Here is an interesting question on Yahoo Answers: "Interested in cheap tablet PC....?"
Most tablet under $100 are not very good. The best way to check if they are any good is by reviewing the tablet on Amazon, if they are listed there.
As for Android is an out of date OS is a misunderstanding. Android is a family of OS, so naturally you can use out of date or the latest OS. Just like Windows, you can use the out of date Windows 95 or you can run the latest Windows 8.
Currently the latest version of Android is 4.2 Jelly Bean. When people refers to out of date Android OS, it is normally referred to Android 2.3 Gingerbread. A very old version of Android that was build for smartphone, with their small screen, opposed to tablet, with large screen. To get better experience on tablet, the minimum is Android 3.0 Honeycomb. Of course it is preferable to have Android 4.2 Jelly Bean. Android OS are upgradeable, however it is subject to manufacturer willingness to provide the upgrade. For sub $100 tablet, I doubted there is an upgrade option available now or in the future, so it is very likely you will be stuck with out of date OS in the future.
It is also important to note that when you buy a tablet, you are tied to its OS. Whether it is Google Android, Apple iOS or Microsoft Windows. It is very important that you check with the respective App Store that you can browse online to see if any application or games that you want to use or play is available for that tablet. Do a search for Google Play for Android, iTunes for Apple iOS. I can't remember the Windows App Store, hopefully others can point you to it.
Since Apple tablet are not likely to be priced under $100 and Microsoft tablet are still new and thus expensive, I am afraid you are stuck with Android tablet. Most likely the Android OS version will be 2.3 Gingerbread, an outdated OS.
My suggestion will be to increase the budget and see if you can find the lowest price on Google Nexus 7, which is currently the best Android tablet and it is upgradeable to Android 4.2 Jelly Bean, currently the latest OS.
Good Luck and Happy Hunting!
Source: Yahoo Answers
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