Samsung Hopes There’s Room in Tablet Market for a Wi-Fi Galaxy Tab

Samsung said on Wednesday that it will start selling a Wi-Fi-only version of its 7-inch Galaxy Tab beginning Sunday.

The Android tablet will sell for $349, which is higher than the price many cell phone carriers are charging for their versions, though to get the lower prices, consumers have to sign up for a two-year contract.

Although the tablet was among the first iPad rivals to show up at cellular carriers, it now faces competition both at the carriers and from other Wi-Fi only tablets. The Motorola Xoom is expected to be the first in a wave of tablets running the tablet-optimized Honeycomb version of Android. In addition, HP is prepping a webOS-based TouchPad tablet and RIM plans to start selling its PlayBook tablet this month. And all of those are still chasing the leader–Apple’s iPad, which was updated in March.

As a result, prices on the Galaxy Tab have been falling as carriers adjust to the competition and prepare for the newer models. Sprint and Verizon, for example, have cut the price to $200 after initially selling the device for as much as $500.

Samsung itself has pledged to bring out 8.9-inch and 10-inch models this summer that also pack the newer Honeycomb software.

Indeed, the company went back to the drawing board to come up with a thinner, sleeker design after Apple introduced the iPad 2.

It remains unclear just how big the appetite for the Wi-Fi version of the older 7-inch model will be. The only retailers announced on Wednesday were Tiger Direct, CompUSA and Circuit City (which are in fact all part of the same company, which sells primarily online).