AT&T has announced a $100 discount on any of the tablet computers it sells with a two-year service contract. The move is intended to spur holiday tablet sales and activations on the carrier's 3G and LTE networks.
BLACK FRIDAY: Could be big for Android device buyers
It applies to AT&T's full listing of tablets, including the Apple iPad and the iPad mini when it goes on sale later this month. The other tablets currently on the AT&T website are Samsung Galaxy Tab 2 10.1, Samsung ATIV smart PC, and Pantech Element, both new and refurbished.
Dubbed a "promotional discount," the savings are being interpreted -- wrongly -- by some as an iPad subsidy, similar to the payments AT&T and other carriers make to Apple to reduce the money paid by subscribers for iPhones bought with a two-year contract.
From now until the promotion ends, AT&T customers will receive $100 off any tablet bought with a two-year data plan at AT&T's retail stores or online at www.att.com or at "selected agents or retailers," according to a statement from the company. AT&T iPad models with LTE cellular currently are $480, $580 and $680, depending on storage. The Samsung Tab model is currently $400.
The iPad mini with LTE is due to be released this month, and will start at $459 for the 16GB model; the 32GB and 64GB models successively add $100 to the price tag.
It's a common practice to offer promotional discounts during the holiday season. A discount, according to the Business Dictionary, is a "deduction from the face amount of an invoice, made in advance of its payment." The effect for the buyer is a lower price.
Though the end result is the same -- a buyer is paying less for some product or service -- the subsidy mechanism is very different from a discount. "The basic characteristic of all subsidies is to reduce the market price of an item below its cost of production," according to the Business Dictionary. In the case of Apple and the carriers that offer the iPhone, the carriers pay Apple a substantial portion of the full price of each iPhone that is sold with a two-year contract, and then in turn sell the iPhone to subscribers for the difference.
AT&T lists the "regular price" of the new 16GB iPhone 5 as $650. But it offers "instant savings with contract" of $450. The price paid by a subscriber: $200.
One AT&T data plan is Mobile Share, which offers one bucket of data, ranging from 1GB to 20GB, which can be shared by multiple devices. A tablet can be added to a Mobile Share account for $10 per month. AT&T's DataConnect plans start at $15 per month for 250MB, $30 for 3GB and $50 for 5GB.