Tablets, Chromebooks Compete for Share in Sub-$500 Back-to-School Skirmish

Back-to-school sales are packed with low-end computing options including tablets, PCs and Chromebooks all competing for the sub-$500 segment of the market, we found in a scan of ad inserts from Sunday’s New York Times. In addition to $399 and $499 Galaxy tablets, the opening page of a P.C. Richard ad featured an HP Pavilion laptop with Intel i3 dual-core processor, a 15.6-inch screen, 4 GB RAM, a 500 GB hard drive and a DVD combo drive, selling for the $399 price of a Samsung 8-inch tablet, with a $100 rebate tossed in.

As added incentive at P.C. Richard, all computers $499 and up were eligible for special financing when bought by Aug. 2. Also featured on page 1 of the P.C. Richard insert was a Google Chromebook, nipped by $20 to $229 with an instant rebate. The Chromebook had an 11.6-inch HD display, 2 GB RAM and a 16 GB solid state drive.

P.C. Richard featured tier-one brands on its cover page, with price-led brands inside. A pair of Samsung Galaxy Tab S models were listed at $399 for an 8.4-inch model and $499 for the step-up 10.5-inch unit, both with Super AMOLED displays. Both were based on Android 4.4, offered 3 GB RAM and 16 GB memory and packed an 8-megapixel rear camera and 2.1-megapixel front camera, according to the ad.

Tablet market leader Apple took the back cover of the 12-page booklet, matching Samsung’s pricing for similarly featured models. The iPad Air was selling for $499 and the iPad mini with Retina display for $399, but P.C. Richard sweetened the pot for the iPads, offering a $50 gift card after mail-in rebate on the 9.7-inch model and a $40 gift card with the purchase of the 7.9-inch model. Consumers had to do their homework to uncover the specs of the Apple units, which were smaller than the Samsung units in screen size and storage (1 GB RAM and 16 GB memory), according to specs on the Apple website. Cameras on the iPads are 5 megapixels for the rear and 1.2 megapixels for the front. The iPad mini with a standard display started at $299 and customers were eligible for a $25 gift card with mail-in rebate.

Prices continue to become more competitive at the leader end of the tablet market, we found. In the low-end tablet bin, the starter price at P.C. Richard was $39.99, slashed by $60, for a DQV 7-inch model with an 800 x 600 display, 4 GB storage and a 0.3-megapixel camera. In Best Buy’s back-to-school ad, the lowest-priced tablet in the Android pack was a Digiland 7-inch model, bundled with a Targus case and ScreenDr cleaning solution, for $59.99. Staples’ back-to-school circular opened with a Nobis Android 4.4 7-inch 8 GB tablet with HD display and quad-core processor for $49.99, a $20 price cut.

In the global tablet market, Apple and Samsung, numbers one and two in shipments and market share, both saw their share decline year-over-year in Q2, according to the most recent data from IDC. Apple’s tablet shipments dropped 9.3 percent year-over-year to 13.3 million units, or 26.9 percent market share, vs. market share of 33 percent in Q2 2013. Samsung’s Q2 shipments edged ahead by 1.6 percent to 8.5 million units versus a year ago, even as its market share slipped to 17.2 percent from 18.8 percent, IDC said.

Lenovo’s worldwide share leapt 65 percent to 4.9 percent, still well behind Samsung but on a steep trajectory in Q2. Asus, in fourth place, also grew, in Q2, selling 2.3 million shipments with 4.6 percent market share. Shipments for number five Acer plummeted 33.4 percent to 1 million units, as its market share skidded from 3.4 percent to 2 percent.

The group of manufacturers in the “others category” in tablets saw shipments jump from 16.4 million to 21.9 million units for the quarter, to 44.4 percent market share from 37 percent in Q2 2013, IDC said. The worldwide tablet market grew 11 percent year-over-year in Q2, totaling 49.3 shipments, IDC said.

The tablet market “is still being impacted by the rise of large-screen smartphones and longer than anticipated ownership cycles,” said Jean Philippe Bouchard, IDC research director for tablets. Another impediment to tablet growth is slow adoption in the commercial segment, Bouchard said. But IDC forecasts that stronger commercial demand for tablets over the rest of the year will help propel the market, driven by more enterprise-specific offerings typified by the Apple/IBM partnership announced last week.

Share growth outside the top five vendors reached an all-time high due to the expansion of vendors entering the tablet space, IDC said. By now most traditional PC and phone vendors have at least one tablet model in the market, and strategies to move bundled devices and promotional offerings have slowly gained momentum, said Jitesh Ubrani, research analyst. “Until recently, Apple, and to a lesser extent Samsung, have been sitting at the top of the market, minimally impacted by the progress from competitors,” he said. Now growth among smaller vendors is bringing a “leveling of shares across more vendors as the market enters a new phase,” Ubrani said.