Apple Tablet: 3G Pricing Is the Wild Card

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 |  About: Apple Inc. (AAPL)
by: Larry Dignan

Apple (NASDAQ:AAPL) is widely expected to launch its tablet device later this month and speculation abounds about this highly anticipated gadget. But there is a significant wild-card: 3G access.

The 3G access issue was noted by Macquarie analyst Phil Cusick and it’s a point worth pondering amid all of the media reports over the holidays. In a research note, Cusick noted that as beautiful as an Apple tablet may be its success will be driven or limited by connectivity. Just wi-fi may be limiting. 3G access is going to be pricey. Where’s the balance?

Cusick notes that the Kindle model, where 3G service is bundled into the price, isn’t going to fly with full PC firepower, apps and lots of data consumption. The Kindle, media only model, has wireless data costs of $6 a month, estimates Cusick. Wireless data plans can run you $60 a month.

Simply put, how Apple packages in the 3G access will be a big factor with the iTablet, iSlate or whatever this device is called. The Financial Times pegs a Jan. 26 launch for Apple’s tablet. Cusick writes:

Giving the carrier a piece of any media revenue (like Kindle does) rather than a high monthly service price could help, but could also result in higher prices for iTunes content, cut into Apple’s already thin margins on iTunes, or limit a customer’s ability to download over 3G and doesn’t address browser/email pricing. The best result may be that devices offer tiers of 3G service, from a low-end with just Kindle-line functionality and pricing, to a highend with a fully functional browser and matching high monthly fee.

Those options sound pretty complicated to me.

In any case, the total cost of ownership for Apple’s tablet should be monitored at launch. Analysts are expecting something in the $800 range per device with 3 million to 5 million shipments in fiscal 2010.