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Mobile carriers in the UK — 3, T-Mobile and Orange — are providing iPads through a subsidized model, perhaps as early as year’s end. Fresh on the heels of the UK carriers, Japan's mobile provider Softbank has just announced a subsidy program for iPad. Apple's competitors, who have been unable to compete pound-for-pound with iPad's pricing, thought they had found Apple's soft underbelly via the carrier subsidy model; however, it appears Apple is more than willing to play the same game, but that's where Apple stops playing fair.

The UK carriers are taking an agressive approach, bring iPad to the masses for around £199, with a two-year subscription. But in Japan Softbank's approach is nothing short of stunning, offering the iPad for free, with a two-year contract.

Regardless of the UK's low £199 carrier pricing or Softbank's free solution, neither offer can be matched by Apple's competition. Yet Apple is pushing this subsidized direction forward without any serious players in the market, thus it reveals how important Apple believes tablets are to their future. Subsidizing tablets as the best way to lure consumers probably isn't that relevant to Apple, but it does accomplish the task of locking out a new entry point for the competition, while leaving iPad in a commanding position.

If you don't get the big picture yet, let me spell it out for you: Apple is dead serious on dominating the tablet market space. I was once told by an engineer who had worked closely with Apple "They (Apple) don't just enter a market to be a player or to be a part of the market, they go into a market to do one thing, win, to completely dominate it."

The subsidy model is quickly launching in other regions across the globe, so this begs the obvious question: When is it going to happen in the US? When will it grab hold in Germany, France, Brazil, Australia and beyond? Are the UK and Japanese markets merely test cases for Apple? If these programs turn out to be successful, count on Apple green-lighting an all-out worldwide carrier model come Apple's next iPad revision. A tiger by the tail indeed.

2 Comments

1. themacadvocate ~ November 30, 2010 15:57
   I believe AT&T's decision not to subsidize the iPad (it was almost certainly their decision in the end) was a confluence of several factors: -AT&T was reluctant to compensate people (through subsidy) to add significant consumption devices to their already-compromised network. Think about how bad AT&T's 3G network would be if a $199 iPad was available. -AT&T *knew* these devices would sell big and didn't need to subsidize them to move. The Apple that volunteered the iPhone to AT&T in 2007 is a very different company. Why pay Apple through subsidy when the 3G sign-ups would happen without it? -Related, AT&T still had exclusivity. People already owned 10s of millions of iPhones through AT&T. If they bought a 3G model, they were guaranteed revenue. In short, the difference between the upstart 2007 Apple and the juggernaut 2010 Apple, and the success AT&T has enjoyed with the iPhone, is what allowed them to "just say no" to subsidies.
2. ereriommido ~ February 26, 2011 10:01
   hi, new to the site, thanks.

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