Business

$99 tablets: Price is right

When tech is cheap, consumers listen.

That’s the lesson from the fire sale on Hewlett-Packard’s TouchPad tablet that turned a commercial flop into a cult hit.

Once HP decided to kill off the tablet and slashed the price to $99 from $399, consumers flocked to stores, which are now running out of a device that had been gathering dust.

The experiment in consumer psychology proved that the market is hungry for tablets outside of Apple’s iPad — if the price is right.

Amazon is poised to enter the tablet fray with an Android-powered tablet in late September or October, a source with knowledge of the plans said yesterday.

The device will sell for hundreds less than the entry-point $499 iPad, a feat few tablet makers have accomplished, the source said.

Amazon is considered one of the few credible threats to Apple and has been willing to sell its electronics at a loss in hopes of generating more digital media purchases.

“If Amazon is particularly aggressive on pricing, that could be a trigger for many players to rethink the sales price of tablets,” said Charles King, the lead analyst at Pund-IT.

Aside from the TouchPad phenomenon, the lower-price tablet market is starting to surface, including entrants such as Vizio, which launched a $299 tablet this month.

ITG Investment Research said that tablets running Google’s Android are starting to chip away at Apple’s iPad marketshare, and price will be key to further erosion.

“We expect to see more and more lower-end, more-affordable Android devices enter the marketplace, which should further allow Android to increase its share,” said Tony Berkman, CEO of ITG.

The pressure is on to build cheaper handheld devices, not just tablets but smartphones.

Yesterday, Samsung showed off four new Android phones and Nokia touted three new Symbian smartphones, which are all built for low-end market.

The cheaper phones cost $200 or less and consumers sometimes get them free after signing long-term contracts with wireless carriers.

While competitors try to undersell the iPad, Apple is reportedly developing a cheaper iPhone to challenge rivals offering low-end Android smartphones.