How much value does cellular access give gadgets?

So far, less expensive Wi-Fi-only versions of unsubsidized popular portable electronics have outsold their cellular-equipped counterparts. Will that continue with the PlayStation Vita?

At E3 this year, Sony presented more details about its forthcoming handheld formerly known only as the NGP. Now revealed to be the PlayStation Vita , it continues the PSP (and PS3) tradition of inviting a new generation of games with a powerful combination of technologies. These range from a pair of cameras, an accelerometer, and gyroscopes now found in many handsets to a quad-core processor, 5-inch OLED display, and a touch-sensitive back panel to complement its touch screen.

PlayStation Vita
The PlayStation Vita will provide another opportunity to study the impact of a premium for cellular access. Sony

It will also be the first handheld console from a major brand available with optional cellular access. Thus, the PlayStation Vita, priced at $249 for the Wi-Fi-only version and $299 for the cellular version, will provide another opportunity to study the impact of a premium for cellular access.

The Wi-Fi-only PlayStation Vita is priced almost perfectly between the Amazon Kindle at $139 ($114 with "special offers"), and the $499 entry-level iPad. The least expensive 3G iPad commands a $130 premium over its Wi-Fi-only counterpart whereas the cellular-equipped PlayStation Vita--like the 3G Kindle--is priced at a $50 premium. Looking at it in terms of percentages, the cellular premium breaks down as follows--Kindle: 36 percent, PlayStation Vita: 25 percent, iPad: 26 percent.

Of course, the price of the device is but one factor. The data-supping Kindle provides free cellular access, whereas the iPad monthly plan starts at about $15 per month. At this point, there's more to be revealed regarding how the Vita will use the cellular network or how that usage will be priced. The experience to date has been that the less expensive Wi-Fi-only versions of unsubsidized popular portable electronics outsell their cellular-equipped counterparts.

For example, in NPD's Apple iPad Owner Study II report completed in March, NPD found that only 18 percent of iPad owners cited 3G connectivity as a feature that most attracted them to the device, down from 24 percent last August. In addition, NPD found that more than half of even iPad 3G owners don't use it with any cellular plans; that number grew to more than two-thirds for most recent owners. However, as its home console rival Microsoft ties Xbox Live into its Windows Phone platform, Sony is exploring cellular connectivity in other ways. It has integrated its PlayStation Suite into its recently released Xperia Play and will be certifying other Android handsets.

Carriers have yet to find a mass-market portable electronics product outside of handsets that makes a compelling case for cellular, even when access is free as it is with the Kindle.

Carriers have yet to find a mass-market portable electronics product outside of handsets that makes a compelling case for cellular, even when access is free as it is with the Kindle. The relatively poor performance of the more expensive Nook, for example, has led Barnes & Noble to opt for Wi-Fi-only on both its color and second-generation e-paper-based models even as the device would have proven more capable of tapping into a wider range of Web-based media as other tablets do.

But the quest continues, and AT&T recently announced that it is working with Panasonic on connected car entertainment systems, following work with other car companies such as Ford and Nissan and exploring distribution beyond electronics retailers.

Like the 3G Kindle, the cellular Vita will face competition not only from its locally connected twin, but from a major competitor--the Wi-Fi-only Nintendo 3DS, also priced at $249. However, the Vita may be able to utilize something the iPad has not--access to a shared device plan. At the D9 conference, AT&T Mobility CEO Ralph de la Vega shared that AT&T is planning to roll out such an option. Functionally, such a plan may not yield much greater benefit than the now prevalent personal hot spot or access point plans, but it would streamline the connection experience for products with embedded cellular.

 

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