Why wifi is enough for most Christmas iPad shoppers

They sold out of wifi-enabled iPad mini tablets at 8.30am this morning at the flagship Apple store in Regent Street, London. It has been a similar story every day this week. The nice Apple lady in the shop told me that the queues were now starting at around 6.00am.

If I had really wanted to walk away with an iPad mini today, they did still have some cellular-enabled versions available. But they only had the 32GB versions and these were £180 ($293) more than the 16GB wifi-only model that I had enquired about. The Apple lady didn’t seem surprised when I hesitated adding that “yes, the wifi-only versions are very popular and we hope to get some more in”.

I remember speaking to a senior executive at a European operator more than a year ago and his telling me that 4G-enabled tablets were going to be a fantastic revenue stream for them. Well, the iPad mini is 4G enabled (even though 4G is only available on one of the UK’s four networks) but it does not appear that this has made it a significantly more attractive proposition – at least in the minds of consumers – than if it was 3G-only.

The reality is that people are opting for the wifi-only versions of the iPad mini because they do not see the value in adding cellular connectivity. First there is the £100 premium for the device and, on top of that, whatever cellular price plan you chose to sign up to.

Is this something that operators should be worried about? Is it inevitable that only a small percentage of people – high-end consumers and business people – will want cellular connectivity on their tablet? We think that yes, it is something that they should be worried about and that no, it is not inevitable that only high-end users will want cellular connectivity.

We have just published our top 10 predictions for the telecoms and media industry in 2013. One of our predictions is about operators and wifi. This is the prediction:

Wifi will become a victim of its own success
There will be a shift in operator sentiment away from public wifi as it becomes evident that the growing availability of free-to-end-user wifi devalues the mobile-broadband business model. Mobile operators will respond by articulating the value of their cellular networks better, but others not affected by this trend will double down on their public Wi-Fi investments to continue to propel the deployment and monetization of wifi.

The apparent preference for wifi-only iPad minis in London is already demonstrating that most people are happy with the wifi connectivity that they can get at home, at work, at their gym or at the local coffee shop. Are there really enough times and places where we need wide-area (cellular) network connectivity?

If operators (or Apple) want to persuade more people to buy cellular-enabled iPad minis, they will have to start introducing new marketing strategies and price plans that persuade people that it could be really useful to have cellular connectivity. Here are a few situations where cellular connectivity could be useful:

As a back-up when the broadband goes down at home: When I was away on business a few months ago and the broadband went down at home, I got a call from my eldest son at 6.00am in the morning because he needed an internet connection at home to finish his homework. At the time, I would happily have paid for a few hours of cellular broadband connectivity.

As back-up for wifi when networks are congested: In Japan and the US in particular, wifi hotspots in city centers and areas such as train stations are already massively congested.

When you go and visit your mum and dad: There’s a good chance that they won’t have wifi. What would you pay for a weekend package?

When you go on holiday – at home or abroad – and there is no wifi in your hotel, campsite or villa.

What is interesting about these scenarios is that they all involve occasional usage. In countries where there is a wide availability of wifi, it is going to be difficult to sell postpaid packages for each and every connectable device because people will not have a consistent, regular requirement for cellular connectivity. The options therefore are either to bundle the device into a shared price plan – which is what Verizon Wireless has done pretty successfully – or introduce a range of new, easy-to-use and affordable prepaid plans for the occasional user.

We are hoping that in 2013 operators will communicate the value of cellular connectivity better and start educating the customers about how and where it may be useful for them.

If they do not, we should not rule out the possibility that Apple will do it for them. Maybe if Apple was an MVNO and offered occasional mobile broadband usage via an app on the Apps store, it might have more success in selling cellular iPad minis in the run-up to Christmas.

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One comment

  1. Avatar RichA 15/01/2013 @ 2:14 pm

    Interesting discussion. Having purchased tablets with 3G connectivity which I never used twice, I opted for Wifi only in my Mini. I reasoned I could use the tethering on my phone whenever I needed a a non-wifi data service. Indeed this works pretty well except for the need to manually start personal hotspot everytime.

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