Samsung Electronics has cut the price of its 7-inch Galaxy Tab on the heels of Apple’s launch of the iPad 2.
The decision is also aimed at easing the Korean firm's inventory ahead of the launch of its 10.1-inch Tab.
Samsung moved 2.5 million Tabs up to March 6 both domestically and abroad. Of those, Samsung sold 500,000 to SK Telecom, KT and LG Uplus.
The Tab is selling at 896,500 won domestically, down from 995,000 won, minus subsidies and contracts with carriers.
Galaxy smartphones are also available to Korean consumers at a discount, according to carriers and Samsung.
"Samsung is feeling heat from the iPad 2 and a price cut is set for a battle with Apple in the nascent market," said a high-ranking Samsung source, asking not to be identified.
"It's a smart move. Samsung is reconsidering its price strategy on the next Galaxy Tab with a 10.1-inch screen."
A Samsung spokesman said the price cuts were "expected" and don't mean anything more.
KT, the first carrier to sell the iPhone and iPad is planning to launch the iPad 2 in the next couple of months, according to KT sources. KT spokeswoman Kim Yoon-jeong declined to confirm this.
SK Telecom, now the second Apple vendor here, is expected to release the new Apple tablet following the launch by KT. A SK spokeswoman Kim Ji-won declined to comment.
Samsung released its 8.9-inch tablet at a technology exhibition in Orlando, the United States, which opened Tuesday. The Tab's third version has a slim profile at 0.33 inches, similar to Apple's iPad 2
Samsung's dual track of aggressive pricing for 7-inch Galaxy Tab and caution in pricing its forthcoming 10.1-inch tablet reflects a fierce fight that is looming between the two market leaders.
Samsung sources told The Korea Times that an internal consensus has been reached that its 7-inch tablet has been well accepted.
Apple said it sold over 14 million iPads last year, easily outperforming Tabs.
Samsung believes it is finding a springboard to further narrow the gap with Apple with its strategic alliances closer with top global carriers.
"It's not been fixed yet but Samsung is considering pricing the upcoming Galaxy Tab at the level of the iPad 2," said another Samsung source on the condition of anonymity.
"The lower pricing is litmus test ahead of its pricing decision for the Galaxy Tab 2," added the anonymous source.
Samsung plans to make more updates on its software applications for the new tablet as part of its strategy to soothe concerns over its late response for software-related updates.
Samsung said it is aiming to increase the sale of its tablets fivefold to 7.5 million throughout this year from last year's 1.5 million, the Samsung spokesman said.
Inspired by the iPad’s success, Motorola, BlackBerry maker Research in Motion, LG Electronics, Toshiba of Japan and Acer of Taiwan are other major players that have confirmed their strong appetites for tablets.
But JPMorgan warned that the global tablet market might face an oversupply due to limited growth in demand.
The U.S.-based investment bank expects 81 million tablets to come onto the market by the end of this year, while just 47.9 million, or some 40 percent will go to end users, resulting in a possible supply bubble.
