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[Exclusive] New 'Tablet' Pricing Structure at Verizon May Be Coming

Discussion in 'Android News' started by dgstorm, Feb 23, 2011.

  1. dgstorm
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    dgstorm Editor in Chief Staff Member Premium Member

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    [​IMG]

    Some of our insider sources at Verizon have indicated that there may be some shakeup in the pricing structure of tablets at Verizon very soon. The full details remain a mystery at the moment, and it's possible that the news could be good, bad, or even both. The speculation is that the two-year contract pricing we're seeing right now for the Xoom may be extended to other tablets, and that it may be Verizon's way of testing the waters to implement this type of contract revenue stream pricing for future tablets as well.

    The bad of this might be that Verizon pushing their two-year contracts on tablets may not sit very well with many consumers. Although they have similarities, a tablet isn't a smartphone, and people may not view their usage in the same way.

    The good out of this may be if they do extend this pricing scheme to other tablets, then it could potentially drop the initial purchase of the tablet and make them more affordable. For example, right now Verizon doesn't offer the Samsung Galaxy Tab on contract. If they did, we 'might' see it drop to $299 with a 2 year contract, since the Motorola Xoom is $799, but only $599 with 2 year contract.

    We will obviously keep our feelers out for more intel. In the meantime, let us know what you think of this potentiality in the forums.

    Thanks for the tip, JFMFT!

    by dgstorm
    Source: AndroidTablets.net
  2. kodiak799
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    kodiak799 Well-Known Member

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    It's an issue VZW SHOULD wrestle with. I think the bigger opportunity is a bundled package of some sorts - people have smartphones, tablets, and PC's, along with home broadband.

    I think it's just ridiculous to expect people to pay for 2 data plans when really they can only use one device at once (and the tethering plans are kind of a joke).

    Now, I see the 10gig mobile broadband plan for $80 and that's kind of obscene, so who knows. But maybe something like $40-$45 for a data plan for ONE smartphone and ONE tablet makes sense.

    I realize they probably gouge business users on the tethering plan, but going forward charging for tethering just seems dumb, especially as that line gets blurred with stuff like DLNA, HDMI out and laptop docks. Maybe why tiered plans make sense (simplify!) - just say "ok, you got 5 gigs of data and we don't care how or where you use it or on what devices". They could even get their "tether" money by charging you to add devices to a plan (i.e. still capped, but 2 devices on a plan costs an extra $10 or something).
  3. gadgetrants
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    gadgetrants Well-Known Member

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    Thanks dgstorm, I think this an interesting bit of news, and I'm curious where it will go.

    Regarding the Galaxy Tab, I wanted to note that Samsung has figured out that its Tab will soon be outclassed (if not already), and inventory needs to be dumped. Indeed, recent deals have placed it at $399 without a contract (though requiring that pesky one month of a data plan from some carriers).

    As a device class, tablets heavily duplicate netbook functionality (truthfully, a dual-core Windows netbook is a much more versatile device)...and since netbooks run between $300-$400 I'd expect the Android tablet universe to gravitate in that direction. Probably $400 to $600 (off-contract)...and only toward the high end--not because of superior processors--but because of features like 1080p displays, dual cameras, GPS, accelerometers, and HDMI ports. (I really think newer Android tablets in the $800-$1000 range like the Xoom are almost DOA...there will be WAY too many cheaper, well-built devices running Honeycomb soon to sustain that price level.)

    Without those kinds of features, in fact, a rational person might expect tablets to be cheaper than netbooks! Damn iPad...look what it's done to the marketplace and people's expectations!

    -Matt
  4. kodiak799
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    kodiak799 Well-Known Member

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    No kidding! I remember thinking tablets were a gimmick - who would really want to surf, send emails and search/post without a keyboard, not to mention having to stare at a device you have to hold or look at laying flat.

    And that's where the Apple marketing brilliance comes into play. Charge $400 to compete with netbooks and people start asking "hmm, do I really want a less functional alternative?" Charge $800 and it becomes a status symbol for the trendy and hip, the "look at me, I have so much money I can throw it away on an unnecessary device" crowd.

    Yeah, I see the potential now. Still don't really understand the seemingly insatiable demand in present form.
  5. HamDog
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    HamDog New Member

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    This is my exact beef with Verizon. Verizon DSL at home ($40/month for 4-7mb package), My Droid's data package ($30/month), and now more data for tablet? I would love to see a plan that covers everything.

    Recently I examined all my bills, from DirecTV, to everything else and wondered where I could make some cuts. I've already taken lots of steps (canceled DirecTV and got a HTPC), and currently in the process of going VOIP and canceling my landline phone. I love toys, but it's just getting ridiculous. I love my Droid, but I don't think I'll be renewing my contract or jumping on the latest phone when my contract expires in less than a year.
  6. TheOldFart
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    TheOldFart New Member

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    Although I think that a lot of people buy a tablet as a status symbol, I'm not surprised by the price being higher than a netbook. Smaller and less powerful electronics have always cost more than their more capable larger brothers.

    tablet $ > notebook $ > desktop $

    The only reason that netbooks cost less than notebooks is the less powerful and much lower cost Atom processor and associated chips. Look at how much 10 inch notebooks cost that have processors more in line with the larger notebooks.

    Newegg.com - Acer Aspire TimelineX AS1830T-6651 Notebook Intel Core i5 470UM(1.33GHz) 11.6" 4GB Memory 500GB HDD 5400rpm Intel HD Graphics

    =>$ than

    Newegg.com - Acer Aspire AS5742-6413 Notebook Intel Core i5 480M(2.66GHz) 15.6" 4GB Memory DDR3 1066 500GB HDD 5400rpm DVD Super Multi Intel HD Graphics

    The 2nd is $50 less for an i5 processor that is 2x the speed.
  7. kodiak799
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    kodiak799 Well-Known Member

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    I ditched my landline some 8 years ago. Never missed it, although dropped calls eventually forced me from Sprint to VZW.

    Not sure what the capacity is on LTE, but I do know the VZW CEO has mentioned an alternative to home broadband. LTE speeds are equivalent to most mid-tier cable internet plans, and a $60 all-you-can-eat plan would make a lot of sense and be extremely competitive. But, of course, when you look at their mobile broadband plans that doesn't appear to be a remotely reasonable expectation.

    Also, you might look into a new voice service I see VZW is offering. $20/month unlimited calling in the US and they give you a contraption that lets you plug in a landline and make calls over wireless.

    Otherwise, I've thought about setting up VoIP, but not aware of a free method other than that GV/Sipsorcery hack I could never perfect. I'm also thinking about getting a BT speakerphone that I could just leave plugged in to use at home.

    I don't disagree, but the margins are MUCH higher than on PC's and netbooks (where the lion's share of profits go to the OS and chip maker).

    New tech always cost more and higher margins, sure. But it's also true that many consumers associate price with quality/luxury/etc..
    Last edited by a moderator: Feb 25, 2011
  8. HamDog
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    HamDog New Member

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    Ya, a $60 all you can eat plan would definitely be worth it, but I'm not holding my breath. And I didn't know about a $20 landline plan with unlimited US calling. But I'm sure you'll have to add $10 to it for taxes. Right now I'm testing VOIP.ms service. $5/month for 3,500 minutes of incoming and 1/2 penny/minute for outgoing. I use this with my Google Voice account. So far, it works perfectly.
  9. TheOldFart
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    TheOldFart New Member

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    The higher end processors can certainly cost hundreds, but I don't think that the OS is that significant. I really don't know for sure though. Does anyone know what the computer makers pay MS for Win 7 Home?

    I saw that on the Verizon site a few hours ago. I'm going to check it out tomorrow morning. It will depend on how much they add for the various taxes and fees. Right now I pay $26 for my landline, with no long distance.
    Last edited by a moderator: Feb 25, 2011
  10. kodiak799
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    kodiak799 Well-Known Member

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    I've seen research showing like 80% of the profits in PC go to the OS and chip maker. The guys who put the box together get like 3-5% margins. Whatever MS gets, they are only amortizing development costs - it costs them virtually the same amount of money to ship 10M Win 7 installs as 10k.

    Now, we know the IPhone costs $200-$250 to make (ignoring R&D and marketing/distribution costs), and it retails for more than double. I'm sure tablets also probably retail for about double. Point being the smartphone and tablet makers are making WAYYYYY more than 3-5% margins, more like 35% margin.

    Eventually, competition should drive those margins down, but the carriers clearly create stickiness/friction from that happening.

    Well, also appears to be for one phone. Maybe you could plug in multiple bases (or a base with multiple handsets) but it's probably not real practical for people wanting phones in multiple rooms.
    Last edited by a moderator: Feb 25, 2011
  11. HamDog
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    HamDog New Member

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    I'm paying $20/month + $10 in taxes. California sucks! 50% tax rate! There's a high price for all that sunshine :icon_eek: I just checked their site and didn't see an unlimited plan. Maybe it's not in all areas.
  12. TheOldFart
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    TheOldFart New Member

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    I think that the only way to have multiple phones is to use one cordless base unit and multiple cordless phones. I have one base and 1 additional remote unit + 1 regular phone in the exercise room. I can just add another remote cordless phone to the base unit for the exercise room. I spent about an hour reading the manual and the various site pages and discussing it with the wife and we are leaning toward getting it, depending on the total cost. Base units with a total of 4 handsets aren't that expensive. If someone needs more than 4 then I don't think the Verizon unit will work, unless there are some base units that can handle more than 4.
  13. GrillMouster
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    GrillMouster New Member

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    Many modern cordless phone systems only require a single base hub to be plugged into a telephone outlet. The satelite handsets only require a power outlet for their charing bases. Such a system should work with Verizon's Home Phone Connect, where the cordless system's main base hub would plug into VZW's router-looking device.
  14. TheOldFart
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    TheOldFart New Member

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    The Verizon site and manual says that it will work that way, so I don't see a problem, unless a person prefers corded phones. In that case, he is stuck with one phone.
  15. kodiak799
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    kodiak799 Well-Known Member

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    Looks like you can plug two units into it, not sure.

    Like I said, been years since I've had a land line, but what you said makes perfect sense. However, if for this to work someone has to go out and buy such a new cordless phone system it's going to take longer to break-even.

    Now for knee to the groin....this is $19.99 a month for UNLIMITED calling on the same network I pay $39.99 for 450 minutes on my cell.
    Last edited by a moderator: Feb 25, 2011
  16. TheOldFart
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    TheOldFart New Member

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    Yeah, that was my first thought too. Sort of felt screwed for what I pay for my cell phone service. Then the more I thought about it, I started to feel that I might get a bargain for my home service. The feeling depends on whether I am optomistic or pessimistic at the moment. :)

    One article I read said that it was supposed to be for customers who already have cell service from Verizon, but I think that is wrong. The Verizon site says nothing about that.

    I guess you can. Here is what the manual says:

    "The device provides two telephone ports. The ports use the same telephone number.

    Plug one end of a telephone cable (RJ11) into a telephone port and the other end into the back of a home telephone or home telephone base unit.

    Do not plug Home Phone Connect into your telephone wall jack. This configuration is not supported unless you have taken steps to disconnect the landline wires coming into your home."

    I guess you can run it through the home phone wiring as long as you disconnect the incoming line and most likely the bell if you have one in the line.
    Last edited by a moderator: Feb 25, 2011
  17. kodiak799
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    kodiak799 Well-Known Member

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    That'd be pretty slick, if one knows how to do it.

    Also occurs to me this could be pretty handy if you had a second home, just carry your phone service with you! And combined with a GV number...
  18. RemyL75
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    Basically, if someone has their home phone service through a cable internet service (Comcast for example), then the wiring is already severed (to an extent) from the outside phone line access box. You would just plug VZW's device in where the cable modem was plugged in to provide your service. It's about the same. for those that do not have this setup, then you will prob need a professional installation, unless you know what you are doing, then i say save the money and go at it.
  19. Newton122189
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    Newton122189 New Member

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    Somehow I just know this is gonna screw me allllll up when I go to get a XOOM tomorrow

    I can here them now, "We dont offer those plans anymore."
  20. dman59
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    dman59 New Member

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    I have the same feeling as well when I get it too.
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