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Verizon Introduces Its Own Ellipsis Tablet

Does VZ have something up its sleeve with the cheaply built, but pricey Ellipsis 7?

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Kindle Fire, Nexus, iPad, Galaxy Tab and … Ellipsis? Tablets are big business, but unless you happen to be Apple (AAPL) or Samsung (SSNLF) they’re not particularly profitable. The market is also brutally competitive, with tech blogs and consumers fixated on specs, design and price. So why would Verizon (VZ) decide to enter the tablet fray with its own device?

The Android-powered Ellipsis 7 is the first in what the wireless provider says is a new line of tablets to be featured in its stores, where the newcomer will compete head-to-head against the iPads and Galaxy Tabs it currently sells.

What makes Verizon’s move even more of a head-scratcher is the poor value proposition the Ellipsis 7 represents. It’s priced at $249 on a month-to-month contract, more than Amazon’s (AMZN) Kindle Fire HDX 7 or Google’s (GOOG) Nexus 7. But while these market leaders offer 1200 x 1920 pixel (323 PPI) displays, the Ellipsis 7 has a much lower resolution (216 PPI) display. That difference is going to be noticeable to comparison shoppers.

The Ellipsis 7 has less RAM, less storage, a slower processor. Its primary camera is a 3.2MP model, while 5MP is the norm. It’s heavier than the other tablets. It does ship with the latest version of Android — 4.2.2 Jelly Bean — but the Ellipsis 7 very much resembles a tablet designed to be competitive last year, not in 2013.

So how does VZ expect to get away with charging a premium for this thing?

First of all, you won’t find the Kindle Fire HDX or the Nexus 7 in Verizon stores — VZ doesn’t sell those less expensive 7-inch tablet market leaders. Instead, the Ellipsis 7 sits beside a collection of tablets that are much more expensive. Apple’s new iPad Air starts at $629 (for a month-to-month contract) and Samsung’s Galaxy Note 10.1  is priced at $599. The Ellipsis 7 is the cheapest new tablet Verizon offers. The only thing close to its price point is last year’s Galaxy Tab 2 ($299 new or $209.99 pre-owned).

Verizon will gladly sell a walk-in (or online) customer an iPad Air, but for those on a budget, the Ellipsis 7 is front and center as a new, 2013 model tablet with LTE connectivity at a comparative “bargain” $249 price. It has full access to Google Play and is running the latest version of Android. I’m willing to bet Verizon makes a profit margin off these that rivals Apple’s 45% margin on the base iPad Air.

But what about the more informed Verizon customer?

Article printed from InvestorPlace Media,

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