Originally derided as a pricey niche product for geeks, tablet computers have become so common that supermarkets are now selling their own brands, pushing out low-cost rivals.
Tesco in Britain and Carrefour in France are selling their own branded tablets pitched at customers unwilling to pay $400 or more for an Apple or Samsung product.
The retailers are not only trying to cash in on booming tablet sales, but also to nudge people to buy everything from films to groceries from their online stores, pushed through their devices, a lesson learned from Amazon and Google.
Traditional computer makers including Asus, Acer, HP, Lenovo, Dell, Sony, LG will continue to be squeezed, said Gartner analyst Tracy Tsai.
They account for only 10 per cent of the market today, far behind Apple and Samsung with 60 per cent and also smaller than the 20 per cent share held by white label tablet makers who manufacture for others, such as Archos. Amazon and Google hold the other 10 per cent.
“Some of them will pull out from the market of tablets altogether,” Tsai predicted.
The price for tablets running Google’s Android software ranged from $99 to $299 in 2013, providing an estimated 15 per cent to 25 per cent gross margin to hardware vendors, but when prices need to be cut to meet the competition the margin could drop.
Amazon, which sells its Kindle Fire tablet at cost or even at a loss, ties people to its site to buy music, books or films rather than them buying Apple’s iTunes or going to Carrefour and Tesco.
“If you get a tablet into someone’s hand, it is almost a digital shop window,” said Ben Wood, analyst at CCS Insight.
“The retailers are realising: ‘Crikey, we need this to be part of a much bigger strategy to make sure that Amazon does not eat us alive.’”
Carrefour is also selling smartphones and a smartwatch starting at €149, in addition to four tablets, while a Pakistani bakery chain called Gourmet poached a former Samsung executive to help it sell smartphones starting at $15.
Tesco shifted more than 400,000 of its Hudl tablets, priced at £119 in little over three months after a September launch.
“We saw an opportunity in the market for a lower priced but highly spec-ed tablet,” said Michael Comish, who heads Tesco’s digital strategy and operations.
“We were certainly pleasantly surprised by consumer demand,” he said, adding that Tesco was selling as many Hudls as it could produce in autumn.
Big retailers have been here before. In the past many worked with manufacturers in Asia and elsewhere who produced everything from clothing to refrigerators that the retailers then sold under their own brands. Carrefour and Tesco, the world’s second and third-biggest retailers, then turned to that network of manufacturers to make gadgets.