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Invasion of the budget tablets

Last week, I received a press release from a company called D2 announcing its new 7in tablet (16GB) with Android Jelly Bean 4.1 for $89 (£59). This new US tablet also has a microSD slot so you can upgrade it to 32GB of memory, making it a very versatile yet low-cost tablet solution.

That same day, I got a note from HP introducing its new 7in tablet, the HP Slate 7, which also runs Android Jelly Bean 4.1, for $169 (£112). Unlike the D2, the HP Slate has a 3-megapixel rear-facing camera and a VGA camera on the front. It goes on sale in April in the States, with UK availability to be confirmed.

As you most likely know, Google has its own 7in budget model called the Nexus 7 and Amazon has the 7in Kindle Fire HD (costing £159). And of course there are non-branded tablets selling on the cheap.

With all of these affordable offerings, it seems pretty clear that the invasion of smaller tablets is in full swing.

Although this race to the bottom will not deliver any major profits for manufacturers of these cheap tablets, it is great news for consumers. It also suggests that we are about to enter the "tablet-in-every-room" phase, which could profoundly accelerate the integration of all things digital into our lifestyles.

Personally, I already have a tablet in every room of my house. Some are iPads and some are Android tablets of various OS flavours. All have at least two common denominators: A browser and identical apps. Well over 100,000 apps are the same on Android and iOS, thus making it possible to have, for example, my Evernote files, the Kindle reading app, or news aggregator apps like Flipboard and Pulse on all of my tablets, no matter the operating system.

While each OS has its distinct advantages, all of these tablets are small, lightweight, and very portable. This makes them ideal for listening to music, watching movies or TV shows, and reading books or magazines on whichever tablet is the closest at the time of need.

In our research at Creative Strategies, we are already seeing US households that have two tablets, and even some with three tablets, for both personal and communal use. With inexpensive tablets now becoming commonplace, it won't be long before we see multiple tablets in most homes.

With that said, it is easy to imagine how cheaper 7in tablets could dominate the market by the end of this year. In fact, I predict that they will represent 65 per cent of all tablets sold in the United States by the end of 2013. While I see Apple's iPad mini as a major player in this smaller tablet arena, Android is the OS of choice in the low-end of the tablet space.

The fact that smaller and cheaper tablets could represent a major market, however, puts Microsoft in a rather sticky position. It appears that the company has put most of its R&D and marketing efforts into larger tablets thus far, although I hear that Windows Blue, a reported Windows 8 follow-up, is designed to be used on 7 to 10.1in screens.

In some ways, this is not a surprise. Microsoft is still stuck on replicating the PC experience in these new form factors; the Surface Pro and the Surface RT are designed to be PCs that can double as tablets. Let's hope Windows Blue comes out in time to give the company a fighting chance in this competitive 7in tablet market that is already dominated by Apple and Google.

However, as Apple and Google have shown, a true tablet goes beyond the traditional PC metaphor by delivering a unique experience that only mimics the PC experience in its browser use. While slates do have apps like a PC, the apps are created from the bottom up and are optimised for the tablet. The good news is that Windows 8 tablets also have optimised apps, but the bad news is that they come with a lot of compromises due to the need for backward compatibility with existing Windows apps.

Another result of this onslaught of cheap tablets is the possibility that they could be subsidised. This could come from media companies that have a lot to gain through some sort of subscription program. For example, for $14.95 (£10) a month, there’s a great app called Next Issue that delivers all-you-can-read access to more than 80 magazines, including People, Esquire, Sports Illustrated, The New Yorker, TIME, Wired, and dozens more.

If a tablet can retail for $89 (£59), its cost to Next Issue could be no more than, say, $60 (£40). The company could buy these in huge quantities and then give them to new subscribers who agree to a 24-month subscription. This would attract more potential customers, driving up subscriptions and covering the cost of the free tablets in the process.

I could imagine a cable company doing something similar, giving their users a mobile cable TV experience and ensuring that more eyeballs see commercials more often, something that makes cable companies even more appealing to advertisers.

The low cost tablet invasion is upon us and it will only help drive more and more people to use tablets as their primary mobile computing device. These cheaper and smaller tablets could soon become integrated into the tech fabric of our lives and hopefully drive new apps, services, and uses to enhance the way we work, learn, and play.