Editor’s Note: Welcome to our weekly feature, Analyst Angle. We’ve collected a group of the industry’s leading analysts to give their outlook on the hot topics in the wireless industry.
Apple’s recent introduction of its newest iPad, simply named the “new iPad,” came with the usual fanfare associated with any new Apple product – a dose of excitement, a frenzy of buyers and a horde of analysis regarding why Apple included or didn’t include certain features and technologies. The frenzy is warranted, however, as Apple continues to set the bar in terms of consumer features, usability and technologies that translate into high demand.
Apple’s success has come via its intense focus on how technological advances are integrated into products rather than from chasing the latest technology. For instance, it avoided adding LTE to the iPhone 4S last year despite the fact that a flood of Android LTE smartphone competitors were coming to market. When it does bet on a new technology, however, it has the clout to drive that technology to the forefront. As such, the inclusion of LTE in the iPad tells us a few things about the state of the LTE market.
LTE-enabled tablets won’t command a price premium over 3G: Apple has priced the new iPad in line with the iPad 2 (before it began discounting the older tablets). Wide-area network use on tablets still trails Wi-Fi use, thanks primarily to the way operators price data for tablet use; operators have yet to broadly incent users to pay for mobile access on tablets. While users can choose pay-as-you go plans, they still have to pay for a separate data plan apart from their smartphone plan. Against this backdrop, charging more for an LTE tablet than a 3G tablet simply won’t fly for most consumers.
LTE silicon and components have matured: Apple released its iPhone 4S last year without LTE capabilities amid a flurry of high-profile LTE Android handsets. It reportedly resisted the technology because it wasn’t mature enough. Now, the new iPad is coming to market with nearly the same battery life as the iPad 2 (one hour less when using LTE) and will continue with a 9.7-inch screen along with a nearly identical footprint that is only slightly thicker and heavier than the last generation. Apple has offset these technology drawbacks by keeping pricing the same as the iPad 2, improving the performance and display and adding support for the fastest 3G technologies. In terms of cost, analysis from UBM TechInsights suggests that a 16 GB iPad with LTE connectivity costs $310 to build, roughly $30 more than the first two generations of the iPad. LTE accounts for some of the increase in cost but so does the bigger battery and faster processor. This cost metric portends well for LTE-connected devices.
Device vendors are tasked with making critical choices when it comes to the LTE bands they include in their devices: Once Apple announced the specs of the new iPad, criticism mounted over what bands Apple decided to include in the device. Namely, the European 1.8 GHz and 2.6 GHz bands were not included. Likewise, Sprint Nextel and T-Mobile USA were not represented. The reality is, chip and device vendors have some difficult choices to make in terms of which of the some 40 different LTE spectrum bands they will support – not to mention the differing band classes in the 700 MHz band. Given the fragmentation, Apple had to be pragmatic about which bands will give it the greatest economies of scale from volume production. For this round, Apple chose the 700 MHz and 2100 MHz LTE bands and it also had to support the two different band classes that AT&T Mobility and Verizon Wireless operate in on the 700 MHz band. In addition to LTE, Apple is supporting Wi-Fi, UMTS/HSPA/HSPA+ 21/dual-carrier HSPA+ in the 850 MHz, 900 MHz, 1900 MHz and 2100 MHZ bands and GSM/EDGE in the 850 MHz, 900 MHz, 1800 MHz and 1900 MHz bands for AT&T Mobility. For Verizon Wireless, all of those specs plus CDMA EV-DO Revision A in the 800 MHz and 1900 MHz bands are included. The bands Apple has selected demonstrates it is willing to address markets with multiple versions of products. The question is: Which bands will it choose going forward and what will operators need to do to warrant Apple’s attention?
What are the implications of these realities?
Operators will have to become more creative with pricing plans: The new iPad may be outfitted with LTE and higher speed 3G technologies, but the data bucket offerings from AT&T Mobility and Verizon Wireless remain the same. While consumers will certainly appreciate the higher data speeds, they will also drain their data buckets faster. Faster, more powerful LTE devices highlight the need for multi-device data offerings – ones that will allow users to pool data allotments among various devices.
Just because LTE technology can be deployed in a number of spectrum bands, doesn’t mean it should: LTE may give operators a significant amount of flexibility in terms of what spectrum bands they can deploy LTE in, but that doesn’t mean they will attract the iconic devices. T-Mobile USA’s spectrum refarming efforts highlight this fact. The operator will now deploy HSPA+ in its 1900 MHz spectrum – a move that will harmonize its HSPA+ services with those of U.S. and international carriers and put it in a position to support the iPhone 4S and any subsequent versions Apple makes for the U.S. market. We’ve now seen that Apple is willing to offer multiple versions of a device to accommodate various markets but it still seeks as much commonality as possible.
The new iPad will put LTE networks to the test: With a mature Apple LTE device in consumer hands, likely followed by an LTE-enabled iPhone, data traffic is sure to ratchet up on LTE networks, especially when high-definition video is thrown in the mix. Particularly, the new iPad comes to Verizon Wireless when it has already seen a series of LTE network outages in recent months, problems that could well be exacerbated with the new iPad and have the potential to undermine the company’s marketing efforts while squandering the advantages of being early with LTE.
Certainly the iPad is not the first LTE device to run on LTE networks, but the device, and its likely LTE-enabled iPhone predecessor have the power to drive LTE into the forefront, exposing both the highly touted advantages of the technology along with its drawbacks. The fun will come over the course of the next year as we see how this all plays out.
