Tuesday, Oct 04, 2011

Gulf News

Dubai Unlike what happened with desktops and notebooks when retail prices were slashed seemingly every third month, there is a much better chance of managing the value erosion of tablets in the days ahead.

The matter has come to the urgent notice of the local channel — and the consumer — over the last week or so after BlackBerry’s Playbook saw its local price drop by nearly Dh400, just weeks into its launch here. Even otherwise, there have been notable variations in end-user prices depending on the retailers.

Industry sources, however, reckon it could be a case of the many tablet vendors still trying to find the right pricing levels for their brands.

“A downward pricing strategy that is better managed is always better for the market and will not confuse the consumer,” said Arshad Chishty, who heads IT distribution at Jumbo Electronics. “It’s difficult in the tech industry to manage such a change but so far on tablets it has been holding.

Insulated

“As distributors, in most cases we carry forward the prices as dictated by the vendor. The distributors are more or less insulated and it’s only when he is carrying old stocks can it become a real cause of concern.”

Chishty believes the tablet phenomenon — where an Android model is available for Dh1,899 to Dh2,499 — will eventually eat into the niche occupied by net-books, which currently retail at between Dh999 and Dh1,299 on average. “There is still a steep differential between the current price levels of tablets and netbooks and the market is heading towards a point where it will be significantly less,” said Chishty. “Every time a vendor has dropped prices on tablets, the consumer has responded overwhelmingly as was in evidence when HP did so.

“A process that could speed up the transition would be something like Amazon’s new Kindle Fire, which has created a whole new price point for tablets. It’s still a learning process for vendors and the channels in the eco-system for tablets.”

It was last week that Amazon unveiled the Kindle Fire for $199.99. Obviously, the last word has certainly not been said on tablet pricing strategies.

For Jumbo Electronics itself these are interesting times.

Robust consumer demand from its Gulf-wide operations, excluding Saudi Arabia, has ensured a good run in the year to date. It has also to a good extent compensated for declines from some of the other regional markets experiencing political turmoil since the beginning of the year.

“Depending on the product category, primary demand was down by 25 to 30 per cent in some of the key re-export markets fed from Dubai,” said Chishty.

“Of late, currency volatility has also had a hand in placing a squeeze on the industry operations.”

By Manoj Nair?Associate Editor

Gulf News 2011. All rights reserved.