HP's New Strategy: If You Can't Beat Them, Undercut Them

In the less than satisfactory economic climate that the world is in it only makes sense that everyone is looking to get a bigger bang for his or her buck.  As someone who works in the retail industry I must say that this is something that I notice each and every day, and as a connoisseur of all things technology I honesty think that this is one of the biggest factors in the success of products in the highly competitive mobile and tablet market right now.  After all, why would anyone want to pay for a lesser-proven product when they can get a more popular, well know, and industry proven product for the exact same price.

This is a concept that I’ve taken this into consideration when looking at the success of products like the BlackBerry Playbook and the Android tablet industry as a whole; both of examples of products (or product categories, in terms of Android tablets) serving as direct competitors to the Apple iPad 2.  In the case of these devices, and in the case of others like them, the fact of the matter has been that non-iPad tablets have simply offered users less in terms of features (e.g. “apps” available for a given platform) than the iPad line.  Yet the past has shown that just about every tablet on the market, despite being arguably inferior to the iPad, have taken up the same pricing structure.  My point?  Other tablets haven’t gotten off of the ground because consumers aren’t willing to pay about the same price for an Android or BlackBerry tablet when they can get a better all-around product with the iPad 2.

But as the manufacturer competing with the iPad, what do you do when you cannot compete with your competitors?  For a while now it has seemed as if manufacturers have had their heads in the sand and haven’t been able to figure out the answer to this simple question, but this week HP took up the a new approach which I honestly think will help them gain a much better edge in the tablet industry.  If you can’t beat them, undercut them.

Now priced at $399, HP’s 16-gigabyte TouchPad tablet has fallen $100 in price, jumping below the $499 price-point of Apple’s entry-level iPad 2.   For $499, the same price as the 16-gigabyte Apple iPad 2, users can also pick up HP’s 32-gigabyte offering; again priced $100 less than the same capacity level in the iPad line.

Some are going as far as suggesting that this price drop will also be reflected in the upcoming release of HP’s 4G-enabled tablet which is currently available for pre-order (32GB) on Amazon for $699.

Either way, I think this is a flat-out genius move on HP’s part and I honestly cannot understand why we haven’t seen other manufacturers take the same avenue.  Sure, the company is cutting themselves short of $100 of pure profit and is surely cutting into their bottom line a bit by making this move, but I for one think that it will work out better for them in the long run as users will be more willing to purchase their product with this rather significant price drop.  I mean, I’m sure that in HP’s eyes selling more tablets with a lower profit is better than the product go cold.

Nonetheless, I still have to wonder if consumers will be more likely to go for the TouchPad, even at the lower price.  Like I said at the beginning of this article, consumers are looking to get a better bang for their buck; and when it comes down to it doing so means more than just getting a good price.  I personally think that shoppers are still going to look at the iPad more than anything, as even for $100 more I think that consumers will still see it as “money better spent” because they will be getting a more popular and arguably better product.  I know that if  I were looking to drop a few hundred dollars on a tablet, I’d be more than happy to pay an extra $100 to really get my money’s worth.