Taipei, Thursday, September 21, 2017 02:24 (GMT+8)
mostly cloudy
Taipei
29°C
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
  • LPWAN offers two-way communications for data collection, remote control

    Mobile + telecom | 6h 9min ago

  • Taiwan foreign direct investment totals US$4.9 billion in January-August

    Bits + chips | 7h 21min ago

  • Taiwan August export order value increases

    Bits + chips | 7h 30min ago

  • Taiwan market: Optoma launches LED projector

    Displays | 7h 41min ago

  • EU sets new minimum prices for China PV imports

    Before Going to Press | 5h 17min ago

  • Google Play eyes opportunities from VR, AR, Chromebook

    Before Going to Press | 6h 12min ago

  • KYEC grabs testing orders for analog, PA chips from Murata

    Before Going to Press | 7h ago

  • Innolux to expand 6G fab capacity

    Before Going to Press | 7h 10min ago

  • Japan, Korea, Taiwan among top-5 Google Play markets

    Before Going to Press | 7h 11min ago

  • DRAM bit growth to reach 19.6% in 2018, says DRAMeXchange

    Before Going to Press | 7h 15min ago

  • Tokyo Electron optimistic about etching equipment demand for 3D NAND, FinFET

    Before Going to Press | 7h 27min ago

  • HTC in trading halt pending release of material information

    Before Going to Press | 7h 35min ago

  • TSMC to hold over 70% of PWM IC orders from Qualcomm

    Before Going to Press | 7h 36min ago

  • Taiwan August export order value increases

    Before Going to Press | 7h 42min ago

  • Taiwan foreign direct investment totals US$4.9 billion in January-August

    Before Going to Press | 7h 46min ago

Pause
 | 
View more
Global notebook shipment forecast, 2017 and beyond
Global AP demand forecast, 2017-2020
Global notebook shipment forecast, 2017 and beyond
  • China AMOLED panel capacity expansion forecast, 2016-2020

    This Digitimes Research Special Report examines the China AMOLED industry, focusing on the expansion capacity of the makers, the current implementation plans of major smartphone vendors in the market and the technological hurdles faced by the China makers.

  • Global AP demand forecast, 2017-2020

    Digitimes Research expects global AP shipments to surpass the 1.9 billion mark in 2017, with smartphones remaining the main application. Qualcomm will be leading the market in 2017, as other players continue playing catch up and scramble for funds to invest in more diverse applications.

  • Global notebook shipment forecast, 2017 and beyond

    This Digitimes Special Report examines key factors in the notebook industry, including products, vendors and ODMs, that will affect total shipments in 2017 and through 2021.