with Glenn Lurie, president of AT&T's emerging devices business
Glenn Lurie has been AT&T's most outspoken advocate of its growing connected devices business, and rightly so. Since starting the business in November 2008, Lurie and his team have grown the division into a $1 billion business that he thinks is just the tipping point of what's possible. Lurie recently spoke with FierceWireless Editor in Chief Sue Marek about the company's recent deal to provide connectivity for Amazon's new Kindle Fire HD LTE tablet and the growth of its Mobile Share plans.
FierceWireless: When Amazon announced its new Kindle Fire HD tablet with LTE earlier this month, it said the tablet will come with a $50 per year data plan from AT&T (NYSE:T). That's a new rate plan model for tablets. Why make the change?
Lurie: We are doing a great job with tablets in this industry. OEMs are starting to understand that customers want anytime, anywhere connectivity. Connectivity is not just about Wi-Fi only. So we are going to continue to work with our partners, in this case it's Amazon, and look for ways to increase that opportunity. We want OEMs to have 100 percent of tablets built with cellular and Wi-Fi connectivity.
The carriers have done a great job, I'm proud of AT&T, for making it simple for customers to have lots of choices of rate structures. We have the session-based plans that we launched with the iPad, day passes, week passes and now with Mobile Share we are giving customers a ton of choices.
FierceWireless: But your critics are going to say that with the $50 per year plan, Amazon tablet users are only getting 250 MB of data per month and that isn't going to be nearly enough.
Lurie: It's an Amazon promotional offer. It's an opportunity for people to decide how they want to use it. It's twelve 250 MB sessions. The customer will get notification on the device asking them if they want to buy more. It will be completely up to the customer if they want to do it and how and when. But our goal continues to be to look for opportunities so these devices are all monetized. All these devices give customers what they want and as a carrier, we would like a way to monetize, as does the OEM.
This is just another example of us looking for that opportunity.
FierceWireless: But ABI Research did a study and found that in the second quarter of 2012 less than 27 percent of new tablets shipped included a 3G modem, which was 12 percent down year over year. The trend seems to be going the opposite of what you are saying.
Lurie: I read the same research you do and there are a lot of guesses out there. By the way, the carrier with the most tablets on their network is AT&T, and I see exactly what they sell.
FierceWireless: The price difference between a Wi-Fi-only device and a cellular and Wi-Fi device is pretty significant. If customers don't understand the difference, then of course they are going to buy the less expensive device.
Lurie: I think that part of that price difference is because the OEMs are building two devices. If you talk to Qualcomm and Sierra and other module makers, you will see that the price of the device is higher than the actual cost of the module.
FierceWireless: You said today you have 17 million paying customers on connected devices through the second quarter. What are you including in that figure?
Lurie: Yes that is all emerging devices, connected devices like tablets and M2M. What I'm most proud of is the fact that since this group launched in November 2008 we have grown from little revenue to well over a $1 billion business. That was my goal and I reached it. But we are just getting started. I'm pleased at what we have done but now it's time to take it to the next level.
FierceWireless: What is that next level?
Lurie: I think that some of the things that we have worked on for the past few years are starting to really come to fruition. We are starting to see exciting things around automotive that will happen at the end of this year and in early 2013. Automotive is a phenomenal space.
I also think you will see more on Digital Life. That's AT&T's focus on the home and all-IP connectivity in your home. We are going to leap way ahead and deliver more than anyone else and at a competitive price.
FierceWireless: With the connected car space, it seems like there are a lot of obstacles to overcome. How is this going to take off in the next few months?
Lurie: It is a complicated ecosystem. Inside the vehicle there are at least four or five companies delivering different telematics services. There are some automobile makers where AT&T will be just transport. But for the majority, they also want help with it. They are seeing that the smartphone and the tablet are all coming in the car.
And all these things are using the same module that is also telling the car maker that the airbags in your car just deployed. So there are safety aspects, plus infotainment and applications being developed for just the vehicle. And there is the connection to the Digital Life and the home. There is a whole bunch of connectivity--unconscious connectivity--which is so simple you aren't aware that you are connected.