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Tablet vendors scurry to undercut $500 iPad

The iPad has sold extremely well at a starting price of $500 but that kind of pricing doesn't work for many tablet vendors. And recent price drops reflect this.

Lenovo K1 is the latest tablet to go on sale. Now $329 at Best Buy, reduced from $499.
Lenovo K1 is the latest tablet to go on sale. Now $329 at Best Buy, reduced from $499.
Best Buy

What's the sweet spot for tablet pricing? We're finding out as Hewlett-Packard, RIM, HTC, and others learn that trying to sell a tablet at the iPad's starting price of $500 may be a fool's errand.

Lenovo and Best Buy are the latest to bring down pricing, selling the 10-inch Lenovo IdeaPad K1 tablet with 32GB today and Monday for $329, down from $499. And that 10-inch tablet comes with a dual-core Nvidia processor and Android 3.1.

At Best Buy, HTC also recently knocked down the 7-inch HTC Flyer to $299 from $499. This happened--probably not coincidentally--right after the $199 Amazon Kindle Fire was announced--which is selling briskly, thank you.

RIM and Best Buy have also been testing the $299 price-point waters for the 7-inch BlackBerry PlayBook, $200 off the regular price. As of Sunday, it's back up to $499. But that price seems almost fanciful now.

And India's $60 Android tablet--albeit with very-low-end features--offers a whole new take on tablet pricing.

Tablet price reality check:

  • HP TouchPad (10-inch, WebOS): sold at fire-sale for $99.99 (16GB), reduced from $499.
  • Amazon Kindle Fire (7-inch, Android): $199.99 (8GB).
  • BlackBerry PlayBook (7-inch, QNX): periodically on sale for $299.99 (16GB), reduced from $499.
  • Lenovo K1 (10-inch, Android): on sale for $329.99 (32GB), reduced from $499 (Sunday, Monday only).
  • HTC Flyer (7-inch, Android) : $299.99 (16GB), reduced from $499.
  • Asus Eee Pad Transformer (10-inch, Android): regular price of $399 (16GB).
  • Acer Iconia (7-inch, Android) : $329.99 (8GB).
  • Toshiba Thrive (10-inch, Android): $399.99 (16GB).

But don't expect Apple's iPad to come down in price anytime soon. It still starts at $499.99 and is still listed as a top seller at Best Buy and Amazon.

That doesn't mean Apple is invulnerable of course. A future 10-inch Amazon tablet priced aggressively could put pressure on Apple. "Amazon is already working with Foxconn to develop a direct competitor to Apple with a 10-inch display," said Ashok Kumar, an analyst at Rodman & Renshaw. "Potentially they could come up with some disruptive pricing. For that, I think Apple would have to react," he said.

That may be wishful thinking though. Apple is famous for sticking to its price guns. Kumar suggests one scenario, however, where Apple reduces the price on an older iPad, similar to what it has done withe iPhone 3GS.