With the iPad, AT&T offers 250 MB of data a month for $15 a month (technically, $14.99, which is odd since every other deal is a round number). With the Kindle Fire HD, AT&T offers 250 MB of data for $50 a year. So that’s $180 a year versus $50 a year for the same data on the two different devices.
Perhaps not coincidentally, when you factor out the storage markup, Amazon is charging users $130 to upgrade to the Kindle Fire HD with 4G/LTE.
So it’s possible that Amazon is passing the entire $130 from consumers over to AT&T to secure their good-looking deal. But if that’s the case, why not either tack-on or eat the remaining $50?
It’s just another layer of complexity for the consumer and it’s a weird one since most consumers are going to want more than 250 MB of data a month with an LTE connection. In fact, it’s such a weirdly small amount, that Verizon doesn’t even offer the option.
Again, I just don’t get it.
I was very impressed by Amazon’s press conference today. I went in thinking it’d be a single (as opposed to the whiffs by Nokia and especially Motorola the day before), but I ended up thinking it was actually a homerun. I already bought a Kindle Paperwhite.
But there’s one thing I’ve been thinking about that I still don’t really get: the $499 Kindle Fire HD.
That price doesn’t bother me per se, but why is it so much more expensive than the $299 version? It has two key differences: twice the storage (32 GB versus 16 GB) and 4G LTE connectivity.
Amazon is selling the non-4G Kindle Fire HD with 32 GB for $369, which means they value the 4G element at $130. Coincidentally (or not) that’s the *exact* premium Apple charges for LTE on the new iPad.
But that’s a huge premium. There’s no way the 4G/LTE chip costs that much. Apple gets away with it because Apple gets away with charging huge premiums. But Amazon usually does the opposite. And in fact, Jeff Bezos himself made a point of saying today that they’re not in this to make money from the hardware. So why the huge markup?
You could certainly argue that you’re getting more with Amazon’s 4G/LTE upgrade — and you sort of are. Amazon is bundling 20GB of Cloud Drive storage and a $10 Amazon Appstore promotional credit (which is just as beneficial to Amazon as the consumer since it encourages app lock-in). You also get 250 MB of data a month for 12 months — but you have to pay an additional $49.99 for that.
I suppose some of the $130 4G/LTE markup may go towards the data rate they secured for consumers from AT&T. But 250 MB worth of data is basically a joke these days. Especially with LTE. (Verizon doesn’t even offer the option for the iPad. Naturally, AT&T does, for $14.99 a month.) $50 a year may *look* like a great deal for a year of data, but it’s just sort of a weird, borderline deceiving deal. You’re going to want more.
Overall, there’s no question that the 4G Kindle Fire HD is a better price than you’d get with a similar iPad. But based on the early hands-on, it certainly seems like the iPad is still a much nicer device. It’s bigger. Faster. And again, Apple goes after premiums on the hardware. They’re in the business of selling hardware. Amazon is not.
I don’t get why Amazon wouldn’t launch the 4G Kindle Fire HD at $399. Or, if they’re insisting on going with $499, why not eat the silly $50 extra cost for the 250 MB of data? It’s like they subsidized 75% of the data cost, but didn’t feel like going the entire way.
It almost feels like Bezos decided he wanted to make some kind of point about the $499 price and really, the iPad, on stage today. So maybe he went to his team and said, “what’s the best we can offer for $499?” And this is what we got.
The product just doesn’t feel like it’s priced right to me, given Amazon’s other Fires, and their intentions. I think the iPad still wins at the $499 price point, even without LTE. Amazon didn’t quite sell me on this one.
Update: Doing the math.
What do you think about the rumors that say that a new version of Nexus 7 with 3G connection is comming, when the new iPad has come with 4G/LTE connection for half a year already? Is it that when they say 3G, it really means that Google aims at 4G?
Asked by Anonymous
I’m fascinated by this possibility.
On one hand, it will make the Nexus 7 even better — lack of cellular connectivity is probably the biggest knock against the device.
On the other hand, given Google’s history with the carriers, I worry this could fuck the device. Does this mean updates will go back on the carriers’ schedules (which often seem to be next-to-never)?
You have to believe Google would not be stupid enough to give into carrier demands once again, giving them control of Android updates. They’d likely push for more of an iPad-like plan, pay-as-you-go.
If the “iPad mini” has a cellular option (still not clear though I imagine it’s likely), Google will probably have to do something. If the new Kindle Fire debuts with a 3G/4G option, Google will definitely have to do something.
As for the 3G vs. LTE question, doing 3G when everything is transitioning over to LTE seems sort of silly, unless you consider the rest of the world. Maybe that and price is why Google would go with 3G.
1) The LTE data rates are in-line with the 3G rates. This is a very pleasant surprise. Still commitment-free. No contract required.
2) Of course Verizon is including the hotspot functionality with their plans while AT&T isn’t. AT&T seems to be doing everything in their power to ensure you don’t buy service from them. That’s one way to fix a crap network: drive people away.
Rene Ritchie nailed the date of the iPad event, no reason to think he hasn’t nailed this as well (from the same source).
But I still wonder about the price points. Apple got AT&T (and later Verizon) to offer some pretty killer 3G deals. Will they be able to do the same for 4G?
Hi-def screen has been more or less a forgone conclusion for months (I cannot wait to see what it looks like). Better processor is a no-brainer. But this is the big news in the Bloomberg story from Tim Culpan, Peter Burrows and Adam Satariano:
Apple is bringing LTE to the iPad before the iPhone because the tablet has a bigger battery and can better support the power requirements of the newer technology, said one of the people.
Makes sense to me. Sarah and I talked about this possibility on iPad Today (about 4:30 in) a few weeks ago.
And if the iPad does gain LTE, the logical next step is that the next iPhone would gain the technology as well. But I’m with John Gruber, it’s more likely, but not a slam dunk. Every single person I know who has a 4G phone still just bitches about the awful battery life when LTE is enabled. There will need to be more power-efficient chips (which seems likely) and/or Apple will have to pull out some battery life magic (also likely) to ensure an LTE iPhone this year.
Danny Sullivan notes the difference between the iPhone 4S and the Galaxy S II Skyrocket on AT&T. Both are actually running on the same network, but the Galaxy gets the all-important “4G” moniker.
Except that it’s bullshit.
As Sullivan points out, the iPhone and the Galaxy are getting the exact same speeds. That’s because AT&T’s network is actually HSPA+, which the iPhone supports but refuses to call “4G” even though AT&T does.
Why does AT&T call it 4G? Because they were one to two years behind their competitors in rolling out an actual 4G network. In other words, when all hope fades, lie.
In AT&T’s parlance, real 4G is “4G LTE”. What a fucking joke.
Says John Gruber:
The original EDGE iPhone is also a good example of Apple’s relatively conservative pace of adoption of cell network technology. AT&T (née Cingular) already offered 3G service when the iPhone was announced. But coverage wasn’t widespread, and Apple was concerned about its effect on battery life.
If the iPhone comes to Verizon, soon enough there will be a model that supports LTE. But Apple isn’t going to lead the way on that.
Agreed. As I wrote back in June:
More importantly, I’m not even sure we’ll see a 4G-capable iPhone next year. As Apple proved with the first iPhone (which wasn’t 3G despite 3G being fairly ubiquitous at the time), they care more about the overall experience than about being the first to have a nice-sounding feature. Users laughed at the notion that 3G capabilities severely dinged battery life — until the iPhone 3G came out and that’s exactly what happened.
With 4G, by all accounts, the battery ding is even worse. Also, 4G is still slowly deploying around the country, and some carriers (read: AT&T) won’t have it really deployed for a long, long time. In other words, don’t be surprised if next year Apple still doesn’t have a 4G version of the device. Everyone will bitch about it, but in Apple’s view, it likely just won’t be worth it yet.
That’s why we’ll see a CDMA and not an LTE version at first.