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The Xoom was Android's first iPad rival — priced above the iPad and it sank

Motorola's Xoom, the first Android Honeycomb tablet, cost more than the iPad 2 it chased; quarterly shipments fell from 440,000 to 100,000.

Motorola · 2011-02-24

What happened

In early 2011 Motorola launched the Xoom, the first tablet to run Android 3.0 Honeycomb — Google's answer to the dominant iPad. Reviewers praised its hardware, but the launch pricing drew criticism because it cost more than the iPad 2 it was meant to beat.

The Xoom shipped at $799 with 3G, and even the Wi-Fi version at $499 topped Apple's comparable model. A tablet running an ecosystem that was still thin, priced above the market leader, had little to offer beyond early adopters and Android loyalists.

After a start of roughly 250,000 units shipped in Q1 2011 and 440,000 in Q2, sales fell off a cliff — 100,000 in Q3. Price cuts in July 2011 failed to change the story, and by Q1 2012 shipments were back around 100,000.

Motorola replaced the Xoom with the Xyboard before the year was out. The first serious Android tablet had proved that hardware praise meant nothing when the price and the apps both trailed the iPad.

Why it happened

  • Motorola priced its first tablet above the iPad 2 it was designed to beat, handing the market leader the price advantage on day one
  • Android 3.0's app ecosystem was still thin, so a premium-priced Xoom offered buyers less than the cheaper iPad
  • Shipments collapsed from 440,000 in Q2 2011 to 100,000 in Q3, and price cuts could not bring buyers back
What it costShipments fell 440k→100k per quarter; replaced in a yearcostly

The lesson

A challenger cannot charge more than the incumbent unless it offers more. Motorola's Xoom was praised but priced above the iPad with a thinner app store, and its sales collapsed within two quarters.

Sources

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