Verizon offers $200 subsidy for Motorola Xoom

Verizon Wireless (NYSE:VZ) will sell the Motorola Mobility (NYSE:MMI) Xoom tablet starting Feb. 24 for $600 when it is paired with a two-year contract, $200 cheaper than without the contract.

Motorola Xoom verizonVerizon also said EV-DO data pricing for the device will fall under its previously established tablet pricing plans: 1 GB of data for $20 per month; 3 GB for $35; 5 GB for $50 and 10 GB for $80. The carrier did not disclose what it will charge for LTE data; Motorola expects to release an LTE-capable Xoom shortly.

The Xoom appears to be the first tablet Verizon has agreed to subsidize. The carrier began selling Samsung's GalaxyTab Android tablet last year for $599 with month-to-month service; the device now goes for $499 without a contract. Other carriers have offered significant subsidies on the GalaxyTab; Sprint Nextel (NYSE:S) launched the GalaxyTab tablet for $399 with a two-year contract late last year.

Verizon also sells the iPad and offers the 32 GB version bundled with its MiFi product for $730 without a contract.

Last week at the Mobile World Congress trade show in Barcelona, Spain, Motorola Mobility CEO Sanjay Jha said the Xoom is worth $800 (sans contract)--despite the fact that the 32 GB version of the iPad with AT&T Mobility's (NYSE:T) no-contract HSPA+ service retails for $729. "We felt that our ability to deliver 50 Mbps would justify the $799 price point," Jha said. "It is 32 GB with 3G and a free upgrade to 4G. Being competitive with iPad is important. We feel that from the hardware and capabilities we deliver we are at least competitive and in a number of ways better [than the iPad]."

Verizon has said its LTE network delivers average real-world downlink performance of 5-12 Mbps. Motorola will upgrade the Xoom to LTE sometime in the second quarter--existing customers will be able to upgrade their device to LTE at no additional charge.

Jha also said that Motorola will release a Wi-Fi-only version of the Xoom. He would not be drawn on the exact price, but said it would be "meaningfully cheaper. The price is set by iPad at $599, and we will be right around there." The 32GB Wi-Fi-only version of the iPad sells for $599. A Motorola spokeswoman told FierceWireless that the company will release a Wi-Fi-only version in European markets in the second quarter but declined to comment on U.S. plans for the Wi-Fi-only version. 

The Xoom runs Android 3.0, or "Honeycomb," and boasts a dual-core Nvidia Tegra 2 processor. It also features a 10.1-inch widescreen HD display. The device supports 1080p HD video and HDMI output to display content on larger HD screens. Additionally, the Xoom has a front-facing, 2-megapixel camera for video chats over Wi-Fi, EVDO or or LTE, as well as a rear-facing 5-megapixel camera that captures video in 720p HD.

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