Analysts: AT&T's HTC Jetstream tablet overpriced

At $700, the tablet's price will need to drop to find adoption, they said

AT&T and HTC's new Jetstream Android tablet with LTE capabilities is heavily overpriced at US$700 in a market where buyers are looking for discounts, analysts said on Wednesday.

The tablet will be the wireless carrier's first LTE device, and will become available starting on Sept. 4 with a two-year agreement in the U.S. The tablet runs on Android 3.1 and has a 10.1-inch display and a dual-core processor with a clock speed of 1.5GHz.

"For the first time, AT&T customers can receive discounted tablet pricing after committing to a two-year agreement for a new $35, 3GB monthly data plan," AT&T said in a statement.

The tablet is also available for those who don't want to commit to a two-year agreement, though the tablet pricing was not provided. Post-paid data plans will be priced at $14.99 for 250MB or $25 for 2GB, and for pre-paid plans at $14.99 for 250MB or $25 for 2GB. Overage charges vary depending on plan.

HTC's high-price tablet comes at a time when users want cheap tablets. Hewlett-Packard's TouchPad tablets sold out quickly after its price fell from $399 to $99 in a fire sale, and the company is making a final round of TouchPads before discontinuing the sale of webOS devices. Android tablet makers are also waging a price war in order to find acceptance among users, with Honeycomb tablets such as the Toshiba Thrive available for as little as $400 on Amazon.

The $700 price for AT&T and HTC's Jetstream is a mistake as it's quite clear tablet prices are softening, said Roger Kay, president at Endpoint Technologies Associates.

"They are going to get egg on their face just like HP did with the TouchPad," Kay said. HP's TouchPad was a failure when originally priced at $499, but sold well only after the price plunged to $99.

The iPad sets the bar in terms of price and performance, and prices can't go higher than that, Kay said. The iPad 2 is priced starting at $499.

"I'm convinced that if you want to sell [a tablet], you have to make it a steal," he said.

The average price consumers expect to pay is around $256 for a tablet, said Sarah Rotman Epps, senior analyst of consumer product strategy at Forrester.

But operators such as Verizon and AT&T are trying to establish a premium value for LTE broadband service, Rotman Epps said, adding that there was no clear data yet on tablet sales with respect to LTE. But going by the track record of the previous Android tablets such as Motorola's Xoom, the price of Jetstream will ultimately fail to capture the larger market, Rotman Epps said..

Kay agreed, saying AT&T is clearly trying to sell 4G LTE through the rich price of Jetstream, but consumers care little. With the fast LTE data transfer speeds, a 3GB monthly data plan could also be limited. AT&T will ultimately have to drop prices on the tablet, Kay said.

"That's marketing 101, but it's not good in a market where competitors are offering tablets in different flavors and at cheaper prices," Kay said.

The tablet weighs about 1.5 pounds (0.7 kilograms). It has a MicroSD slot for up to 32GB of storage, a 1.3-megapixel front-facing camera and an 8-megapixel rear-facing camera with dual LED flash.

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