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Retailers make no money on tablet sales

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.  

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