TECHNOLOGY SPECTATOR: Telstra's 4G tablet lure

Telstra's track record on branded smart devices may be questionable but that hasn't stopped it from having another crack at the device market. So what's driving the telco's latest game plan?

Technology Spectator

In a month dominated by tablet launches, where the likes of Apple, Microsoft and Google fired their latest salvos in the ongoing tablet wars, Australia's dominant telco Telstra has also revealed its renewed ambition in the tablet space.

While the release of Apple's iPad Mini and Microsoft’s Surface followed a predictable trajectory, Telstra’s decision to launch its own 10.1 inch HD-enabled device appeared somewhat out of the blue.

Some of the surprise could be attributed to the fact that Telstra's track record, when it comes to branded tablets, doesn't inspire confidence.

Telstra's previous foray into the realm of tablet computing came in 2010 with the launch of the T-Touch, a 7-inch tablet developed by Huawei. After a year’s worth of less than flattering reviews, Telstra folded the device, saying it had outlived its shelf life. It’s been a year since the T-Touch’s fateful demise and it appears the telco has an odd way of celebrating anniversaries.

Despite its past errors it’s having yet another crack at the device market, presumably having learnt some important lessons. We did get a glimpse of that with the release of the T-Hub 2 in July.

While the original T-Hub was an unmitigated disaster Telstra's latest iteration of its "smartphone for the home", which combines a cordless handset and a 7" tablet powered by Google Android, did highlight that the telco was willing to learn from its mistakes.

Telstra might be hoping to repeat the trick this time around and exorcise the ghosts of the T-Touch with its latest stand-alone tablet.

What’s in the Telstra tablet?

At first glance, the 10.1-inch Android tablet, made by China's ZTE, has very little to stand apart from the sea of Android tablets. However, in a bid to play off the telco’s self-produced 4G hype, Telstra has pitched its tablet as the cheapest 4G enabled device in Australia. Considering that most 3G enabled tablets cost more than $480, the telco’s tablet appears to be an accessible way for consumers to tap into its emerging 4G network.

Pricing is one of the key points that has pleased Telyste’s research director and principal analyst, Foad Fadaghi, who says that many consumers may see the Telstra tablet as a handy companion to their growing device collection.

According to Fadaghi, the one tablet per user adage is longer relevant with most users looking for cheaper secondary tablets. The fact that Telstra's new tablet is both affordable and 4G enabled could put it at the top of people’s list as a viable second tablet.

He also notes that the low price point makes the tablet appealing to impulse buyers, who may come into a Telstra store to buy a 3G iPad, but find it more affordable to leave with a 4G Telstra tablet.

However, it also raises the question of whether Telstra is selling this tablet at a loss, following the footsteps of Amazon which sells Kindle Fire at a loss in the hopes of recovering the profits from software sales. Perhaps Telstra is hoping to recover its profits with 4G network subscriptions?

A 4G network lure?

Unsurprisingly, Telstra has already started bundling its latest tablet with a 4G access deal.

For $49 per month over 24 months, customers can purchase the Telstra tablet with on a 4GB per month 4G plan.

Doing the math, Ovum principal analyst and research director, David Kennedy says that its bundle offers a 50 per cent discount on the actual price of the tablet.

"This suggests that the real aim is to attract new users to its mobile data service,” Kennedy says.

Though he suspects this will be harder than what the Telstra anticipated.

"The current reality is that most tablet usage is Wi-Fi based,” Kennedy says

"It will be difficult for Telstra to shift this pattern of behaviour and attract a significant number of new LTE users in the short to medium term”

Telstra vs Apple, Google and Samsung?

It’s a bold move by Telstra to pit itself in direct competition with some of the most recognisable and loved brands on the planet. Take Apple for instance. Part of its success could easily be attributed to the affinity consumers hold for its products. Customers queue for days for new release Apple products and they are also willing to pay somewhat of a premium to own them as well.

It would be difficult to argue that that the typical consumer holds Telstra and its brand in the same esteem. I’m sure that if given a choice many consumers would opt for an iPad or an iPad mini over a Telstra branded tablet.

Sure, if the tablet is priced low enough and it has enough perks consumers will buy it. But what happens when 4G technology becomes the norm for all tablet devices?

Telstra’s tablet launch is a clever Christmas strategy given that the tablet is one of two devices (the other being the Samsung Galaxy Tab 8.9 4G) that can access its 4G service. But it’s anyone’s guess as to whether the device is still attractive when 4G simply becomes the norm.

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