How long until we see free Android or Chrome OS tablets?

How long until we see free Android or Chrome OS tablets?

Summary: Building a decent sub-$100 tablet is possible today, and recovering the cost of this over a couple of years – especially if it is tied to something such as Amazon Prime – is well within the realms of possibility.

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TOPICS: Mobility, Amazon, Android
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The way hardware is sold has changed tremendously over the past decade, with companies such as Google and Amazon now willing to forego making a profit on selling a device, and choosing instead to make up the lost revenue from advertising, services and app sales. But how long until a company takes this a step further and makes the hardware free?

See alsoSeven 'I wish I'd bought that years ago!' tech accessories

Think this isn't possible? Think again.

It's a model that has worked for smartphones for years, with carriers spreading the cost over the duration of the contract. Sure, the consumer pays the price eventually, but there's no upfront fee and no clear distinction between the fee paid for the carrier contract and the fee paid for the device.

The same would apply here. The tablet wouldn't really be free, but its cost would be recovered over the lifetime of the device.

Let's also not forget that hardware is cheaper than ever, and with tablets such as the 7-inch Kindle Fire HD now down to under $120 it's now feasible for a company such as Amazon to claw this cash back over a couple of years from sales of digital and physical goods.

Free might seem risky – and it is if the company doesn't have its alternative revenue stream ducks in a row – but there are also massive upsides.

  • It's a place the likes of Microsoft and Apple can't enter because neither firm is geared up for such a revenue shift.

  • It's a wide open space. Apart from the smartphone arena, no one's doing this.

  • It's new, and the first one into the space has a chance to invent, define it, and make it their own, while simultaneously puttng the competition on the back foot.

  • It could be tied into a membership scheme, such as Amazon Prime, perhaps as a perk for higher 'platinum' tiers.

  • It would give a device huge potential to infiltrate the market. There are a lot of hands out there that don't have tablets in them.

  • It would massively shake up the market, not just at the low end, but across the board. While I don't think that it would kill off the exsting budget market, but it would certainly redefine the market space.

  • Tie in to home automation and IoT, opening up yet potential another revenue stream.

Building a decent sub-$100 tablet is possible today, and recovering the cost of this over a couple of years – especially if it is tied to something such as Amazon Prime – is well within the realms of possibility. Also, if the device was tied to a membership scheme such as Prime, then the lifespan of the device could be better controlled.

This could also pave the way for additional revenue streams in the form of early upgrade fees and warranties.

I've mentioned Amazon Prime in this piece a few times, and that's because ultimately I think that it is Amazon that is best placed to do this give its massive hardware, software and services ecosystem.

While a device like this might not be suited to the likes of us who push the envelope of what gadgets can do – a device like this is going to have limitations built into it as to what it is and isn't capable of – there are swathes of people out there who would benefit from this, and would do more – and more importantly, spend more – if they had a device like this in their hands.

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Topics: Mobility, Amazon, Android

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26 comments
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  • Who but Amazon?

    Google may get some 'payback' from Android app/play users (except forked ones, like Microsoft or Amazon), but nothing like the profit Amazon get from buyers of goods with serious profit.

    Unless Walmart etc., get in on the act, I can't see free. Though there already several subsidized, including Tesco (UK).

    And why would even Amazon give for free, when people are more than willing to pay at least half the price for their tablet?
    Heenan73
    • Never Free

      Subsidized yes, very subsidized yes, free no. People will not take care of something if it is totally free. You have to charge a nominal amount so that people will take care of it and not throw it in the trash and get a new one just because the battery needs to recharged.
      MichaelInMA
    • as the market is now

      I think you're right. with google improving profitability of the play store and maybe a third player coming in for more competition in the future? you never know.
      theoilman
  • Who would be subsidizing them? Not the Cell carriers

    as that would force the end user into a $30 a month contract for something that works pretty much anywhere on free wifi.

    So who exactly would be subsidizing them, and how would they get their ROI?
    William.Farrel
  • How long until we see free Android or Chrome OS tablets?

    Even if its free I wouldn't use an android or chromeos tablet. I'd take one and see if I could install Microsoft Windows on it then resell it.
    Loverock.Davidson
    • why don't you

      bequeath all you money to m$ (and possibly inhell) and then jump off a cliff ?
      GrabBoyd
      • I thought that ZD|Net had standards...

        We can deal with your excessive trolling, and we can deal with your FUD slinging, but telling someone to kill themselves just because they like Microsoft?

        What the hell is wrong with you?

        Honestly though, has the community shrunk so low that they're up-voting comments like yours now?
        ForeverCookie
      • Not sound advice, GrabBoyd

        Think about it - if he jumped off a cliff, there's a possibility he'd come crashing through the roof of your cave.

        You could be seriously injured.
        William.Farrel
    • A Categorical Response

      Sir, I don't think you've thought this through. Remember when the iPad was introduced and Conan O'Brien demoed how it could be used to make guacamole?

      It's at no cost. It has some value. Whether it has value as a computing device, I defer to your judgment as to your needs. Still. Door jam. Potato masher. Practical Joke Voice Thrower. Paper Weight. Cockroach Smasher. And that's a quickly thought up list.
      DannyO_0x98
    • was interesting to see at super walmart today

      the formerly all-windows 8 laptop aisle that had been abruptly cleaned bare months ago, is now replaced with perhaps a dozen android based tablets, a chromebook, and then at the end the obligatory iPad display. There was one asus transformer windows hybrid sort of thing in the mix. That was the only windows I now see at wal mart. There may have been a couple boxed desktop PCs in the next aisle.
      drwong
      • WalMart People

        like WalMart things!
        Mujibahr
      • Ya it shows....

        ... That Wal-Mart is continuing its ways by selling everything cheap. Look at the electronic brands they sell. You won't find anything from Sony or Toshiba unless it's their cheapest models. Probably any big screen TV [47"+] is probably from some lesser brand because you won't see a well known brand with high end stuff at Wal-Mart.
        Therefore, to see Androids and crappy Chromebooks at Wal-Mart is not surprising.
        It could bite them. When they do an about face and ask for more models from the better brands, they may get shut out.
        Yes they are catering to the low and middle class.
        Gisabun
    • "see if I could install Microsoft Windows on it then resell it."

      But LD, that would violate your Windows EULA. You are not allowed to resell Windows.

      Please read your EULA.
      anothercanuck
    • microsoft

      Microsoft will make some sort of WinRTbook. When they do this, will it too be a brick? As for Win8.1 on the same hardware -- may not run, and besides, if by miracle it should run, it would not be trouble free at all -- it would be back to antivirus apps - update getting stuck - never ending updates. I think they will shoot for more of the Chrome OS approach and go WinRT software.

      The old heavier duty OS I see running without a lot of fussing and cleaning and constant updating and virus problems is OS X. I have no idea why anyone would put Windows on a lean and clean machine --- a challenge perhaps of nerves?
      mytake4this
  • I'd pass

    I'd pass because they would have to ramp up the spying to cover the cost.
    Buster Friendly
    • Insert tinfoil hat

      you fanbois are funny....
      ;)
      daikon
      • They don't read their EULAs, either.

        Because if Buster Friendly had read the EULAs from whatever companies he likes, he would find those companies have the right to gather all the info they can, and do whatever they want with it.
        anothercanuck
  • Never Say Never, But

    As to data providers, currently they charge an amount that provides a return I suppose they like. If they had to maintain margin while acquiring up front the users data device, the price would go up. Here's the question we need to ask: is there sufficient competition, customer detachment — a customer's ability to change networks without changing devices — and/or network capacity increases bringing downward pressure on data prices? I'm not seeing it today. But, without that pressure on data prices, there is no incentive to creating the premium product, i.e., data plus device.

    We do all understand that "Customers would like it" is only a part of a business case. Another part is "We can sell it at a suitable profit."

    As to network capacity increasing, while that increases bandwidth supply, it comes with capitalization which needs to be paid down. As to switching data providers by replacing my top-of-the-line tablet with a lowest-cost version to pay the same or lower monthly amount, I'm not feeling it. Is any one?

    So let's look at the Amazon Prime scenario, by which we call it a cost of acquiring a new customer. Let's say the premium provider pays $50 for the sub-100 tablet. The premium provider is in one of two categories. The tablet is a conduit for business. The tablet is very indirectly related to their business. Let's call the first company WebSaleCo. They have a web interface, so the tablet isn't necessary to establish the relationship. Do they spend money to put and maintain an app on the tablet? Are they concerned that without the app, the tablet is also a capable channel for RivalSaleCo, their competitor? Let's say it's successful: can they get enough tablets for all the new customers? Wouldn't that put upward pressure on the cost of the "free" tablet? I'm not seeing a clear upside.

    Let's take the second model. Let's call it HipBank and pretend that it's those salad days when there were more banks and they seemed interested in competing for new deposits. Salad days? Let's call them the toaster days, though the clock-radio was the hands-down most successful new account premium. We'll also overlook the doubling in cost (adjusting for inflation) that a tablet would represent. Though, as we overlook these things, we make a mental note that it reduces the possibility that a free tablet makes sense as a new business generator.

    Does a free tablet work here? Tablets are not like toasters. They're newish and just leaving the early adopter phase. People who have a good idea how to fit them into their lives have one. Those that don't have one don't see the utility on an emotional level. Tablets are tied to an operating system and app store. Toasters are all the same and everyone understands the job to be done. Put the bread in the slot and get toast. The tablet would also have to be wi-fi only. What kind of customer excitement would one get if the free item comes with a $25.00 a month engagement with a phone, oops, Data company.

    What about a free tablet for the kids? Better have a tablet on the same os as the parent's.

    OS upgrades? Hardware obsolescence? Customers coming back and asking how to put Android Marzipan on it? Is that sub-100 tablet even using a authorized version of Android? Do you want to explain to the customer why it isn't? Welcome to the nightmare of free.

    So, tablets are still expensive and still a bit wonky and require more cost if one wants to be like Amazon and create a product that uses customer transactions to yield the return.

    The good news? I'm not the sharpest knife in the drawer, so there could be a way to make it work.
    DannyO_0x98
  • When it makes economic sense.

    "But how long until a company takes this a step further and makes the hardware free?"

    When it makes economic sense.

    That is to say: When the expected income of the individual device outweighs its own hardware cost (and carrier costs).

    "Think this isn't possible?"

    It might be, it might not be. You need to make the device cheaper and encourage customers to spend more on the services that come with the device. You also need to work out a deal with the carrier.

    "It's a model that has worked for smartphones for years, with carriers spreading the cost over the duration of the contract."

    Not comparable. "advertising, services and app sales" are generally optional, while a contract is mandatory. There's no guarantee they will be as profitable as a contract.

    They may have to end up making one of the paid services mandatory in order for it to work.

    . . . and oh, yeah, carriers may still want that contract. Just saying.

    "It's a place the likes of Microsoft and Apple can't enter because neither firm is geared up for such a revenue shift."

    Not entirely convinced, especially with Microsoft. Having Office 365, they could easily try something like "this phone is free if you also subscribe to Office 365 for a certain minimum amount of time."

    "It would massively shake up the market, not just at the low end, but across the board."

    The low end, certainly - across the board? Eh, I have my doubts.
    CobraA1
  • Free

    if you just buy this car or appliance first.

    I, like everyone else, don't see it otherwise. There's no big carrier fee to carry it along in any other scenario I can think of.
    Mac_PC_FenceSitter