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Telcos Hold Key to Apple Tablet Sales

NEW YORK ( TheStreet) -- Apple's (AAPL - Get Report) Tablet prospects hinge on phone company charges.

In a research note Wednesday, Macquarie analyst Phil Cusick estimates that the Apple Tablet will sell for about $800 and boost the company's profit 5% next year. That projection calls for 3 to 5 million Tablets to be sold, adding $559 million to the bottom line.

But stiff data service charges by telcos like Verizon (VZ - Get Report) or AT&T (T - Get Report) could cool consumer desire for Apple's hotly anticipated touchscreen device, also known as the iPad or iSlate.
Rendering of a tablet device

"As beautiful as an Apple Tablet may be, the functionality will be driven or limited by the wireless connectivity," Cusick writes in his note.

If the Apple Tablet turns out to be an e-reader like the Amazon (AMZN - Get Report) Kindle, then monthly network connection charges would likely be around $6. But if the Tablet promises to be a full-featured media player -- a portable HD-TV, if you will -- service fees could run as high as $60 a month, Cusick writes.

Apple has been struggling to find the right sales approach for its Tablet. Apple and Verizon have discussed a plan to offer the device on a non-exclusive basis with Verizon subsidizing part of the buyer's cost. The heftier the subsidy, the more Verizon will charge for the data service plan.

The ideal price plan for the Tablet, according to Cusick, would be $700 for the device and about $25 a month for the data plan. But Cusick suggests that Apple will have to defer to the carriers on service prices, allowing for the possibility of tiered pricing based on different levels of data capacity, from light users to heavy users.
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AAPL $93.74 0.00%
AMZN $659.59 0.00%
T $38.82 0.00%
VZ $50.94 0.00%
FB $117.58 0.00%


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