Is there any room for dirt cheap tablets in the channel?

Is there any margin on a tablet device priced at $70? Well according to Energy Sistem Soyntec S.A. of Spain, yes.

Energy Sistem is positioning itself in the market place as a “different” tablet vendor. The one thing right off the bat that makes this vendor different is the price points they have. An entry-level seven-inch tablet is priced at $100 for example. The company’s 10-inch Neo is priced at $233. Note these prices have been converted from Euro’s to Canadian dollars.

But you get the point here. These units are cheap.

Compare that with some of the other brands and you realize how rock bottom the Energy Neo’s are. For example, the Samsung Galaxy  tab S is $419. The Microsoft Surface Pro 3 is $849. The Apple Ipad Mini which is an 8-inch model is $399. There are lower priced tablets such as the Asus at $399, the Acer 11-inch model is $799 and the Dell Venue Pro eight-inch tablet is $299.

Energy Sistem has just released three tablets and they want the channel to resell them. These three tablets are branded Neo and have everything a user would need, according to the company.

Running the Android Kit Kat it has a rear camera and front camera for photos and videos. It has 8GB of internal memory. Now most of the other models are 16GB, but you store media in the cloud. The larger Neo can play back media files on widescreen 16:9 display and has an integrated Intel Quad Core processor.

Energy Sistem makes the point of portability as their Neo can fit in bags and backpacks.

For the channel, all they have to do is sell the product. Energy Sistem administers the orders and pays out the commissions. The company directly ships to the end user through Web automation order processing and tracking shipments.

Energy Sistem acts similar to other vendors in the channel and offers promotions, discounts, and the tools to create an online catalogue.

They have marketing collateral for the resellers too. It’s pretty standard stuff with product news, pricing, template marketing campaigns, but it’s only a few clicks away. If you want to obtain real time information on product availability or new product arrivals they have that too in inventory control.

Almost as important is that the Neo look and feel similar to other tablets in the market.

Here’s the problem I see. A few solution provider partners I know make about seven points on tablets right now. I don’t know what margins Energy Sistem is offering. But if they are competitive, let’s say, that $100 tablet will net a partner $7.

That’s it! The channel would have to sell huge volumes of Neos to make it worth the effort. Or they would have to attach more high margin items to that sale for it to really make sense. I don’t even think a retailer such as Wal-Mart, who is the low price leader, would be interested in this type of return.

I personally do not see channel partners signing up on mass for the Neo mainly because they too do not wish to drive the average selling price down for tablets. But price conscious customers such as non-profits might be a fit for Energy Sistem.

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Jim Love, Chief Content Officer, IT World Canada

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