The Samsung Galaxy Tab, a highly anticipated rival to the Apple (AAPL) iPad, will be available from Verizon (VZ) on November 11. The price? The low, low price of $600 -- plus, of course, the cost of a 3G data plan that starts at $20 a month. That's versus $499 for the low-end iPad. [Update: Verizon is not requiring a data plan, but is selling the device for full price.]
If you found yourself doing a double take, you're not alone. No matter what features the tablet offers, this is one of the grandest marketing blunders that high tech has seen in years. Together, Samsung and Verizon managed to do something that no one else has been able to do: make Apple look like the economically smart buy.
This is no easy feat. For decades, Apple CEO Steve Jobs has honed a brilliant strategy of product design, price, and availability to create consumer perceptions of ultimately desirable consumer electronics. Not everyone reacts that way, but they don't need to. Jobs has his eye on Apple's likely market segment and focuses his efforts to hold onto it. Sometimes he makes major blunders, like trash talking Google (GOOG) Android on the company's latest earnings call. But his batting average is still unusually high, and everyone makes marketing mistakes.
Case in point is the Galaxy Tab. The numbers are brain numbing. Hardware manufacturers moan and complain about Apple all the time -- how the company repackages innovations by others into something "new" and still commands premium price based on the perceived "cool" factor. It's general grousing because others haven't been as smart or successful competing with Apple.
So what did Samsung and Verizon do? Copy the disastrous Microsoft (MSFT) Kin strategy, which involved prices that were too high to gain users. The Galaxy will be a full $100 higher than the introductory iPad.
Yes, the cheapest iPad that does 3G is $629, but the Wi-Fi only alternative creates a lower price floor. The Galaxy Tab screen is smaller that that of the iPad. Even if you think that the Jobs rant about 7-inch tablet screens was silly, most consumers probably associate smaller screens with smaller prices. Sure, it is a lot lighter than the iPad and has dual cameras -- but the head of Samsung's mobile product team could only manage to say that he couldn't see anything in the Tab that was weaker than the iPhone. Now there's a ringing endorsement for a higher price.
Not only does the move hurt Samsung's prospects, but it isn't good for Android tablets in general. The first major competitor makes Apple's pricing look reasonable emotionally, even if a logical comparison doesn't hold up. You win marketing competitions with smarter emotional appeals, not with Mr. Spock as your campaign director. Everyone else will now find themselves in trouble. Either they follow the Samsung lead and reinforce the iPad being a "deal," or they undercut price significantly and have less margin room.
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