Orr: Tablet pricing an important factor in global demand

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Jeff Orr ABI

Jeff Orr

Less than 60 days are left in the calendar year and families in all parts of the world are looking for deals. And there is a good chance one of the hottest tech items to be found on wish lists this year is a media tablet. But exactly how affordable are tablets in different countries given the challenging economy? Here at ABI Research we tackled a pair of questions to address this notion: "What is the average selling price of a media tablet in my country?" and, "How many weeks of average household income does it take buy a media tablet?"

Country-level data was created for twenty-two established and emerging markets in the Americas, Asia, and Europe. Perhaps not surprisingly, the price and local availability of Apple's iPad tablet has significantly impacted affordability. Experiences with Apple's iPad have influenced how consumers and business users engage with technology devices, and in less than three years, Apple has shipped more than 100 million slates representing over half of the world's tablets.

However, iPad success has not been as a result of offering the lowest price. For example, the base model of the 3rd generation iPad with 16 GB and Wi-Fi connectivity sold for $499 in the United States during October, while the same model sold for $500,000 Chilean pesos (or more than US$1,000) in Chile.

Of the countries analyzed, the lowest average selling price (ASP) for tablets can be found in India for $340, where Apple has simply been out of financial reach for most. Lower-priced and locally made slates are a larger part of India's tablet mix. In contrast, Chile has the highest ASP for tablets at more than $710 each. Chile has seen success with iPad shipments, though Apple products are sold through authorized resellers instead of directly from the manufacturer, which has resulted in higher prices compared to markets where Apple has a dedicated local, online presence.

When applying Gross National Income (GNI) and average household size to each country, one can determine how many weeks of average household income it takes to purchase a media tablet in the local market. The extreme cases in the 22 countries investigated are Ukraine and the U.S. In Ukraine, it takes about 3.33 weeks of gross household income to afford the average tablet while in the United States it takes less than 1.5 days of average gross household income. The amount of disposable income for a household is highly variable within a single country. This measure of days to weeks of savings may not seem like a long time in any market, however, this is based on gross income. Taxes and work-related deductions need to be considered along with typical living expenses such as housing, food and utilities.

If you are looking to buy yourself a media tablet, but do not want to rely on household income, individuals will have a slightly different set of results related to affordability. The average gross income per capita in the United States allows the average media tablet in the States to be purchased in about half of a week--the fastest of the 22 countries analyzed--while individuals in the Republic of the Philippines will need nearly 13.5 weeks of gross income to save enough for the average locally purchased media tablet.

Looking ahead, the push toward more affordable tablets such as Amazon's Kindle Fire HD, Google's Nexus 7, and the recently announced Apple iPad mini are expected to see the ASP drop even further. This downward price trend could be offset by generally higher ASPs for the recently launched Windows 8 and Windows RT tablets, though it is too early to know how markets will respond to these devices.

Jeff Orr is Sr. Practice Director of Devices, Applications & Content for ABI. Orr manages the analyst resources for mobile devices, applications and content research at ABI Research. As an individual contributor to ABI Research's mobile devices team, he focuses on media tablets, ultrabooks, netbooks, and eReader devices. He also leads research into markets for 3G/4G modems and mobile hotspot routers. For more information:  Media Tablets & eReaders

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