I have an iPad 2 and my wife has an e-ink Kindle but no tablet. Some day in the future, I’ll probably upgrade to the new iPad and give her my old one. In other words, the high price of iPads is moderately deterring us from engaging in massive consumption of iPads, but it’s not actually diverting us into other lower-cost product lines. On the other hand, when we needed to buy a Christmas gift for someone we knew to be tablet-less, we got him a Kindle Fire.
Not coincidentally, it seems that in Q4 Amazon had a 16.8 percent share of the tablet market which suddenly collapsed to 4 percent in the first quarter. That leads Joe Weisenthal to dub the Kindle Fire the fruitcake of tablets, a product that people are happy to buy as a gift but don’t want to buy for themselves.
To speculate a little, nobody needs “a tablet” the way lots of people need “a phone” or “a computer.” You might want the best computer, but what you need is “a computer” so there are lots of points on the price/quality curve where you can sell computers. But nobody needs a tablet. Some people want the best tablet and some of those people buy it. But if the iPad value proposition doesn’t appeal to you, you just don’t get one. Maybe in a few quarters they’ll be cheaper or the specs will be better or financial circumstances will have changed and you’ll reconsider.