By Leila Abboud and Paul Sandle
BARCELONA Feb 27 Originally derided as a pricey
niche product for geeks, tablet computers have become so common
that supermarkets are now selling their own brands, pushing out
The shifting nature of the market underscores how millions
of people are choosing simpler devices to surf the web, send
emails and shop, putting pressure on traditional PC companies.
And since Apple pioneered the tablet in early 2010, the
gadgets now available at the lower end of the market are
becoming commodity items that non-technology companies can order
from Asian contractors using common components.
"Reference designs for tablets and smartphones from
companies like Qualcomm have drastically reduced
barriers to entry and increased commoditisation pressure in the
hardware industry," said Sameer Singh, Hyderabad-based tech
"This opens the door for not only players that can survive
on low margins, but also for companies that use hardware as a
channel for something else."
Tesco in Britain and Walmart in the United
States, are selling their own branded tablets pitched at
customers unwilling to pay $400 or more for an Apple or
Grocers like Tesco and France's Carrefour are not
only trying to cash in on booming tablet sales, but also to
nudge people to buy everything from films to groceries from
their online stores, pushed through their devices, a lesson
learned from Amazon and Google.
Traditional computer makers including Asus, Acer
, HP, Lenovo, Dell, Sony, LG
will continue to be squeezed, said Gartner analyst Tracy Tsai.
They account for only 10 percent of the market today, far
behind Apple and Samsung with 60 percent and also smaller than
the 20 percent share held by white label tablet makers who
manufacture for others, such as Archos. Amazon and
Google hold the other 10 percent.
"Some of them will pull out from the market of tablets
altogether," Tsai predicted.
The price for tablets running Google's Android software
ranged from $99 to $299 in 2013, providing an estimated 15
percent to 25 percent gross margin to hardware vendors, but when
prices need to be cut to meet the competition the margin could
Amazon, which sells its Kindle Fire tablet at cost or even
at a loss, ties people to its site to buy music, books or films
rather than them buying Apple's iTunes or going to Carrefour and
"If you get a tablet into someone's hand, it is almost a
digital shop window," said Ben Wood, analyst at CCS Insight.
"The retailers are realising: 'Crikey, we need this to be
part of a much bigger strategy to make sure that Amazon does not
eat us alive.'"
Carrefour is also selling smartphones and a smartwatch
starting at 149 euros, in addition to four tablets, while a
Pakistani bakery chain called Gourmet poached a former Samsung
executive to help it sell smartphones starting at $15.
Tesco shifted more than 400,000 of its Hudl tablets, priced
at 119 pounds ($200) in little over three months after a
"We saw an opportunity in the market for a lower priced but
highly spec-ed tablet," said Michael Comish, who heads Tesco's
digital strategy and operations.
"We were certainly pleasantly surprised by consumer demand,"
he said, adding that Tesco was selling as many Hudls as it could
produce in the autumn.
Carrefour's mobile phone, dubbed the Smart, launched at
Christmas and was among the store's top-five selling products in
recent months, said Jose Zdziech, sales director for technology
Big retailers have been here before. In the past many worked
with manufacturers in Asia and elsewhere who produced everything
from clothing to refrigerators that the retailers then sold
under their own brands. Carrefour and Tesco, the world's second
and third-biggest retailers, then turned to that network of
manufacturers to make gadgets.
Tesco's Comish said they designed the Hudl to drive people
to purchase films, music, and now books from blinkbox, a
video-on-demand provider Tesco bought in 2011. The company spent
a lot of time on the user interface, he said, to make it easy to
get to Tesco services, without forcing customers to use them.
Carrefour's Zdziech said the retailer would continue to sell
Apple and Samsung products since its own products were not aimed
at the high-end. But Carrefour has dropped some competing
tablets and phones from lower-end manufacturers he declined to
name. "We had to make some choices so as to better showcase our
own branded products," he said.