Can the iPad 3 Kill Tablet Contracts?

The iPad 2 sold more tablets in the last 90 days of 2011 than all Android tablets currently activated by Google. There are a number of reasons that the iPad has won over consumers, but one of the biggest reasons has been the lack of any contract.

The iPad has never come with a contract, just a $130 price premium for the 3G model. If the iPad 3 has 4G LTE connectivity, could it force Verizon and Android tablets to kill off contracts and offer better month to month pricing?

Read: Apple’s iPad 3 Event: What You Should Expect

This week we saw numerous Android tablets announced at Mobile World Congress 2012, and Verizon announced the availability of the Samsung Galaxy Tab 7.7. All of this days before Apple announced the iPad 3 event, which takes place on March 7th in San Francisco.

Tablet Contracts Aren’t Good For Android

Galaxy tab 7.7While the Samsung Galaxy Tab 7.7 looks like an awesome tablet, the pricing completely kills the deal for the average consumer. On one hand, Android tablets are coming closer to the iPad’s starting price of $499, but too many of them come with contracts that kill the deal.

The Samsung Galaxy Tab 7.7 is $499 on contract, but you must also factor in the $720 in data fees for the term of your contract, which would leave you with enough money to buy a WiFi only iPad 3 and a iPad 3 WiFi+4G, assuming iPad 3 prices stay the same.

And that’s using the cheapest monthly plan. Based on the recent Verizon retail experiences of friends and family, I’d bet many new tablet owners walk out of Verizon with more data than they need.

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Android is great and all, but to the average consumer and business user it doesn’t offer a premium over the iPad. Even if you compare the $699 off contract price of the Droid XYBOARD 10.1, which allows you to use it without a contract, most users won’t pay $70 more. Not even the stylus is enough to draw in the average consumer.

Kevin C. Tofel at GigaOm called for tablets on contract to be abolished this week, highlighting many of the reasons that tablets on contracts don’t work. In addition to price, Tofel hits the nail on the head calling out the lack of family data plans and the fact that most consumers already have tablet features and a mobile hotspot on their smartphones.

contractHonestly, shouldn’t I be able to buy a bucket of data for all my mobile devices to share? I can already do it with minutes and so far Time Warner isn’t charging me an extra fee for every WiFi device I have at home (or I would be broke).

On Google+, there’s a healthy discussion going on about tablets being sold on contract, and that’s where the best point of all is. Yes, there are people who will buy the Galaxy Tab 7.7 off contract or who do want the contract, but that’s a very limited number of people.

I certainly don’t hear readers clamoring to lock in a tablet for two years when Samsung announces a new tablet every other month and major upgrades happen at least every year.

Because of all these factors, many consumers don’t consider the best Android tablets available, which gives the iPad less real competition. I know I don’t want to live in a one tablet world. Competition drives innovation, and without it we’ll see lackluster features and tablets.

Can the iPad 3 Kill Contracts?

One of the most pervasive rumors about the iPad 3 is that it will come in a iPad WiFi + 4G model, a first for an Apple product.

Assuming the iPad 3 price remains the same with 4G LTE, it will be the most affordable off contract 4G LTE tablet Verizon offers, and will put incredible pressure on Verizon and Android tablet manufacturers to offer cheaper, off contract tablets.

I don’t expect to see this happen overnight, but with 4G LTE the iPad 3 has a chance at tuning the Android tablet table in favor of the consumer.

Would you be more likely to buy an Android tablet if it didn’t have a 2 year contract?

Contract Photo via sxc.hu

  

Comments

  1. The1Llama says

    iPad 3 to kill Tablet Contracts??? How about KILL all further development of ANY Android Tablet! 

    Face it, the iPad is the iPod of the previous 10 years when the ZUNE and other mp3 players were trying to compete with Apple, but ended falling two steps behind with each model! The only thing that has a CHANCE to compete is a Kindle and that’s only if Amazon can make up the $$$ they lose building them with eBook sales.

    I predict by the end of the YEAR Apple will have another iPad version out, plus the basic iPad2 will be down to $299, and a special EDUCATION version down to $199, thus KILLING off even the KINDLE market!

    PEACE!

    • Justin Williams says

      To compare tablets to the iPod just doesn’t make sense. The iPod killed Zune and other mp3 players not because they were first but because they developed the itunes ecosystem and even Zune didn’t quite have an answer for that at launch.  Android has an ecosystem in place already, the problem is that android tablets at least initially were buggy and hard to use (they still are to an extent).  Android tablets will continue to be released, but just like it took android smartphones nearly 2 years to become solid enough to really knock the iPhone from the top spot it will take android tablets a while.  But with Windows tablets coming later this year Android needs to make in-roads and the carriers and manufacturers are going to have to start seriously looking at competitive pricing or the carrier and android itself may be left out of the loop.

      • The1Llama says

        You make some good points and unlike a lot of people who post comments you have some GOOD FACTS to back up your points! I guess I should have implied that the way that Apple tied iTunes to the iPod was the reason all the other mp3 players failed.

        I still see Apple as being far ahead of anybody else in the Tablet market from the way iOS, iCloud, and the upcoming OSX-10.8 (Mountain Lion) will Sync users over the whole product ecosystem (iPhone, iPad, and Mac). They also are able to CONTROL the whole system (product & software) so that ALL the devices (New & Old) work together! Even almost 4 year old iPhone 3GS’s can run the latest iOS5 version.

        This is the BIGGEST problem with the “Mythical” Google marketplace (phone & tablet) because the device manufactures keep changing the specs and Google can not keep the device ecosystem SYNCED like Apple can with iOS. Heck, even Amazon has their Kindle’s on a modified Android/OS that may not be compatible or able to run the next Android version!

        I think your right though that Microsoft will be able to keep more users tied to their ecosystem IF Window 8 does what they have demoed and discussed. The problem is that MS will ONLY control the OS side (& maybe the App store side) of the ecosystem, but NOT the Tablet or Phone side and it will take at least a YEAR to build up enough momentum to even catch up to Android.

        So, as I predict, Apple will have a $199 iPad Tablet for sale by next year, thus putting pressure on even Amazon Kindle, and even Samsung is finding that even if they are able to BUILD a Tablet to match an iPad! 

        This is going to get worse because Samsung, HP, and others (except Amazon) can’t make enough money on it to be practical because Apple and their $90 billion in the BANK can BUY their own processing plant (from Sharp) to build the new iPad HD screens (& future iTV’s) that Samsung used to get paid to build.

        PEACE!

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  3. DNel says

    When I purchased my Galaxy Tab 10.1 I did not want a tablet with 3G, 4G, LTE. I am rarely away from a wifi hotspot at home (my tablet stays here 99% of the time) or work. My phone can handle all the carrier data that I need and my tablet uses wifi. There is no way that I’d pay for another data plan just for my tablet, even a month to month plan. As pointed out in the article, it would be cheaper to just activate the wifi hotspot on my phone (month to month) than get an additional data plan for a tablet. Being on Sprint I have unlimited data (which could change) and don’t have to worry about being throttled or capped. If I were to get an iPad, I still would stay away from data plans and stick to wifi only.

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