Posted by Sarah Rotman Epps on February 24, 2011
The Motorola Xoom went on sale today, the first tablet to ship with the Android 3.0 "Honeycomb" operating system. I've been testing the Xoom for the past few days, and here's my take:
- The Xoom is a solid, sexy product. If the Xoom were a guy, he'd be the quarterback who occasionally flashed a GQ-style fitted suit and pocket square. The device is plenty powerful and has some nice design flair. When you use the camera, for example, it anticipates that you'll be holding it in landscape mode with your right thumb on the screen, and it simulates the radial control dial of a real camera under your thumb. There are no awkward moments, as there were with earlier Android tablets like the Samsung Galaxy Tab and Dell Streak--it's slick and fast and feels like a tablet rather than an oversized smartphone. It has all the features you'd expect from an iPad challenger (cameras, ports, Flash support, etc.).
- But consumers will balk at the price. The 4G-compatible version is $800, or $600 with a two-year Verizon contract. At this price, we're not the only ones predicting meager sales. This quarterback demands a high salary--"I can throw far!" he promises. His high BOM cost demands, "I'm worth it!" And yet, Forrester's surveys show that consumers expect to pay only $257 for a tablet as of January 2011, down from $504 in June 2010. Tablets are expensive to build, but consumers expect them to be cheap. AND, our data shows that they don't want to be tied in to a fixed data contract, and they don't want to buy from a carrier--meaning that pricing strategies that work for mobile phones won't work for tablets.
This situation begs the question of WHY consumers will accept a price from Apple that they won't from Motorola. The answer, partly, is that consumers perceive that the live service Apple offers in the Apple Store is built into the price, as we found in a study we did a year ago. No other OEM has the same level of in-store service and support.
In our forecast of US consumer tablet sales, we expect 24.1 million tablets to sell in the US this year, at least 20 million of which will be iPads. The Xoom is a great product, but its fatally flawed pricing model means that it won't fly off the shelves this year. The Xoom will earn a lusty look from consumers--and then they'll go buy iPads.