Taipei, Wednesday, October 14, 2015 01:05 (GMT+8)
partly cloudy
Commentary: Price competition over 7-inch tablets erodes profits
Ocean Chen, Taipei; Jackie Chang, DIGITIMES [Monday 29 April 2013]

Tier-one tablet makers have been engaging in price competition in the 7-inch tablet market which has eroded profits, according to sources from distribution channels.

The popularity of 7-inch tablets continues to rise. To increase sales many brands provided price promotions at Softex 2013 between April 17-21.

Acer's Iconia B1 was originally priced at NT$4,990/unit (US$168/unit) but that the show, prices were slashed below NT$4,000/unit. Prices of Asustek's MeMO Pad ME172V dropped to NT$4,990/unit from NT$5,990/unit at the show. Sources from the distribution channels noted that the aim for the price competition was to increase brand recognition.

However, this type of development is not beneficial to distributors and brands.

In the 10-inch tablet market, distributors have been able to obtain profits. Excluding the iPad series, the average price of most 10-inch models is around NT$8,000-10,000/unit. Because the prices are high, consumers tend to buy accessories such as covers to protect the products, and the profit margins on accessories are usually high.

However, prices of 7-inch products are relatively low and distributors stated that consumers are less likely to purchase accessories to protect them. This has been eroding profits for distributors.

For brands, price competition does not help to increase brand value. In addition, consumers purchase products from brands because of quality, guarantees, and maintenance services. All these increase costs. But if brands continue to engage in price competition and shrink profit margins, resources will be depleted and firms will suffer.

Realtime news
  • With Asia and US deployments rising, global 2015 solar PV forecast estimated at 59 GW, says IHS

    Green energy | 2h 7min ago

  • Synergy to be generated from acquisition of EMC, says Dell executive

    Before Going to Press | 3h 8min ago

  • Solar cell prices may rise in 4Q15, says Motech CEO

    Before Going to Press | 3h 13min ago

  • Taiwan solar cell order visibility through 2016 Lunar New Year, says Motech CEO

    Before Going to Press | 3h 18min ago

  • GCL-Poly, Xi'an LONGi tout Taiwan solar cell makers

    Before Going to Press | 3h 20min ago

  • Samsung, LG to mass produce OLED digital signage in 2016, says reports

    Before Going to Press | 3h 25min ago

  • China to continue PV feed-in tariff subsidies over next 8-10 years, says NEA

    Before Going to Press | 3h 27min ago

  • China Mobile completes installation of 1 million TD-LTE base stations around China

    Before Going to Press | 3h 28min ago

  • China market: TSMC seeing brisk demand for 16nm chips

    Before Going to Press | 3h 32min ago

  • Foxconn ties up with OnePlus to produce smartphones in India

    Before Going to Press | 3h 33min ago

  • Hong Kong Electronics Fair 2015 opens

    Before Going to Press | 3h 34min ago

  • Court dismisses legal action filed by ASE against SPIL

    Before Going to Press | 3h 39min ago

  • LED lighting demand in Southeast Asia market in 2015 estimated at US$1.5 billion

    Before Going to Press | 3h 41min ago

  • Samsung to use Clear Force touch technology in Galaxy S7 handset, says report

    Before Going to Press | 3h 42min ago

  • Taiwan has advantage in flexible electronics industry, says ITRI

    Before Going to Press | 3h 47min ago

  • HTC launches 6 smartphones in Bangladesh

    Before Going to Press | 3h 48min ago

  • Wah Hong expects 10% on-quarter revenue increase in 3Q15

    Before Going to Press | 3h 48min ago

View more
Display panels for wearable devices
Taiwan server shipment forecast and industry analysis, 2015
2015 global notebook demand forecast
  • Wireless broadband developments in Southeast Asia markets

    As of 2013, the 10 ASEAN nations had a total of over 700 million mobile subscriptions, with the CAGR from 2003-2013 reaching 24%. This Digitimes Research Special Report analyzes the various mobile broadband markets in ASEAN and looks at the respective trends in 4G LTE development for those markets.

  • 2015 global tablet demand forecast

    This Digitimes Research Special Report provides a 2015 forecast for the global tablet market and analyzes the strategies of key market players such as Google, Apple, Intel, and Microsoft.

  • 2015 China smartphone panel trend forecast

    This Digitimes Research Special Report analyzes the strategies of key China-based major panel makers BOE, Tianma and IVO for attacking the different market segments through technology and pricing, and their relationship to local vendors Huawei, Lenovo, ZTE, Xiaomi and Coolpad.