Apple rivals are flooding the markets to take on its blockbuster iPad tablet but none of them seem to be able to match the $500 price set by Apple.
The latest iPad competitor, Motorola Xoom, is priced at a substantial $800 while the Samsung Galaxy Tab costs $600 without a contract.
The fact of the matter is that Apple has developed a pretty tight and highly functional ecosystem around its products. The company uses its own software, designs its own hardware, including the A4 chips that power the iPad, has 300 strong retail outlets across the globe and on top of that, it owns its own digital media store, iTunes.
This allows the company to profit directly not spend a significant chunk of its revenue on licensing fees. Apple's rivals, like Motorola, Samsung and LG, have to share revenues with retailers and spend on software licensing, which forces them to raise the price of their tablet devices.
As Wired.com's Brian X. Chen writes, “why do you think Hewlett-Packard bought Palm to make the TouchPad? HP wanted ownership of a mobile operating system in-house to take control of its own mobile destiny and stop being so reliant on Microsoft (which, to this day, doesn't have a credible tablet strategy).”