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The shaky coexistence of tablets and smartphones at the carriers

By | June 10, 2011, 5:12am PDT

Summary: I have spoken off the record to quite a few staffers at the carrier stores, and a distinctive picture of how tablets are affecting carrier business is beginning to emerge.

I hang out at wireless carrier stores a lot; they likely think I am a lurker of some sort up to no good. I like to keep up with what the carriers have going on in the smartphone space, and lately turned my attention to the tablet offerings they have. I have spoken off the record to quite a few staffers at carrier stores, and a distinctive picture of how tablets are affecting carrier business is beginning to emerge.

Tablets are the red-headed stepchildren of the carrier world as they don’t generate new customers for the most part. Staffers made that clear — a customer has to come in with a specific tablet in mind or there is little chance of selling them one before leaving the store. It often comes down to the sales rep convincing the customer to buy the particular tablet they came in to see, or losing the sale altogether. The reps find this much more difficult than the smartphone business, where they have a decent shot at convincing the customer to look at a different model should the one they came in to see not appeal to them in the store.

Tablets don’t present an opportunity to upsell prospective buyers, which is a big part of the wireless carriers business. Sales reps admitted they get recognition when they sell a smartphone customer additional services like big data plans or more voice minutes. Tablets in the U. S. don’t do voice nor texting so the opportunity for selling additional services is much smaller. Customers either take a tablet home with the basic data plan or most likely don’t take it home at all.

Most carriers are offering Wi-Fi-only tablet models in addition to the 3G-enabled models, and these are a dicey sales proposition for the staffers. If you can buy an Android tablet in Best Buy with Wi-Fi, what’s the benefit to buying it at the carrier? There isn’t a good response to that question to give prospective buyers, other than because you’re here in the store right now.

New customers don’t seem to be going into the carrier’s retail stores for a tablet. I was told across the board that tablet sales are being made to existing phone customers almost without exception. The tablet offerings are not bringing in new customers to the carrier, a big goal of them all. This may have to do with the lack of big promotions in pricing for the tablets, according to one sales rep. Or it may just be that customers have it in mind that you go to the carrier store when you need a phone, which doesn’t occur to them for a tablet.

One of the most interesting things that cropped up with this behind-the-scenes lurking experiment of mine was how much more likely customers were to buy carrier-branded netbooks than tablets. Customers are still coming to the carrier retail stores specifically looking for a 3G-enabled “laptop”, and they are selling them. Sales aren’t brisk by any means, but customers were considering netbook purchases at almost every trip I made to the carriers for this research. The bigger variety in netbooks a carrier had available, the more likely they were to close a sale according to reps. Everyone I spoke to found the netbooks so much easier to sell that they’d much rather try to sell them than tablets.

This is not scientific research by any means, and as all conversations with carrier representatives were off-the-record not the official position of the carriers. What I witnessed first-hand and the many conversations I had with store personnel painted a consistent picture of the shaky coexistence of tablets and smartphones in the carrier stores. These observations are independent of tablet make and model and pricing.

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James Kendrick has been using mobile devices since they weighed 30 pounds, and has been sharing his insights on mobile technology for almost that long.

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James Kendrick has no affiliations or relationships that need to be disclosed.

Biography

James Kendrick

James Kendrick has been using mobile devices since they weighed 30 pounds, and has been sharing his insights on mobile technology for almost that long. Prior to joining ZDNet, James was the Founding Editor of jkOnTheRun, a CNET Top 100 Tech Blog that was acquired by GigaOM in 2008 and is now part of that prestigious tech network. James' writing has appeared in many print publications: Smartphone and Pocket PC Magazine, Information Week and Laptop Magazine to name a few. James' coverage of the mobile technology sector has regularly appeared in the New York Times, Salon.com and CNN/ Fortune online. Not just a writer, James has filmed numerous video reviews and how-tos that have garnered well over a million viewers. He has appeared on local news segments and been interviewed by the Associated Press on mobile technology topics. Additionally, James has been podcasting about mobile technology for years.

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RE: The shaky coexistence of tablets and smartphones at the carriers
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I still have the sinking feeling that the OEM's still don't get it.
The IPad is popular because it's instant on, and lightweight enough to carry easily -- and -- has a long battery life, and doesn't annoy & frustrate the user with poor responsiveness, and buggyness.

A device that gives consumers the ability to stay connected, has a long enough battery life not to worry the user at the end of the day, and doesn't piss off & frustrate the user with 8 hour personal troubleshooting and maintenance issues, and an over 1 minute wait to check email, etc... Is that also too much to ask?

I don't think the _main_ reason for the popularity of the IPad tablet is because of the form factor, but rather for the reasons above.
@voltrarian
And why does anyone have to be "commected" for 8 hours? The iPad is a portable media device and nothing else and the people that think they have to be using it constantly are obviously not focused on much of anything else. Got a career? Planning to get ahead? How much time are you going to spend on entertainment? Got a family? Does being on an iPad all the time meet the needs of the family? Etc, etc, etc....ad nauseum.
@Romas27 The ability to be connected for eight hours actually translates into being able to turn it on and use it at a moments notice without having to worry about whether or not you've charged it. This is the primary reason I got my netbook. I can leave the power supply at home and use the thing for writing and photo editing at lunch AND at my after work hobby session for two or three days straight without a recharge.

I haven't used the iPad, but I understand it delivers similar performance. What we need is a netbook with the performance, reliability and weight...

Or, right, that's my netbook, an Eee PC. Running an old tried and true OS (doesn't matter which one, there are many), it hasn't given me any problems yet. And it's light enough.
@grassdogstudio
Why I switched from my ASUS UL to my ASUS tablet....
chuckle happy

Has all the netbook stuff, lighter and I can slide easily into whatever type bag I have.

Check one out... glad I did.

grin
@voltrarian

I've got first gen iPad and let me tell you while iPad's battery is good relatively but it aint that much better!
The fact that iPads have cut into netbook sales has led some analysts to project the eventual demise of netbooks and their replacement in the market by tablets.

At the same time we see snarky arguments in these pages between people who throw tomatoes at iPads because they are not "real computers," i.e. they don't do Office, and those who say the other folks "don't get it" and that tablets aren't supposed to be computers; they are consumer electronics appliances.

This suggests that what Apple found was an unserved market: people who were buying netbooks because even though they weren't ideal, they were the closest thing to what they wanted. Which turns out to have been a non-computer consumer electronics appliance that does the "fun" stuff that computers can do, but without having to put on a propeller beanie to keep it running.

What you see in the stores is that there is a second group of netbook buyers who are not open to tablets; they really do want an ultra-portable Windows/Office engine. If true, we should see the "cannibalization" of netbooks by tablets level out at some point, leaving a still-sizable netbook market. Also if true, Google is driving into the ditch with Chromebooks: they are neither ultra-portable Windows/Office engines, or super-portable "fun".
@Robert Hahn
I agree. There may be room for many different markets, though. I like my netbook, but I want an ereader too. I think that segment will continue to be strong (and it's very similar to the tablet).
@Schoolboy Bob
And that's why I like and use a Nook Color in addition to my (older) HP TX2500 tablet computer and tethered smartphone.
@Schoolboy Bob , I think most current netbook users would like to use a tablet variant such as the Transformer. It would serve all their needs and more. The only barrier to entry vs the netbook is the Transformer price and also current unpolished Honeycomb OS.
@logic103
Will agree....
Picked mine up and is doing almost all I ask....
I'm using it in place of my UL atm and it can accomplish 90%+ of what I would do on my UL.
Nice grin
@Robert Hahn The problem, not just with Apple or Android tabs is that they are WAY too expensive for toys. OK, they aren't supposed to be PC's. I get that, and accept it. But why would I pay $600 for a "toy" or entertainment device, when I CAN buy a decent laptop for that price and have both? I don't see the value in tablets currently.
@timspublic1@...

Because enterprise buyers aren't using iPads as toys, they are a powerful tool when connected to the right backend.

How many sales will it take for the "only useful for consumption" brigade to see the future of computing.

25 million iPads and counting.
@Robert Hahn " they really do want an ultra-portable Windows/Office engine. "

1. Bring back the MID and UMPC!!!
2. I agree with everything you said, except some of us want an ultraportable Linux/OpenOffice engine. happy
@jgm@...

Android feels very similar, but if you really want to be a purest, people have loaded Ubuntu on Android tablets.

Just remember, just because you can doesn't mean you should (LOL)
@Robert Hahn
I basically agree with you, but wanted to add my recent experience. I just bought an Acer Android tablet and as a business user, I'm trying the experiment to see it really will let me leave my notebook behind.

So far, I love the lighter weight and (almost) instant on.

While I wouldn't want to create 100 page, heavily formatted doc's on the pad, the $25 office suites and soft keyboard are perfectly adequate for updating a doc or creating a quick report that isn't an email.

I have both corporate (MS Exchange) and personal mail showing up on it.

So far, I am thinking that these new Honeycomb tablets may just be the tipping point to move me from a notebook/netbook to a tablet.

And to the Apple crowd, the biggest problem with the iPad in this space is Steve Jobs insistance on simplicity at the cost of flexibility and security. The iPads are great consumer units, but they just don't meet the needs of the corporation to secure intellectual property.
@sbf95070
Finding the same after trying an iPad for a while.
Now have an ASUS Transformer and finding it is much more flexible, allowing me to do a broad range of work activities - much more so than the iPad.
happy
@sbf95070
I see a lot of merit in what you're saying and what others have added to the mix. I'd really be happy with the form factor of the iPad running a real Linux. This would provide security and real apps. It should have the touchscreen keyboard but also accept a small blue tooth or USB keyboard for real content creation when you're in a suitable location.
0 Votes
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Data Plan Prices
ptrader 10th Jun
Until the carriers allow consumers to pool data plans across multiple devices, the appeal of 3G/4G capable tablets are going to remain a niche item.

I HAVE to carry a data plan on my smartphone these days (required by the carrier). Forking out a separate fee for the tablet makes one of them feel rather obsolete - and expensive.
@ptrader
This is a good point as I use boost with my Evo and have unlimited data so why would I want a new plan with a contract for what I already pay. i prefer buying no contract units or off contract units as the 2 factors of the required contract and a seperate data plan with such high prices for such little data make it a no. I do have a samsung Tab and an xoom I bought from ebay new in the box no contract. The Tab is a Tmobile rooted and unlocked now which I bought for $175 shipped and my xoom is a verizon 3G/Lte upgradable unit I got new in the box shipped for right at $325 no contract on ebay. I have alway bought from no box stores or carriers as it's much cheaper no contract and same item. i then use my evo which is rooted and turn it on as a wifi hotspot so no need for a contract of data extra plan. i have the $50 a month with shrinkage and now pay $40 and in 6 months it drops to $35 for unlimited talk text data and I have the option of 4G by the day if I want it.
@ptrader
Absolutely agree!.
As a result, both of my tablets are wifi.
I would trade in my "unlimited" ATT plan for a 6-8 gig all device plan with the ability to add on or a plan where I can buy in 1-2 gig chunks as I need them.
Either would be a vast improvement and likely draw in more carrier level buyers.
plain
0 Votes
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Tablet - Wi-Fi only
tpatric99 10th Jun
I bought a Xoom wi-fi at Best Buy rather than at Verizon, because I didn't want to be annoyed by their sales pitch, and because I earned reward points. I have no need for the 3G because of the abundance of hotspots and because I can tether to my smart phone. To me, paying extra for 3G/4G was wasteful.
@tpatric99 Sure, wasteful expense to the consumer, but a cash cow in increased ARPU to the carrier, which is the whole point of "one device, one line of sercice." Otherwise, they would have implemented shared data pools for multiple devices long before now.
@tpatric99 Exactly! A second data plan? Keep the 3G tablets!!! Not useful, just expensive to buy and to own.
0 Votes
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Very interesting article...
FeralUrchin Updated - 10th Jun
It's good to gain some insight into the carriers' perspectives. I think it's true that with tablets Google/OEMs/carriers are mainly targeting consumers who want a "non-computer consumer electronics appliance"--and a throwaway one at that.

I bought my Galaxy Tab thinking I was getting a small form factor computer with an "open source" OS. Big mistake. Besides being "locked" against user administrative access (needed, for example, to remove unwanted crapware), there is nothing I can see on the horizon from any of the three parties above that suggests long term support for the device--certainly no Android bug fixes or updates for existing users and no OEM or carrier interest or competence in providing support with Android issues.

It's likely that the involved vendors expect you to discard your tablet at the end of your data contract, like you would a cell phone, and upgrade to a new device with the "latest and greatest" hardware and Android version.

I think the US carriers could do themselves a favor, however, by offering voice calling service on tablets, which is available to tablet buyers in Europe and Canada. I'd still keep my cell phone for it's small shirtpocket size, but I'd also be willing to pay to have voice calling activated on my Galaxy Tab for additional flexibility and convenience. It would be especially cool if either device could forward calls to the other.

Thanks to the author of this article for providing insights into the world of tablets beyond purely technical matters.
0 Votes
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"Or it may just be that customers have it in mind that you go to the carrier store when you need a phone, which doesnt occur to them for a tablet."

It wouldn't occur to me. In fact, even of the four occasions when I've bought a wireless phone, only once did it happen in a carrier store -- and that only because that carrier had bought out my original carrier and shut down the network that supported my phone, while I still had several months on my contract. No one at the new carrier seemed interested in helping set up a contract so I could get a phone that worked until I found one carrier store that had its act together.

Since then we've shopped at carrier stores, but wound up buying either online or at a big box electronics retailer. Even the online purchases weren't consistent; the first was from the carrier but the second was from the manufacturer.
I have had PC's, Mac's, netbooks, IPhone, Blackberry models and Android. I rate them in this order, best at the top: Mac's, IPhone, Blackberry, Adroid, PC's, netbooks. I have not yet gotten a tablet, but it will be an IPad and Wifi, not 3G. I would love to have 3G on a tablet, but I don't want to be stuck with a carrier. That is one reason I love my built-in-Wifi Kindle.

I think a lot of people now are more educated on products before they go into stores. Normally I know exactly what I want before I order a product. In fact, I normally know more about the products they sell than they do. I have had to show the salespeople how to use features.

I hate the netbooks just like I hate PC's but more so because they don't have the power needed to do so many things.
0 Votes
+ -
Tabs
rmoroney 10th Jun
I traded in a regular cell phone for a Galaxy tablet at Verizon as I no longer needed a personal cell. I have also been disappointed in the lack of voice capability (which I was aware of) and the lack of ability to remove the verizon junk w/o resorting to rooting. Definitely should have went with a wifi only from another retailer.
@rmoroney According to Verizon, most of the crapware is actually pre-installed by Samsung. So buying a Tab at Best Buy would avoid the Verizon 3 or 4 apps, but leave you with many more.

I'm told by the Best Buy guys that the iPad has little or no crapware. Haven't personally confirmed that, though.
@FeralUrchin
True, but it has lockware (need to jb it to do any customizing at all).
Try an ASUS or ACER tablet...
I have the ASUS Transformer (no crapware) and an iPad.
While the iPad is a great consuming device, I am having a better experience with my ASUS.
One note, while you can accomplish 80% on your iPad without really digging into it (courtesy of iTunes), for the ASUS, follow the initial setup instructions. It requires a small bit of setup; wifi only is needed (no iTunes). Nice item for the ASUS, Amazon has a "Free app a Day" which I take full advantage of!
Either way, enjoy.
grin
0 Votes
+ -
Square peg in a round hole
wmarkjones 10th Jun
The problem is perception -- the customer is thinking "phone", and the salesman is thinking "upsell". Yeah, right. Who's going to win that contest? I believe it's going to be difficult if not impossible for any carrier to significantly change a customer's perception of what a tablet is at this point.

However, when tablets become what they really should be, instead of the toys they are now, the picture will change dramatically. When tablets are presented in their true light, that of an intelligent, mobile computing device capable of being your desktop PC that fits in your purse or under your arm, the entire picture changes. But at this point, tablets are nothing more than a klunkier version of a smartphone, which people primarily use just for media display and Internet browsing. Ho, hum -- yaawwwn. .... hmmmm ... Where was I?

Oh yeah .... and with most tablets, you can't even use them as a phone! Give me a break.

The round hole is the beauty of the future power of mobile intelligent computing. The square peg is Apple's and Google's kludgy idea of what a tablet should be now. Like I said, give me a break.
I understand the reasoning that the big four carriers have put out for not allowing voice and texting on tablets (not wanting to cannibalize their phone business)...but why hasn't one of the smaller carriers broken that? There's a significant market out there that would rather just use one device, and the hardware in tablets is easily capable of the work...
@scarbarough Great point. It seems to me that any carrier--large or small--could instantly grab more market share by enabling voice on tabs that have the hardware for it.

I'm not even convinced there would be that much cannibalization, since many of us would continue to want the smaller form factor cell phone for much routine carrying around.

On the other hand, somebody is offering a smartphone that plugs into the back of a tablet-sized display, essentially turning the smartphone into a tablet computer. Seems like a cool idea.
@FeralUrchin
ASUS is launching one later this year I think, mayber early 2012....
@rhonin
Only concern is the "tether" rule...... sad
Wasn't it last year or so that someone predicted this exact scenario, and was laughed offstage? Tablets are still very much specialty and niche items - and are likely to remain so until that portion of the market seems close to saturation. Non-personal apps like factory floor management and mobile order processing still have a lot of room for tablet activity.
Many like myself predicted a year ago that these alternative tablets to the iPad was going to be a none-starter in carrier stores. The majority of consumers were not going to walk into a carrier store for tablets, they're not phones requiring data and voice just to use. It was predicted that consumers were going to reject the idea of paying for a separate contract just for their tablets. The original iPad even showed that consumers preferred the wifi version over 3G. Yet these greedy carriers continued to stuff their stores with expensive tablets that required separate contracts. Falsely thinking that they will sell as well as phones sold.

Meanwhile the iPads are still seeing long lines across the globe.
@dave95.
Think most consumers saw the "Doom on Xoom" by Moto..
chuckle wink
I just got a Samsung Galaxy Tab with 3G on Bell in Canada. I got it for $50 on a 3 year contract, $20/month for 500 gb. There's no way that I would have gotten the tablet at all if it hadn't been this price. I got it at Future Shop, a chain owned by Best Buy. Our carriers do allow sharing of data plans between gadgets for a $10 fee. We can also tether our iPhones and Android phones for free, so I can use my phone if I think that I may go over. I find that you generally get a better deal from the big box stores. Bell still wants $199 and a 3 year contract if you buy it directly from them.
@Muttz
Love something like that here in the US.... but Verizon and ATT have not yet "seen the light" in the share arena. sad
i don't get it, don't carriers offer subsidies for signing your life/contract away. in the uk at least for like ?25($40 i guess) a month you get your ipad/xoom for free. surely this happens in the states, therefore a reason to buy tablest from a carrier
@beenman500
Not that deeply.....
and in the US if I have a tablet and a phone, they each have unique data plans. No sharing allowed, unless you pay for that priveledge too.

Either way, it spells ouch! over here.
sad
Android's Wifi tethering makes 3G tablets all but worthless. I just enable Wifi tethering on my HTC Desire and I'm good to go.

Wifi tethering (except on iPhone) is largely free in The UK, making sure you don't go over your limit of course.
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