India Gets a $35 Tablet: Is The U.S. Next?

NEW YORK (MainStreet) -- The Amazon Kindle Fire promises a lot of great features, including free cloud storage, an innovative Web browser and access to all of Amazon's(AMZN) multimedia services, but the most eye-catching part of last week's announcement was the price point: The device will cost just $200, far less than the $500 base price of Apple's(AAPL) iPad 2.

That's hardly the cheapest tablets can get, though. The Indian government has announced that a long-awaited $35 tablet intended for students will be coming out next month.

Amazon's Kindle Fire tablet may seem cheap, but not when compared with a new tablet program in India.

Yes, that's $35, about what an American might pay for a bottle of decent wine at a restaurant. The tablet will have Wi-Fi, a front-facing camera and the ability to read PDFs, among other basic features. It won't be anything close to the iPad when it comes to computing power and features, but the Indian government thinks it can be a powerful tool for its students.

So would there be any market in the U.S. for this kind of super-cheap tablet? After all, consumers can already choose between sleek smartphones, cheap feature-phones and everything in between. It stands to reason, then, that we could someday see a similar range of tablets -- with the iPad as the high-end option, the Kindle Fire as a more moderately priced device and something resembling India's tablet for students and low-income consumers who want some mobile computing power.

Ross Rubin, an industry analyst for the NPD Group, points out that there are already some super-cheap tablets in the U.S., albeit not as low as $35.

"It's quite possible to get a basic tablet that gets you to the Web and plays media," he says. "But there are compromises -- they have resistive touchscreens [requiring pressure or a stylus] instead of capacitive screens [which only require a touch], and not the fastest processors." He says that some large drugstore chains started offering such tablets last Christmas, but that many customers were dissatisfied and returned the products at high rates. Wal-Mart(WMT), for instance, sells this 7-inch Android-powered tablet for just $97 (though in fairness, it's received decent customer reviews).

It's at least a start. And as production costs come down, we could see similar tablets being employed in much the same way India apparently intends to use its own cheap tablets -- as a government initiative for educational purposes.

"As the cost of color displays continues to decrease and touchscreens get better, it would make a lot of sense for many families to own one of these products, if for nothing else than textbooks," Rubin says. "The volume purchasing power of universities, school boards and states could be used to outfit their students with this kind of technology." (Indeed, one company, Kno, is in the business of putting cheap textbooks on the iPad, which could become an even more feasible investment if more inexpensive hardware becomes widely available.)

We don't expect $35 tablets to be sharing shelf space with the iPad anytime in the near future -- for now, it seems likely the iPad will remain the chosen tablet of professionals and high-end consumers, while the Kindle Fire will likely become the more mass-market gadget.

But don't be shocked if falling production costs soon make it possible for much cheaper tablets to find their way into schools.

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