Can pricier tablets compete with the iPad 2?

Apple surprises the tech world by offering a beefed-up iPad 2 without raising the price. How can rivals keep up?

At $799, The Motorola Xoom tablet (pictured) can't compete on price with the $499 iPad 2.
(Image credit: Corbis)

When Steve Jobs unveiled Apple's iPad 2 last week, one feature in particular leapt out for tech observers: Its price. Although the iPad 2 has ramped-up processing power and a host of new selling points, it still retails for $499 — the same as the original iPad — thanks in part to Apple's ability to cut deals with parts manufacturers. Meanwhile, two competitors, Motorola and Samsung, have released tablets that cost more without delivering the iPad's cultural cachet; Motorola's Xoom, for instance, retails for as much as $799. What will it take for pricier rivals to overtake the iPad 2? (See a review of the iPad 2)

Only low prices will work: Nobody expected Apple to deliver a new, improved tablet for such a low price, says Jason Perlow at ZDNet, and rivals are already "eating the iPad 2’s dust." The problem for competitors like Motorola is that consumers have little reason to test out a more expensive, "completely unproven tablet platform." It's a "no brainer" that they'd just buy an iPad instead. The only way Motorola can overcome buyers' apprehension is to find a way to "undercut the iPad 2 on price."

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