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That’s it: Tablets on contract should be abolished!

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Verizon Wireless announced availability and pricing for the Samsung Galaxy Tab 7.7 LTE slate on Tuesday. The thin and light 7.7-inch tablet, Samsung’s first with its Super AMOLED Plus display technology, launches on March 1 for $499 with a new two-year agreement. Verizon requires a minimum $30 monthly LTE plan with 2 GB of data.

Let me preface a rant by saying that I bought a Wi-Fi version of this tablet last month, paying a premium because the device is only available in Asia. I don’t regret the purchase at all and absolutely love the hardware: 1.4 GHz dual-core processor, 7.89 millimeter thickness and a brilliant 1280 x 800 touchscreen that’s probably the best I’ve seen yet in this category. I’ll be happier when the Galaxy Tab 7.7 sees an upgrade to Android 4.0(s goog), but even with Android 3.2, it’s my go-to mobile slate and impresses nearly everyone I show it to.

The problem I see is that while I paid a premium, most others won’t. And that’s exactly what the two-year contract with Verizon(s vz) is: it adds minimum of $720 extra for a data plan that likely replicates the plan they have on a smartphone. Without such a contract, the Galaxy Tab 7.7 might be worth an unsubsidized price of $499, but with one I don’t see it being a big seller.

Others are chiming in, agreeing with me after I tweeted the price and contract information:

Joe raises two relevant points in his tweet about the iPad(s aapl). First, a 7.7-inch slate that comes with 16 GB of internal storage shouldn’t be priced the same as the iPad, a 9.7-inch tablet with the same storage capacity. That is unless it provides some premium features, software, ecosystem or experiences. While I generally prefer Android, I’m willing to bet that average consumers don’t feel that Android tablets offer a premium over the iPad or its supporting ecosystem. Android die-hards will disagree, of course, and I understand that.

Secondly, you can’t buy an Apple iPad with a contract in the U.S. Yes, you can buy an iPad with a 3G radio for a $130 premium, but the data is on a per-use basis, not a contract. That’s how Verizon sells the iPad, and it’s time that it, and other carriers, consider doing the same for Android tablets. It’s great that the Galaxy Tab 7.7 LTE can share its 2 GB of monthly data with 10 Wi-Fi devices, but can’t the same generally be said of Verizon’s LTE smartphones, USB sticks and MiFis?

Among many other reasons, this is why I believe Android tablets aren’t selling well. We don’t need multiple connected devices with a data plan for each. Sure, we know that family plans or shared device data plans are coming, but for now, they don’t exist. So a secondary device with a contract simply isn’t as appealing as a contract-free slate or smartphone. It’s that simple.

And shame on Samsung — to a point — here too. When negotiating the deal for the Galaxy Tab 7.7, it should have held its ground and demanded a reasonable contract-free price with the flexibility of 3G/4G data as needed. The company hasn’t done that on any tablet that I know of yet, and this omission isn’t helping sales. Just yesterday, according to CNET, Samsung’s Hankil Yoon, a product strategy executive, told reporters at the Mobile World Congress, “Honestly, we’re not doing very well in the tablet market.”

Honestly, Samsung — and Verizon, for that matter — this situation won’t change until tablets no longer require a two-year contract and offer improved experiences. It’s that simple.

13 Responses to “That’s it: Tablets on contract should be abolished!”

  1. Craig Campbell

    Here’s the problem I have – as Kevin mentioned, the on-contract price is $499. The contract-free price is $699. That’s a $200 subsidy with the contract. So how in the name of whatever can they possibly justify a $350 ETF? I have no problem with the contract-free $699 price – given the tech in there, it’s probably a reasonable, if expensive, price. However, if they are going to plonk a $350 ETF on the contract, they should subsidise the tablet by at least $350. In other words, the on-contract price should be $349 or less. They do this with the phones – many of which have similar on-contract prices to this – and it works pretty well, at least for the US market. Why oh why can’t they use the same model for the tablets? I wish Verizon, AT&T, T-Mobile and Sprint (do they have any tablets?) can explain to my why they do not subsidise tablets like phones, and yet lumber consumers with the same contract and ETF fees. It’s just not right. Actually to be fair, T-Mobile I don’t have as big an issue with because their ETFs are still $200, but wow this whole situation is crazy. How stupid do they think we are?

    • They think “we” are very stupid – and they’re right. The majority of the public doesn’t care that AT&T/Apple are sharing a $700-ish sale price of an iPhone that has about $10 more hardware than an iPod touch – because it gets amortized over a 24-month data contract. (not picking on Apple – they all do it). More price transparency would help -but unless someone figures out how to modularize the radio aspect so you could truly swap carriers – change will be slow.

  2. I think you chose a bad headline – it’s CONTRACTS that need to be abolished. I’m glad to see that you are now beginning to agree with me on why mobile broadband in the U.S. still sucks. And I hate to beat on a dead horse, but this is nothing more than Verizon again demonstrating corporate greed at work. Pay a monthly data fee for each data device in my arsenal? Forget it! There are smarter ways to get it all done:

  3. How much more evidence do you need that the tablet is an crApple phenomenon? The platform suffers from severe value ambiguity. Its limited capabilities make it a content device at best that is priced at a luxury level like all apple products!

    IT is now and will ALWAYS be a niche device. I can get a lot of notebook power for the same price.

  4. “Secondly, you can’t buy an Apple iPad with a contract”. So I guess the 32GB iPad 2 I bought from Vodafone UK for UKP50 on a 2 yr contract was just a figment of my imagination …

    • Sorry Neuro; I was focused on the U.S. market with the latest Verizon move; here in the U.S. you can’t buy an iPad on contract. I’ll update the post to reflect that I was speaking about the iPads in the U.S. Just so I’m clear: You for your UKP50, you’re getting both the hardware and the service, yes? Here, the monthly plan generally covers the service only. Thx!

      • To clarify, I’m a long time Vodafone customer going back years, have bought the last two iPhones on contract from them. They offered me a 16GB iPad 2 for UKP0 up front, rather than UKP229, and UKP 32 a month for 3GB/mo 3G service, UKP5 than normal (they gotta gets paid somehow, I guess). The uplift on the upfront cost from 16GB to 32GB is UKP50 (UKP279), so they charged me UKP50 for the 32GB.

  5. I agree with you but I also wish that people would stop referring to the price of a phone ON CONTRACT as it’s price. That is NOT it’s price. They should be forced to listed it’s off-contract price first and foremost and later list any discounts due to contracts.