Average tablet price drops to $386, says IMS Research

Apple's competitors are finding it difficult to compete on anything else than price

The average sales price of tablets was US$386 during the first quarter, a 21 percent drop compared to the same period last year, according to a report from IMS Research.

The price decline is a result of intense competition in the tablet PC market, and Apple is paving the way, according to IMS.

With the release of the new iPad, the company reduced the entry price of the iPad 2 to $399. That meant greater pressure on its rivals, forcing them to reduce prices to make their products competitive, IMS said.

Vendors have found few ways to differentiate their tablets. A low price seems to be the major factor in attracting consumers to buy tablets other than iPads, according to Gerry Xu, market analyst at IMS.

Low-end tablets have sold well and vendors with products in this category have helped lower average prices, according to IMS. Today low-end tablets typically have prices below $200.

Also, white-box tablet makers have lowered prices below that price point and have as a result have won widespread adoption of products in the first quarter, primarily in emerging countries, said Xu. However, to balance performance and profitability with a low price remains challenging for most tablet vendors, he said.

That point was echoed by Nvidia in a recent blog post, where the company said "it's incredibly difficult to manufacture a low-cost tablet at all, even with a compromised experience."

To help change that, it has developed the Kai the reference platform, which is a recipe that tablet makers can use when they're building low cost, quad-core Android tablets targeted at the $199 price point, it said.

Expected upcoming products -- such as the second version of Kindle Fire and the rumored Google Tablet -- will mean increasing pressure on vendors of low-end tablets to enhance performance while still keeping prices low, according to IMS.

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