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Retailers make no money on tablet sales

evan kypreos by

Currys
Currys

HP has spoken out on the state of the tablet market, suggesting retailers make no money from selling tablets.

Electronic retailers such as Dixons and PC World struggle to make any money from selling tablets to customers, manufacturer HP has claimed.

With the tablet market having swerved down the route of increasingly cheap hardware – largely in a bid to counter Apple’s premium dominance – HP has suggested there is now no room for retailer profit margins. “If you ask Dixons “Are you making money on tablets?” they will tell you immediately “My friend I will tell you I am making no money on tablets,” Pascal Bourget, HP’s VP of Consumer Personal Systems said speaking with TrustedReviews.

With the International Data Corporation (IDC) estimating that 217 million tablets were sold worldwide in 2013, figures have revealed that tablet prices dropped 22.9 per cent year-on-year from 2012 to 2013.

These large sales volumes and widespread price drops, in conjunction with the improvement in the quality of the screens and processors, has meant that retailers are finding it hard to make a profit. This is particularly the case for sub-£200 tablets.

Why do retailers bother selling tablets then we hear you ask. Well, according to Borget, it’s all about the margins available on tablet accessories.

While discussing HP’s new Slate 6 and Slate 7 Voicetab, Bourget explained that the extremely low margins available to retailers and manufacturers of tablets mean that accessories become a vital part of the business model.

“It’s a very important balance to find” he said. “A small (tablet) jacket probably costs a few dollars to make but can retail for £25 so there’s decent margin for retailers and for us”.

The HP Slate 7 Voicetab will be one such low margin tablet, but HP believes the addition of voice capabilities and a free 3G subscription for two years will ensure its success. The Slate 7 Voicetab will come with dual-SIM slots meaning it can be used as a phone or as a 3G connected tablet with no extra monthly data cost. HP's DataPass service offers 250MB of data per month and is free for two years.

The HP Slate 7 Voicetab will be available to purchase in the UK from May.

Next read our guide to the: Best Tablet

Go to comments

Pg

March 10, 2014, 2:21 pm

I guess buying accessories is off the list for me, not that I bought all that many of them. Thanks for tip off though that you are ripping us off on them. Always suspected it.

Evan

March 10, 2014, 5:52 pm

More than that I think it just goes to show how competitive the cheaper android tablet market is. Margins are so tight that there is no money being made. The Tesco Hudl I expect is a loss leader. Tesco will be losing money with every unit sold but hope that the constant brand reinforcement on the tablet and one-touch to buy button will make it a worthwhile venture in the long run.

In terms of accessories I don't think they're a rip-off, they're just more in keeping with more traditional profit margins.

Noel Grundy

March 10, 2014, 6:03 pm

What a bizarre way of looking at it. Did you not read that there is no profit in the tablets themselves. We are talking about companies that are creating jobs. If everyone had the same out look in life as you everyone would be out of a job.

dourscot

March 11, 2014, 9:50 am

Except that you can buy the same accessory on Amazon for a third of the price. Consumers know this.

This won't save computer stores.

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