Thursday, March 17, 2011

Motorola Xoom: Not off to a strong start

Author: Riley Alexander, MD, MBA

The Motorola Xoom represented a fairly important device. It was viewed as the first real competitor to the iPad and many hoped for it to inject some variation into the slate tablet market the iPad had essentially created. Well, initial reports are that the device is not selling as well as planned and production may even be cut on it due to decreased demand. With Motorola hoping for 800,000 units sold by summer, it appears they are having to adjust their sales forecast.

I, for one, am not surprised by this. The Xoom appears to be a compelling device, but initial reports are that the initial version of Android 3.0 (Honeycomb) it is running is quite buggy and feels unfinished.
The more important reason is likely a simple one...price. I went through the pricing of this tablet in a previous post here and mainly ridiculed Verizon's high data pricing, but I think I should have cautioned uptake in regards to the actual unit price more. No single comparable Xoom model costs less than an iPad and most cost a fair bit more. With Apple's considerable brand equity/strength, this is a huge problem for Motorola.

Currently, the iPad absolutely owns this segment of the one is even close in sales figures. With the incredible sales of the iPad over such a short segment of time, Apple has been able to do something our business savvy readers should appreciate--control the supply chain.

The iPad was such a runaway success that manufacturers can barely keep up making panels for it, let alone multiple competing products that are very unlikely to sell as well. In essence, Apple has been able to use its quick success to create a barrier to entry in the form of price. Apple is seen as a premium brand that makes a premium product--why would the average consumer pay more to buy something from Motorola? It's looking like they aren't.

It's looking like that until supply catches up to demand and prices decrease, Apple's competitors are going to have to make a very compelling product to have any chance at catching the iPad. Perhaps HP or RIM can give us that this summer.

About the author:

Dr. Riley Alexander is a pathology resident at Indiana University School of Medicine, blog "addict" and avid follower of technology. His primary interests revolve around how technology, especially mobile, will create increased efficiency, enhanced physician education and better delivery of care in the medical field. Dr. Alexander is a graduate of Indiana University School of Medicine with a combined MD/MBA, in partnership with IU's Kelley School of Business. Due to this, he is also very interested in management, healthcare policy and non-clinical aspects of the medical field and enjoys exploring non-clinical opportunities for medical students, residents and physicians. He completed his undergraduate education at IU-Bloomington.

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