iPad 2 Price Cut Driving Average Tablet Price Down

When Apple’s third generation iPad was released on March 16, 2012, Apple cut the price of its iPad 2 by $100, dropping the price of the entry level iPad down to a mere $399.

That price decline has had a significant impact on the tablet industry, because the new lower price forced iPad competitors to drop tablet prices too. As a result, the average selling price of tablets dropped 21 percent during the first quarter of 2012, to just $361.

According to IMS Research, demand has increased significantly for low cost tablets, especially in emerging countries.

There are few innovations from vendors to differentiate their tablets; low price seems to be the major factor to attract consumers to buy tablets other than iPads. More vendors are expected to focus on the low-end tablet market.

The low-end tablet market includes the Kindle Fire from major retailer Amazon, as well as tablets from smaller brands and white-box vendors. Low-end tablets come with a price tag of $200 or below.

Though worldwide tablet shipments dropped from the fourth quarter of 2011, shipments in Q1 of 2012 still doubled shipments from a year ago, in Q1 2011.

The future release of updated low-end tablets, such as the Kindle Fire and Google’s rumored tablet are expected to put even more pressure on low-end tablet vendors to increase performance while still offering rock bottom prices.

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