Tablet makers are moving toward selling only models equipped with cellular radios and away from having separate Wi-Fi-only units, as the added cost of 3G hardware falls below $30, an AT&T executive said Tuesday.
Most tablets still are sold with only Wi-Fi. For Apple’s iPad, by far the dominant tablet, no more than half of the units sold are equipped with cellular, said IDC analyst Bob O’Donnell. Buying a 3G or 4G model adds cost both for the hardware purchase and for the service plan.
But AT&T is happy with the sales rate of cellular-equipped tablets and the adoption of data plans for them, said Glenn Lurie, president of emerging devices, in an interview at the CTIA Wireless trade show. And the carrier is talking with manufacturers about making their product lines consistently equipped for 3G or 4G, he said.
“All devices should have all capabilities built in from the beginning,” Lurie said. One reason that hasn’t become a reality is that the additional hardware has been too expensive in the past, he said. “The ecosystem was a little out of balance.”
Now, the cost of a 3G HSPA+ radio to device makers is only about $30 on an average, Lurie said. (However, the difference for an LTE radio is still around $60 to $70, he said.) As the cost premium gets thinner, he expects tablet lineups to consolidate on a single design with both cellular and Wi-Fi.
One tablet sold by AT&T has already gone that way, Lurie said: The Pantech Element, a combination Wi-Fi and LTE product that AT&T offered for $399, and which has already sold out, according to Lurie. But there are other such products in the planning stages, he said.
Offering just one model of each tablet would save the OEMs (original equipment manufacturers) a lot of cost for marketing and keeping inventory of multiple designs, Lurie said.
One barrier to Lurie’s vision may be Apple, which still adds $130 to the price of each given iPad model for a 4G radio. While a majority of tablet makers charge consumers $50 more for a cellular-equipped model, “others have made other decisions,” he said.
Apple’s dominance of the tablet market makes any effort toward single-design tablets harder, IDC’s O’Donnell said. Some makers of Android and other devices may converge on one model, but even for them, a $30 component is still too significant to simply absorb into the cost of the device, he said. “OEMs sweat over nickels and quarters,” O’Donnell said.
The key to getting more consumers to buy cellular-equipped tablets will be carriers offering data plans that cover more than one device, O’Donnell said. “All they have to do is open up those data plans,” he said. “That’ll solve it overnight.”
AT&T’s Lurie said the carrier is still studying multiple-device plans and has no plans to announce at this time.