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Mobile Hotspots Gaining More Traction than Tablets? Verizon Says So

by Susan Welsh de Grimaldo | Mar 04, 2013

Verizon's Executive VP & CFO Fran Shammo today revealed a very interesting fact about the success of the Verizon Wireless 'Share Everything' multi-device shared data plans: the plans are working - that is, they are acheiving the goal of increasing the number of connected devices per account - but it has been a different device than expected that has driven success to date.

Move over 3G/4G tablet - the MiFi is king

MiFi®

Shammo noted that when launching the Share Everything plans in mid- 2012 (see Strategy Analytics report: Shared Data Plans from Verizon Wireless "Shifting the Way We Sell Wireless"), Verizon thought that they would drive tablet subscriptions. Tablets have seen some growth in net adds, but underperformed the carrier's expectation. What has proven to be more popular and contribute more to net adds is portable mobile hotspots (referred to as MiFi after the device category was started by Novatel Wireless)

 

The Strategy Analytics View

The success of the mobile hotspot at Verizon should not be a surprise for three main reasons:

  1. the installed base of WiFi-only tablets in the US is much larger than the base of 3G or 4G capable tablets, and for people with WiFi tablets a mobile hotspot provides a better user experience than tethering from a smartphone and it is cheaper than upgrading to an LTE tablet

  2. a mobile hotspot, while costing $20/month to add to a Share Everything plan compared to $10 to add a 4G tablet, can be used to connect up to 5 devices - so multiple tablets or laptops at once
  3. 4G LTE tablets still pack a hefty price on top of a WiFi-only tablet, so even today's purchasers of a tablet may lean away from 4G

Mobile Tablet Subscriptions Will Grow, but How Much? How can Operators Succeed?

Shared data plans and LTE networks with good performance and geographic coverage have eroded some of the barriers for mobile tablet subscriptions, but the cost differential to buy a tablet with embedded mobile connectivity plus the fact that most tablet use occurs where WiFi is often available means LTE tablets subscriptions still face an uphill battle. Growth outlook for tablets subscriptions is positive, but not overwhelmingly so. On the otherhand, the mobile hotspot market seems to have outperformed industry expectations - and should have continued growth even as embedded device subscriptions grow.

What do you think? We are working on an update to our tablet subscriptions...so keep watching this site for an update and let us know what your view is.

Susan Welsh de Grimaldo

Director, Global Wireless Practice 

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