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True cost of the Galaxy Tab vs. the iPad

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Can anyone compete with the iPad in the tablet market? Many have tried, but few have succeeded in putting more than a minor dent in Apple’s market share. With more than two thirds of all tablet sales in the third quarter of 2011, Apple figures to continue its majority dominance for quite some time. That is, unless someone can put together a competitive Android alternative.

The Kindle Fire is one such option, though it’s not nearly as powerful as the iPad. People have flocked to pre-order the Kindle Fire because it combines a familiar brand, Amazon, with an attractive price point, $200. But it will act as an entertainment device, while the iPad can provide much more. Currently,Android’s best bet to compete with the iPad in terms of power and capabilities is the Samsung Galaxy Tab 10.1. Unfortunately, the device’s cost alone will prevent many people from buying.

Verizon’s Options

Verizon go one thing right when they launched the Galaxy Tab in July: they offered it for less than the iPad. A 16GB iPad with 3G capabilities costs $629. Verizon offered the Galaxy Tab for $529.99, saving customers $100. Yet that overlooks one important difference: the $529.99 price for the Galaxy Tab is only available to customers who sign two-year contract. That means paying for a data plan, which ranges from $30 to $80 per month, each month for 24 months.

Worst of all, the $30 monthly plan provides only 2GB of data. That doesn’t provide much leeway for users. It renders video streaming basically useless, since a user can go through 2GB of video streaming by watching just a few movies. Music streaming can also eat data, as can downloading information (including apps from the Android Market). Even moderately heavy users will require the 5GB plan at least, which costs $50 per month. That adds up to a costly amount over two years: $1,730, including the cost of the device.

Verizon does offer the Galaxy Tab without a contract, but that costs $699.99, or $70 more than the iPad. The same data plans apply, though customers are not obliged to pay for every month. The iPad works in the same way. It seems hard to justify charging more for the Galaxy Tab than for the iPad, but that’s how Verizon has set it up.

T-Mobile’s Options

Rumors abounded leading up to T-Mobile’s Galaxy Tab launch. Would they offer it at a discount, perhaps enticing some buyers to choose it over the iPad? As it turns out, T-Mobile not only sells the Galaxy Tab for more than the iPad, but it sells it for more than Verizon. It’s hard to make sense of their offering.

Oh, the deal looks nice enough: $399.99 after a $50 mail-in rebate. But that’s not the full cost. That’s the price for a two-year contract, meaning customers are paying between $40 and $80 per month for data. But it’s also just a down payment. T-Mobile requires an additional $10 per month payment until the device is paid off. The total price: $650. Add in two years of data and it’s far more expensive than that.

Off-Contract

As with the iPad, the Galaxy Tab is available without a 3G radio. Big box retailers such as Best Buy sell it as a WiFi-only device. This is a popular option for the iPad, so it could work for the Galaxy Tab as well. Unfortunately, it’s priced at the exact same price points as the iPad.

Essentially, when a prospective buyer walks through the door, she’ll see a few options. There’s either the iPad, which some of her friends probably own, and there’s the Galaxy Tab, a device that far fewer people own. It would take some convincing to get her to buy the Galaxy Tab in the first place, but when she sees that the prices are the same chance are she’ll go for the iPad.

Make no mistake: The Samsung Galaxy Tab is a quality device and the darling of the Android tablet market. Unfortunately, it’s priced in a way that consumers won’t find attractive. With the popular iPad at similar price points, consumers will opt for the more recognizable name. There’s an opportunity for the Galaxy Tab, but just not at its current price points.

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