Consumer concern over Motorola Xoom pricing plays into Apple’s hands

Motorola have suffered a setback as they prepare to do battle with Apple’s iPad devices in the marketplace: consumers think the Xoom tablet is just too expensive.

The Xoom – due to be the first tablet to run Google’s Android Honeycomb OS – has had a $799 price tag slapped on it by US carriers Verizon Wireless and vendors Best Buy, in a move that could backfire for Motorola.

Additionally, buyers will have to shell out for a data plan to enable WiFi on the product, an extra cost that consumers are far from happy about. Putting these fees in context; the basic WiFi model of the iPad retails for $499 in the states and even the most expensive iPad costs just $30 more than the entry-level Xoom, and comes equipped with both WiFi and 3G.

Charles Golvin, an analyst for Forrester Research, said that the pricing represented an ignorance of consumer behaviour in the tablet market which could force wavering consumers back towards Apple and the iPad.

“This is very aggressive pricing in the face of consumers’ clear willingness to treat Apple products as the “gold standard” and worthy of a premium,” Golvin said. “Competing products [should] represent some kind of compromise, usually reflected in pricing.”

A poll conducted in January 2011 by Golvin’s colleague at Forrester, Sarah Rotman Epps, found that the average price consumers were willing to pay for a tablet device had almost halved since June 2010. Consumers are now unwilling to part with much more than $260, considerably below going rate for a Xoom tablet.

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