By Andrew Berg
When consumers are tablet shopping this holiday season, they’ll likely still notice a significant price difference between the LTE-capable models and those with Wi-Fi only; Apple charges a $130 premium for the Wi-Fi + Cellular version of the iPad Air. In short, the cost of picking up a tablet with cellular connectivity is still prohibitive for many.
That may all change according to Eran Eshed, co-founder and vice president of marketing for Altair Semiconductor, which is pushing its LTE-only chips as a way of bringing down the cost of cellular connectivity in a variety of device categories.
“What we’re trying to do is take that premium down to very cost-effective levels for consumers,” Eshed said, noting that if the gap between the Wi-Fi model and the cellular models could be narrowed to around $25 it would make a big difference in pushing consumers towards a LTE model, whether they have specific plans of using it or not.
Altair has placed a heavy bet on LTE-only technology, which Eshed says could make selecting an LTE-capable tablet a no-brainer for consumers.
Altair already has its LTE-only chip in the Verizon-branded Ellipsis, a lower-end Android slate, which sells for $150 on contract. The Ellipsis is Verizon’s first LTE-only consumer tablet. Eshed called the tablet a “strong endorsement” of Altair’s strategy to disrupt the market and displace pricier 3G+4G multimode chipsets with a lower cost 4G LTE-only option.
Eshed said the goal is to drive LTE price points to Wi-Fi levels, which currently stand at about $10 per unit. He admits that Altair is swimming upstream with its strategy, as larger players like Qualcomm have a lot of money invested in the multimode chipsets.
But there’s evidence that AT&T and Verizon may already be anticipating the shift towards more LTE-capable tablets hitting the network. Both major operators have recently launched $5 per day plans for tablet users, which eliminates the need for a 2-year contract. At a lower cost, LTE could be seen as a “nice-to-have” feature.
Eshed says tablets aren’t the only devices that could benefit from an LTE-only strategy, saying the chipsets could significantly lower subsidies on smartphones.
ABI Research analyst Phil Solis, said in notes earlier this year that the LTE-only market could get off to a faster start than originally anticipated, referencing the Samsung Galaxy Camera for Verizon Wireless’ network as the first substantial LTE-only consumer electronics product to hit the market.
Solis says future LTE-only products to hit the market will include cameras, camcorders, game devices, security cameras, telematics solutions in cars, a range of M2M devices, and eventually handsets (once VoLTE is deemed to be reliable).
Caution at how quickly LTE tablet adoption will happen is probably warranted but when it does take hold, the effect on the networks could be staggering.
Strategy Analytics projects that 2017 global mobile tablet subscriptions will contribute nearly $20 billion to operator service revenues and generate almost 3.5 million Terabytes of mobile data traffic, with LTE accounting for more than 80 percent of all mobile broadband tablet subscriptions.
The Strategy Analytics report confirms that carrier strategies around data plans will play a very big role in driving more use of tablets over LTE, in particular, service plans allowing multiple devices to share a pooled data allocation on a single data plan, such as those offered by AT&T and Verizon Wireless.
Susan Welsh de Grimaldo, director of wireless operators & networks at Strategy Analytics, said in a report that while direct mobile broadband subscriptions on tablets represented less than 10 percent of the total tablet installed base in 2012, they were a key driver of positive postpaid net additions at AT&T and Verizon in the first quarter of 2013.