LTE devices dominate at CES, price points starting to drop

LAS VEGAS--It didn't take long in my annual foray to the Consumer Electronics Show here to pick out the overarching wireless theme of the show: It is all about LTE devices. Nearly every operator introduced them, from AT&T Mobility's (NYSE:T) first two LTE Windows Phone smartphones and six Android LTE devices, including a waterproof tablet from Pantech, to Verizon's (NYSE:VZ) batch of four new LTE phones, an LTE tablet from Samsung and two new LTE mobile hotspots. 

Of course, it's not surprising that with Sprint Nextel's (NYSE:S) planned mid-year launch of LTE in 10 markets, the company used CES as a launching pad for its first LTE devices. The company announced two LTE smartphones and a mobile hotspot from Sierra Wireless. However, Sprint did not provide any insight into how it will price its LTE data plans and whether it will offer unlimited LTE data.

But what caught my eye wasn't the 16-megapixel cameras or the HD screens that some of these devices offer, it was the variety of price points we are finally starting to see. In fact, the prices of the LTE devices announced here provide some insight into operator LTE strategies.

Clearly AT&T is serious about building traffic on its LTE network and moving to the mass market. The company made waves with its two $50 LTE smartphones--the Pantech Burst and the Samsung Exhilarate. The Burst will be available Feb. 22, followed by the Exhilarate. In an interview with FierceWireless, Mark Woodward, AT&T's chief marketing officer, said that any time devices drop below the $99 price point, the operator sees a huge uptick in adoption as the devices attract the mass market. "It's a magic price point," Woodward said. 

Interestingly, he added that high-end smartphones have kept a fairly steady price point of $199, indicating that not all consumers are looking for inexpensive devices and many will pay for devices that they perceive to have more value.

But AT&T's new low-priced LTE smartphones aren't the only thing catching people's attention. Jan Dawson, analyst at Ovum, noted that AT&T has managed to slip past LTE market leader Verizon in terms of LTE smartphone diversity. "Impressively, it [AT&T] has also launched a wider range in terms of price points, operating systems and form factors than Verizon, which launched much earlier. Verizon will have some work to do to catch up, especially at the low end." AT&T plans to offer both Android and Windows Phone LTE gadgets.

Verizon didn't announce the pricing of the devices it debuted yesterday. However, the company does have a Pantech Breakout LTE smartphone that it sells for $50. The company also offers LTE smartphones such as the HTC ThunderBolt, the Samsung Stratosphere and the LG Revolution in the $100 range.

But where Verizon really is trying to attract more subscribers is through its temporary discount on LTE data pricing. Introduced at the beginning of November, Verizon's double data offer, which ends Jan. 15, gives new LTE smartphone subscribers double the data the carrier previously offered (4 GB of LTE data for $30, instead of 2 GB, for example). And it seems the company's LTE marketing efforts are paying off. Earlier this month Verizon said it activated 2.2 million LTE devices on its network in the fourth quarter, which is an increase from the 1.4 million it activated in third quarter.

With AT&T's increased number of LTE devices coupled with Verizon's data pricing promotions, it appears that the race to attract subscribers to LTE networks just got a little bit more interesting.

P.S. To stay on top of all of our CES coverage, visit our CESLive page. --Sue