The outnumbering demand for HP’s TouchPad, after the company slashed its price to $100 seems to indicate a clear strategy to all the iPad foes to beat the undefeated tablet.
Forrester Research analyst, Sarah Rotman Epps wrote in the blog, if Amazon, the online retailer is ready to sell its upcoming Android run tablets at a loss and has enough supply to keep up the orders, it has the potential to surpass iPads sales.
The question is why a company would sell its devices at losses.
As the e-commerce giant is not highly dependent on hardware for its revenue, selling the devices at a loss can help the company build a strong customer base.
“Amazon’s willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market,” writes Rotman Epps.
Comparing Apple and Amazon on the same strategy, Rotman Epps says: “Apple sells software and services, but the lion’s share of Apple’s revenue still comes from hardware, which makes it vulnerable to a company, such as Amazon, that isn’t seeking profit from hardware sales. Amazon and Apple’s relationship, already fraught with Apple’s policy changes on content sales, will become even more strained.”
If the Amazon tablet is priced at $300 at the time of its launch and the company has enough supply to keep up the orders, Amazon could sell 3-5 million tablets in Q4 alone, Forrester analyst Sarah Rotman Epps wrote in her blog. Apple sold 3.3 million iPads in the first three months of the launch.
Amazon hopes that with the devices being cheaper, consumers will spend more for its digital content.
IHS predicted that Apple’s iPad will alone account for 44.2 million tablet shipment this year. An HIS analyst Rhde Alexander wrote, All the momentum in the media tablet market is with Apple right now.”
The iPad rivals have failed to compete with the tablet— Samsung’s Galaxy Tab 10.1 stuck in a patent issue, Motorola Xoom and RIM Playbook crawling to catch up with the competition. However HP has decided to sell more units of HP TouchPad at $100, before it finally gives up the device to bask further in the buyer frenzy.