Tablets' Biggest Challenge: Peddling Extra Data Plans
As Samsung releases its latest Galaxy 10.1 tablet in New York, the key challenge may not be how it does compared to rivals such as the ipad, but how the device is sold.
According to research house IDC, the biggest obstacle facing tablet sellers is the extra data plan customers will have to take on in order to buy one of these new gizmos.
"Unfortunately what we found in our research is people don't really want to pay for yet another data plan beyond the one they have for their phones," Bob O'Donnell, a Vice President at IDC told CNBC on Wednesday.
A recent survey done by IDC across users in countries including U.S., Japan and parts of Europe showed around 40 percent did not want to sign up for another data plan, 39 percent preferred to use wifi and some 20 percent were reluctant to pay for a 3G bundled device.
"There was a lot of concern raised about the price of the data plan; ability to use free wi-fi," O'Donnell said, noting that 80 percent of the time, people are using these devices at home where wi-fi was available.
A tablet that is 3G-enabled costs more than one with just wi-fi capability. A 16-gig Apple iPad with 3G capability, for example costs $130 more than a wi-fi one in the United States.
O'Donnell believes vendors will have to start focusing on wi-fi models and selling them through traditional retail outlets rather than pushing the 3G models through the telecom carriers.
"The carriers have to figure out a business model that says: hey if you have four devices, you can have one data plan and share it across all those devices," he said, adding that Apple could lead the way in this regard, through tethering.
Tethering is a way to share the internet connection of a smartphone — an option that has been catching on with U.S. carriers that sell the iPhone.
"That is a development I think Apple can and will help drive, because that will allow people the flexibility they want," O'Donnell said.