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China: March of the gray market tablets

by David Needle

January 11 2013

Is the world about to engulfed by a flood of gray market, off-brand Android tablets? Not quite, but analyst and TabTimes’ columnist Ben Bajarin says one of “the most disturbing and potentially disruptive things” he uncovered at CES this week is that the market for low-cost tablets in China is taking off in far greater numbers than anyone else is reporting.

At CES Bajarin talked to one vendor mass-producing low cost, 7-inch tablets in China being sold for $47 dollars (292.51 CNY). Others are selling 10-inch models for anywhere from $60-$150.

“There is unquestionably a massive and rapidly growing market for extremely cheap Android tablets in China,” said in Tech.pinions.

As Bajarin points out, these devices are being made using second and third tier manufacturers and come with stripped down versions of Android  with a few simple apps pre-loaded. They are also being sold in a kind of Quik Stop for electronics, flea market type settings, keeping the seller's overhead to a minimum.

Big implications for the tablet buyers everywhere

These so-called white box or no name tablets aren’t about to make their way to the U.S. where buyers are far more brand-centric and the distribution channels are more regulated. But if his aggressive prediction that worldwide tablet sales (thanks in no small part to “insane growth” in China and India) could hit 400 million in 2013 is right, that has big implications in bringing down the cost of tablets everywhere. That would also put China on track to pass the U.S. next year as the country with the most tablet sales. 

(Just this week research firm Canalys forecast tablet shipments would reach almost 400 million, but not until 2016).

“There’s no question that as the market evolves the costs are coming down,” Bajarin told TabTimes. “By next year, you could feasibly see decent Android tablets for $100.”

And even in China, Bajarin thinks these no-name tablets will help develop demand for more full-featured, higher-priced products from name brand suppliers.

“As Chinese customers experience these products for the first time and potentially refresh them several times a year, these consumers will become accustomed to their needs, wants, and desires with regards to tablets and then begin to shop for products who are innovating and adding value,” he said. “This is where the brand comes in, because as value is established in the mind of the consumer, they are willing to pay more for the function and convenience.”

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