Smartphone sales have been declining recently. The number of smart phones owned per adult has increased to saturation levels now. This trend is reflected in the declining sales of new phones in this year’s holiday season. However, telecom companies have found out a new avenue to increase their subscriber base by tying up new tablets with their subscriber plans ranging between $10 and $20 a month. As a result, telecom companies like Verizon and AT&T are practically selling tablets for free.
AT&T recently offered Amazon Kindle Fire HDX at $0.99. It remains to be seen whether such bundled tablets will be able to compete with many other smart phones that are already available at $0.99. This new marketing stance has been duplicated by other mobile phone companies in the US such as T-Mobile and Sprint.
With more than 100 per cent penetration for mobile phones, the market for new smart phones is getting increasingly thinner. Hence, telecom companies are now becoming aggressive with tablets that cater to a slightly different need of ‘casual content’ watching, in a bid to expand the market for their subscription based revenues.
The staggered service payment based model does not cause any loss to the telecom company as over the period of one or two years of the tied-in service, more than the full amount of the mobile phone is recovered. The consumer ends up getting benefited as his one time payment outgo can go easier with smaller installments. However, a frequent phone changer might not prefer this arrangement highly.
However, it remains to be seen, as to how long the tablets may hold the fort for telecom companies who are obsessed about the growth of subscriber numbers. Tablets are not that convenient to possess and face tough competition from bigger screen smart phones and ultra sleek and flexible smart laptops.