Consumers get smart about tech
Verizon yesterday dropped the price on the Samsung Galaxy Tab by $100 to $299.99, although you will still have to sign a two-year contract. That puts Verizon within striking distance of T-Mobile’s price of $249.99, again with a two-year contract.
The move by Verizon comes hot on the heels of reports suggesting that the demand for Verizon’s recently-launched iPhone 4 wasn’t quite what the industry – or the carrier itself – had expected."
The problem, as always, is that today’s must-have, cutting-edge technology is out-of-date almost as soon as you take it out of the box. This is particularly true with the white-hot mobile sector, where new products are coming to market on an almost daily basis.
The long-awaited arrival of Verizon’s iPhone 4 was particularly ill-timed. After 4 years, Apple-watchers have become used to annual updates, and it is perhaps the industry’s worst-kept secret that yet another new version of the iPhone is coming this summer. Thus, anyone purchasing an iPhone from Verizon over the next three months is going to be stuck with an out-of-date model for a minimum of 20 months out of a 24-month lease.
The problem with smartphones and tablets is that the product cycles are now significantly shorter than the voice and data contracts that come with them. If there is going to be a new iPhone every year, wouldn’t it make more sense to offer a one-year contract?
The carriers will argue that if they couldn’t lock you in for two years, then those upfront discounts would start to disappear. However, those discounts are often offset by hefty activation fees and even heftier early termination charges.
Long-term, it will be the consumer who dictates whether the two-year contract remains a staple of the industry. Already, smartphone owners know enough about the pace of change of technology that the carriers practically have to give away a phone if it’s more than a year old. (You can get an iPhone 3G S for $49 and a Droid Incredible for free – both with a two-year contract of course.)
Meanwhile, the industry waits to see the fate of the Xoom, the latest feature-laden tablet from Motorola. With a starting price of $600 and the iPad 2 just around the corner, most people are betting that the discounts are going to come early and often.