Another Apple tablet rumor hit today, but this one offers an interesting twist. Scott Moritz believes that such a device will be subsidized by Verizon Wireless (s VZ). AT&T’s (s T) network is struggling to keep up with the many Apple iPhone devices using it — Apple (s aapl) just reported another 5.2 million iPhones sold in the last fiscal quarter. If I were a decision-maker at Apple, I’d be keenly aware of how AT&T’s capacity woes reflect on my product. Luckily, I don’t need to be telling Apple what they already know. Why else might they be looking at another carrier for a web-capable product?
Selling the device at a subsidized price makes sense on several levels. It locks customers into data plans for the carrier, but allows the device to shine with always-on, high-speed connectivity. This is the reason I never strongly considered an iPod Touch over an iPhone — I don’t want to have to search for a Wi-Fi hotspot every time I want to use the web. A carrier subsidy would also allow Apple to create a device that is expensive, but more affordable. I expect a 9 or 10-inch Apple tablet to be priced in the $700 to $800 range because Apple has no product line there. Rumors from last week indicate a 9.7-inch device is already in production. But in today’s world of $300 netbooks, that kind of price point for a new Apple product might perceived as too high on a relative basis. If a subsidy can bring the price down to $400 to $600, it’s far more compelling to any folks that compare the tablet to a netbook. It may be an unfair comparison since the devices aren’t quite the same, but people will make the comparison anyway.
My gut says that this device will be geared heavily for web use, so it’s really going to need a dedicated connection for the most benefit. I’m wondering if Apple will use a modified version of the iPhone OS or if they’ll create another offshoot of Mac OS X. I have to believe that whichever road they take, Apple will make it as easy as possible for iPhone app developers to easily port their wares to a larger device. Regardless of the OS, I can see why Apple might partner with a different carrier. With 280 million people blanketed by EVDO in 264 markets, Verizon’s network is quite extensive. It’s also not buckling under the weight of too many users.
The only question nagging at me is: why go with a CDMA carrier for an Apple tablet? It could be due to a lack of good choices. T-Mobile offers a GSM choice, but their 3G coverage areas are far fewer than Verizon’s CDMA network. Sprint (s s) offers reasonable EVDO coverage and has roaming agreements with Verizon, but they’re looking to get devices on 4G WiMAX to recoup their Clearwire investments. There simply isn’t another good U.S. choice for Apple if they don’t want to use AT&T for a new device. Of course, the challenge of going with Verizon is that the original device can’t be used worldwide. Most other markets use the more global GSM standards like AT&T and T-Mobile. An Apple tablet on Verizon can’t be sold in those markets, so they’d eventually have to produce a GSM version as well.
At this point, everything we know is based on “industry sources.” It could easily turn out that Apple sticks with AT&T for a new device platform. After all, the carrier is working on network upgrades, so Apple could hold off until some major infrastructure changes take place at AT&T. That’s a more likely scenario in the end since a CDMA device has limited marketability on a global basis. Actually, I can’t think of a better way to kick AT&T’s network upgrades into the next gear — Apple merely suggesting the idea of partnering with Verizon on another data-hungry money maker just might do it.