 Welcome to Top Shelf brought to you by Virgin Mobile. I'm David Pierce and on this show we bring you the best in consumer electronics past, present, and future. This week, we're taking a look at the new wireless landscape. You hate your phone, you hate your plan, but what would it really take for you to change? For years, owning a cell phone has meant signing up for a two-year contract, huge hassles every time you try to switch, and constant compromising. The cheapest carriers had the worst service and the best phones only come with expensive strings attached. But T-Mobile just made a pretty aggressive play with a new range of contract-free smartphone plans and a bunch of new phones to go with them. $70 a month gets you unlimited data, talk, and text. And $99 plus $20 a month gets you an iPhone 5, a Galaxy S4, or an HTC One. The new plans would seem to complete T-Mobile's move away from two-year contracts. It's a bold strategy and the other national carriers, Sprint, AT&T, and Verizon, have definitely taken notice. But can T-Mobile's newfound swagger really change the playing field? We sent Nilay Patel out into the city to talk to people about their carrier relationships. And like all relationships, it gets complicated. Until early 2011, the only way to get an iPhone in the United States was to sign up with AT&T. In 2009, the only way to get the Motorola Droid was to sign up with Verizon. Back then, you weren't shopping for a carrier, you were shopping for a phone. But now, things have evened out. All four major U.S. carriers have the iPhone and they all have the Galaxy S3. And soon they'll all have the Galaxy S4 and the HTC One. So the question is, what are you really getting out of your carrier? And why do we all seem to be in such incredibly long relationships with them? What carrier do you have? Sprint. T-Mobile. T-Mobile. AT&T. Virgin. Virgin Mobile. I have Sprint. Verizon. AT&T. I've tried them all. They all suck, but Sprint sucks the least, in my experience. The services are all right, but I mean, I'm personally thinking about switching over. I'm not sure where yet, though. Why have you stuck with T-Mobile for a decade? I don't know, I'm kind of lazy. How long have you had Verizon? For about four years now. Have you ever been in like a relationship with a person for four years? Yes. How's that going? It turned out in tragedy. How long have you had AT&T? Since like freshman year in high school. So, oh wait, yeah, you don't know that. So probably like yesterday? Yeah, yesterday now. Like eight years. Four or five years. It's been maybe five years now. T-Mobile wants you to switch. The newly renegade carrier is banking on an aggressive marketing campaign and what it says are far simpler plans. For a flat fee and no contract, you get unlimited minutes, messaging, and however much data you want to pay for. As T-Mobile says, there's no two-year commitment required and you can leave whenever you want. But even cheaper prices don't seem to encourage people to switch, especially because when you do the math, T-Mobile's prices aren't that much cheaper. But it's not the devices and it's not the prices that keep you committed to your carrier and no one seems to be happy with that relationship. Would you switch if the price of another carrier is 20% lower? No, not really. I don't want to go through the hassle of changing over. 50% lower? Maybe. How much cheaper? 20%? To be honest, I pay about $10 a month for unlimited data, unlimited tax, and I've got three hours of calls. I hate you. You know, I want you to know. I'm moving. Goodbye. 20% cheaper. Would you leave? No. They are 50% cheaper. I consider it. Your wireless carrier has become the longest relationship in your life and all of us seem to be settling. When those two-year contracts end, the easiest thing to do is just sign back up. T-Mobile seems to be banking on people being fed up with AT&T and the other more traditional carrier plans. And yes, its plans are indeed more transparent. But at the end of the day, T-Mobile's biggest competitor isn't AT&T. It's just the apathy. Joining me now to talk about all of this insanity is Nilay Patel. Welcome back from Bryant Park. I hope you survived. I'm glad you made it. It was cool. And Sasha Segan, lead analyst at PCMag. Sasha, thank you for being here. Great to see you. So, and I want to start with you. So, T-Mobile kind of went out on a limb this week. They did all kinds of crazy things. Is it going to work? Is this like what T-Mobile needed to be the biggest and greatest carrier in the world? Is this the right move for T-Mobile? I think T-Mobile is making a lot of the right moves. But we shouldn't spend too much time or spend all of our time thinking about the pricing and the service plans because T-Mobile has always been cheaper than the three other major carriers. And T-Mobile has been pushing towards this prepaid angle for a while now. But I think one of the biggest deals was that crazy guy in the magenta t-shirt and the Alexander McQueen sneakers. Crazy is like the biggest understatement ever, by the way. He's trying to reposition, he's trying to rebrand T-Mobile as the carrier that actually gets your pain, that understands how frustrated you are with the wireless companies and can relate to you. And if he can charge up T-Mobile staff and he can make every experience a consumer has of interacting with T-Mobile an experience where they really get how you feel as a consumer, that's when T-Mobile wins. Well, so I guess that's the big question, right? Is customer service then, are people going to love their carrier? Are people going to love not having a contract? Like, is this something people were clamoring for? I feel like we, the three of us, have been sitting here saying, wouldn't it be great if we didn't have to be on contract? But like, do people care? It seems like you found a little bit that they don't, but maybe is there a world in which people care about this? I think the switching costs are just too high. Even for T-Mobile to say we're going to separate out the cost of the device and the cost of the service, which they've sort of done. They've at least made them different line items, which is interesting. Right. And now you're on a contract for the phone. But the dream, I think, is to be able to buy any phone and then open a window and have it say, AT&T has the best service in this area and it'll cost $10. And Verizon has slightly crappier service, it'll cost $8. And you can just push the button. And then when you go somewhere else and you're like, man, Verizon service here is better. And you push the button and you're holding the phone and you're switching costs goes to zero, then that's the dream. I'm actually buying whatever service is best for me wherever and whenever. Well, to some extent, we've had that, right, with these prepaid carriers. There are all these other options out there. People don't really talk about this. Except the prepaid carriers also don't make it very easy to switch. And we're not going to see this ease of switching between carriers for at least several more years because of the technical blocks the carriers have put in place to switching. So who are these carriers, I guess, is the big question. We have the big four and then there's all these other companies that give you cell service and they've been offering cheaper phones and cheaper service that you pay ahead of time. So why haven't they caught on yet? What makes it important that T-Mobile is doing this is that if you look at a lot of the little guys, Virgin, Boost, H2O Wireless, Simple Mobile, Black Wireless, whatever. Those are just the least crazy names. Yeah, those are the least crazy names. Except for MetroPCS, Cricket, and US Cellular, most of the other ones don't actually run their own networks. They are using one of the big carriers networks. And that means- It's almost always Sprint, right? No. Simple Mobile is T-Mobile, Straight Talk is T-Mobile and AT&T, Net 10 is AT&T, etc., etc. But in any case, they've all signed contracts with the bigger carriers, which basically prevent them from endangering the larger carriers' businesses. These little guys are structured to not be a threat. So what does that mean? Like they get to too many customers and then Sprint's like, whoa, whoa, whoa. They just can't alter their pricing. So it's basically a shell game so that if you have bad credit, you don't become an AT&T customer. You go to one of these prepaid carriers and they can deal with the risk of having customers with bad credit. T-Mobile is saying they don't care. And I actually think the device story for them is getting more interesting because they have the S3, they're going to have the S4, they have the One, they have the iPhone. And the iPhone in particular, you can unplug it from AT&T and go put it on T-Mobile's network. They said they had two million people who have done that, just bought it and switched and before they even offered it. But it's like going to work now. Like it's going to work. The newer versions of the 5 will work on their faster 42 megabit 4G network. It'll work on the LTE network. How much is that the devices? Part of the other thing T-Mobile announced was like this big range of new devices. The devices are just empty. Okay. The devices are just what you need to be able to play at the table with the big boys. If you don't have an iPhone and a Galaxy S4 and an HTC One, you're not one of the big boys. You're not going to be one of the big boys and you're relegated to the second division. Right. Okay. So the devices are important, but they don't give T-Mobile any advantage. They just let T-Mobile play at the table. So then is T-Mobile's advantage then, like is this a, I still don't know if this is a compelling case to customers. Like you don't have a contract. I don't know that people are like leaping out of their seats to go not have a contract. I guess cheaper is great. And, but like you said, T-Mobile's always been cheaper. I think what people always buy their seats for, and I think this is where the pricing of the phones really comes into play. What people want is they want a new phone faster, right? The service is like whatever. It's just, it's in the air. It's like literally invisible waves, right? It's like I pick up the phone, it gets some data. That's great. What they want is a new phone every year and they can't get it. And John, but John Legere at the, after the event made a hint to one of the reporters. I forget who it was. I forget who wrote about this. But he hinted that they were thinking of maybe some sort of subscription club that could accelerate your upgrades. And now that's a thought. That's a thought that gets a lot of these power users on board. I mean, I think that's like, that's like overthinking it in a way. I mean, that's great. It's a cool idea. But if you look at the market for everything else in the world, it's like if you really do separate the cost of the phone from the cost of the service and enable a market for devices to emerge, then you'll get cheaper things. And they have legitimately done that at this point, right? It's fair to say they, you know, they're still charging you $20 a month to continue to use your phone. But you can pay off the phone at any moment and then the phone is paid off. It's just an installment plan. You're just paying for your furniture on layaway. Right. Right. But that's right. But like if you look at the laptops, for example, right, laptops have just gotten cheaper over time. It's not because Dell has been like, check out our subscription plan for laptops. It's just they're competing in the market directly against each other and cheaper things sell really well. Unlocked phones seem to be the real dream for people, right? Where, and it's kind of what you were describing before, like I buy any phone, put it on any network, but we're not there at all. Yeah. As Neelay says, that's the dream. The dream is this, this fantasy we all have of the European market, which is not actually the case in many European markets of you buy a phone and then you can connect it to a different carrier every month if you want to. Okay. But we can't do that because of the various LTE bands and CDMA versus GSM and all of this, I can use the word bullshit, right? So has John Legere used it? Yeah. It's a lot now. All of this bullshit that the carriers bake into the phones beyond the plans. Right. And I think that's actually going away. So I think what's interesting is that as AT&T and Verizon are getting pressure to increase their like revenue per user, they're realizing that building custom phones like they did in the past is a bad idea. And that's why you're ending up with a one on every carrier. That's why you end up with a note and the S4 and the iPhone on every carrier, because demanding that Samsung build you this range of new devices. No, no, no. I don't agree 100%. I don't entirely agree there because what Verizon wants to do is they want a one and an S4, okay? And they want a one and an S4 with AT&T's LTE frequency band locked out. Oh no, that's- AT&T wants a one and an S4 with Verizon's frequency band locked out. And these are very cheap, easy modifications for the manufacturer to make, and it maintains this lack of an open market. So I agree with you there. I'm saying the days of the Galaxy fascinate and- They captivate. They captivate. You're building these like, you're spending money to build custom variants of phones. It's the market's gone away from that because it's, the carriers know that the phone manufacturers are doing a fine enough job competing and building high-end devices, so they don't have to demand high-end devices. They just say, we'll take whatever you have. And as that happens, the next logical step is for these device manufacturers to say, look, we want a real market now, and we're going to start selling on our phones in a real way. So, well, so- I think that's- This is HTC's next step, right? They're never going to compete in this game against Apple and Samsung. Their next step has to be to say to consumers, screw them, buy our phone. It'll be cheaper up front, no contract, go to AT&T and- And there's some proof that that works, right? Google kind of proved it with the Nexus 4 in, not on a huge scale, but in enough of a sense that they sell out immediately. Except that Google is subsidizing the Nexus 4. That's the thing. Google can use its other businesses, the profit on its other businesses, to subsidize this phone, which loses money on hardware. It's what Amazon is doing with the Kindle Fire. Unfortunately, HTC does not have that model open to them. These phones right now still, I mean, they still actually cost $550. They cost $500, $550. And if you see a good high-end smartphone for less, it's being subsidized by something that may just not be the character. So that's what I think is- We have a couple of- We have like this is T-Wobbles lineup plus this little company called Blue here. And Blue is, you know, just one in a number of companies that are basically selling unlocked, you know, straight off the assembly line in China phones for a lot less than they would. Are these just- Are they cheaper? Like this phone is $299 and has like a reasonable spec sheet. Is it just cheaper because it's worse? Like how do we get to the point where the one is $299? It's terrible. You know, the thing that you pay- But it doesn't cost any more to make bad software than it does good software, right? It costs more to make good software. It does cost more to make good software. It costs more to- Just because the people are- To hire good programmers, to hire more testers, to get it better tested and better studied. Yeah, that costs more. So, I mean, so then how do we get to the point where- Why don't they just run stock? I mean, that's a fair question. Like why- How do we get to the point where the HTC One is $299 unlocked? Will we ever get there? Because just like- Why don't they run stock? Because just like the carriers are afraid of becoming dumb pipes, the manufacturers are afraid of becoming commoditized. Yeah, but how does the- I mean, I would just go back to the Windows- I kind of like this phone. I gotta say. That phone is just an underlying piece of- Has some weird nonsense on it. It's great. Sorry. I don't- I like the clock. You have a bad judgment. I want you to know that. That's fair. I understand. I'm kidding. I'm not kidding. Well, how does the Windows PC market have all those OEMs that just ship Windows? The way the phone market works is more advantageous to the manufacturers than the way the PC market works. You can see, and you can see, for instance, Apple is trying to drag its PCs into working more like phones because that's more advantageous to them. iOS is more advantageous to them than MacOS. And Apple is thinking, oh, we want things to work more like iOS because that's better for us. So this phone market is one where the manufacturers and the carriers both have more strength than the consumers. Right. They don't want it to be more like the PC market. Well, because it's not a real market. I mean, that's- And that's- Well, that's all the way back to the start. This is T-Mobile's move is the first baby step towards some kind of real market where the price of the phone doesn't affect the price of the service, or it's not baked into the price of the service. Now, I don't know if the price of the service is compellingly cheaper enough compared to AT&T and Verizon. It doesn't appear to be. We actually did a big study. We did a huge survey called Reader's Choice, which we do every year. And we found out that the issue with T-Mobile and why people are not switching to T-Mobile is not price. They get great ratings for price. They've always had lower prices. They had lower prices then. They have lower prices now. The reason people are not switching to T-Mobile is number one, customer service, and number two, network quality. And so all of this focus around price, T-Mobile already had the price. If you want to change T-Mobile's fortunes, can you change their customer service and the perception of their network quality? So, I mean, I guess where does all this go in a year? Like, T-Mobile is rolling out LTE, and they claim they're modernizing and changing a lot of this stuff, and that the service is going to be there. So, in a year, is T-Mobile the number one carrier? Are they still where they are? Have Verizon and AT&T moved towards what T-Mobile is doing? Like, what changes now? Execs from all the other carriers have said that they are watching this very closely because they don't want to be paying subsidies, actually, okay? Because that's money that goes automatically to the manufacturers. Right. So, if this really succeeds and T-Mobile starts gaining customers from Sprint and AT&T, probably not from Verizon, because Verizon customers are very network-centric, then you could see the other carriers trying to move more towards a, you pay for your phone, we're not going to subsidize this for you model. But they are still going to try as hard as they can to prevent you from switching carriers with your phone. And my phone is still going to be $600. It's going to be $600. It's going to be locked. And it's going to lock out everyone else's bands. But they're going to try and get rid of the subsidies. So, things are still super depressing, just slightly less depressing. Slightly less depressing, especially, apparently, if you switch to T-Mobile, if their coverage is good enough. Yeah, fair enough. I'll take that. Thank you guys both so much for being here. Really appreciate it. And we'll talk again in a year when everything is still at worst. It's always somewhat of a pleasure. I'll take it. So, in completely unrelated news this week, I got to spend the week playing with the Razer Edge, Razer's new gaming tablet that they've introduced like four different times, but it's finally coming out. It's a real product. And it's a tablet for gamers who really want to spend a whole lot of money to play games on the subway. There are three parts to the Razer Edge, really. The first is the tablet itself. It's a fairly normal looking Windows 8 tablet. The biggest difference, the thing that sets the edge apart, is that it's huge. It's eight tenths of an inch thick, making it not only thicker than most tablets, but most recent laptops as well. There's a 10.1 inch, 1366 by 768 screen surrounded by a pretty gigantic black bezel. The screen itself is okay. It's a little low res for a device this expensive, but it's bright and has good viewing angles. The only part that's rough is the touch screen. It's just kind of unresponsive, often scrolling awkwardly or taking three taps to do something, which really makes no sense on a device this powerful. This is, Razer says, the only tablet with a discrete GPU inside, a separate graphics chip that is basically required for any kind of serious gaming. Along with the tablet itself, there are two accessories that are more or less required to get the most out of the edge. One is the $100 docking station, which adds three USB ports and an HDMI port to the edge. The other necessary accessory is the $250 gamepad controller. It adds a lot of weight to the edge, but it also adds all the controls you'd need to play almost any game. You get two analog sticks and a D-pad, plus all the buttons and triggers you'd get on an Xbox or PlayStation controller as well. It also adds another battery into the edge, which it turns out you kind of need. As a PC, the edge is more or less what you'd expect. It's powerful enough to do anything you throw at it. It specs like a high-end laptop and it performs like one. But let's be honest, this isn't a tablet that also happens to play games. It's a gaming tablet. And I'm sort of surprised to say this, but it's a really good one. I played all sorts of games on the edge and everything I tried was playable. Not perfect. When I cranked up detail in Crysis 3, the frame rate definitely dipped enough that I could tell it was stuttering, but that's an incredibly intense game and it was still playable. Slightly less intense games like Borderlands 2 worked really well, and relatively simple ones like NBA 2K13 were perfect. Here's the thing. I don't quite know how to feel about the Razer Edge. It's much more powerful than any tablet on the market, and if you're in the market for a gaming tablet, it's really the only option. But if you're just a person who wants a computer, the edge costs $1,000 for the lowest spec model, and by the time you've purchased the accessories and maybe upgraded to the more powerful Edge Pro, you're looking at $1,500 for a gaming machine. The edge's performance is great without being remarkable, and if you're spending this much money on a gaming laptop, you can probably do better for your money. But if you want a two-pound gaming PC with a pretty cool controller and you can afford it, you really won't be sorry you bought the edge. That's it for our show. Thank you so much for watching. Thanks to my guest, Sasha Segan, for being here. Thanks to Nilay Patel for being all right, as always. Head to theverge.com for more on T-Mobile and for our full Razer Edge review. Spoiler alert, it plays games. Thanks so much for watching. We'll see you next week.