Motorola Boss Blames iPad 2 For Xoom Pricing

The head of Motorola Mobility, CEO Sanjay Jha, has admitted that Motorola’s Xoom tablet costs more than gadget experts expected because it was loaded with premium features to compete with Apple’s iPad 2.

Motorola launched its 10.1-inch Xoom, based on Google’s Android 3.0 “Honeycomb” operating system, 24 February from Verizon Wireless.

The slate costs $599 (£367) with a two-year, minimum 1GB data contract for $20 (£12) a month. Consumers may also purchase it sans contract for $799 (£490), or $70 (£43) more than a comparable iPad.

Stealing The Show

One day before the Xoom launched, Apple invited media and analysts to an iPad event scheduled for 2 March – a strategic move designed to paralyse people who were considering buying a Xoom.

Despite this pre-emptive strike, the Xoom is off to a “good start,” said Jha at the Morgan Stanley technology conference in San Francisco 28 February.

Jha also noted that the cost for the tablet is based on its quality and performance, along with the fact that it can be upgraded to run on Verizon’s 4G LTE network later this year.

“We had to shoot a little bit in front of where iPad was, knowing that the iPad 2 is coming out,” Jha said, according to Dow Jones. “We felt that $799 (£490) was the right price point for an unsubsidised device.”

The Xoom is also powered by a dual-core, 1GHx processor compared with the single core A4 chip that powers the iPad. Motorola’s tablet is also fitted with front and rear-facing cameras for video chat, while the original iPad has no cameras. The iPad 2 is expected to sport dual cameras at launch, which could come sometime in April.

The dual cameras cost Motorola $14 (£8.58) to include, said UBM TechInsights, after conducting a component teardown of tablet computers.

The researcher said the Xoom parts cost Motorola about $278 (£170), compared with about $245 (£150) for a comparable iPad. The Xoom’s higher resolution display also added $5 (£3) to the tab.

Pricing Worries

Still, industry analysts were clearly put off by the Xoom’s cost, arguing that it should make it less attractive than the iPad.

“Pricing has emerged as a real Achilles’ heel for iPad competitors, as we’ve seen with Galaxy Tab and now Xoom,” IDC analyst Susan Kevorkian told eWEEK.

“It’s unfortunate because, in the case of Xoom, the Android Honeycomb OS is well done, and the technology is fundamentally competitive with iPad and iOS, but the device pricing, plus monthly data plan commitment, is likely to be off-putting.”

Motorola’s move to challenge the iPad 2 might have also provided an opportunity for HP and RIM to come in with more price-competitive offerings later this year, Kevorkian added.

That bearish attitude may not bode well for Xoom consumer purchases down the road. Of course, the speculation could shift once the world gets a peek at the iPad 2.