Enough Already with the Subsidized Netbooks!

Nov 3, 2009
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Enough Already with the Subsidized Netbooks!

With the holidays fast approaching cell phone carriers are stocking up on inventory and amongst the new Motorola DROIDs, HTC Heroes, and Palm Pixies are a slightly larger, yet unfamiliar crop of devices – netbooks. AT&T is all giddy about its exclusive availability of the Nokia Booklet 3G and Sprint announced just yesterday that it will be selling the Dell Inspiron Mini 10V. Verizon already has three netbooks in its arsenal, including HP’s new powerful Mini 311. Clearly, lining up the selection isn’t a problem, but what the carriers haven’t figured out yet is that selling netbooks requires a totally different approach than selling phones. The deals and the subsidized model, in my mind, make as much sense for netbooks as building and then plowing a virtual Farmville farm!

Let’s take AT&T’s Nokia Booklet 3G. The Booklet 3G, which is one of the nicest feeling netbooks I’ve ever gotten my hands-on, costs $599. Now that is a boatload of money to spend on even the nicest netbook (the average price is $350) which is why Nokia intended it to be subsidized by a carrier. (Get it, Booklet 3G!). Here in the U.S. it will be $299 with a two-year data contract ($60 per month) on AT&T. That sounds better than the $599, like $300 better. But when you do the math, it isn’t really cheaper at all. Not only will you pay $299 up front for the netbook, but you also have to add in a whopping $1,440 for data charges over two years. Total cost: $1,739. Woah! That is one freaking expensive netbook.

But do people really use the 3G connection on their netbooks frequently enough to justify purchasing another cell phone? Given that netbooks are generally used for no more than a few hours at a time, it’s highly doubtful. At least in the case of the Nokia 3G you can remove the SIM card associated with the 5GB per month data plan and use it in a different device, but netbooks on both Verizon and Sprint are horses of a different color. Once you buy a subsidized netbook from one of these CDMA carriers you can only use that data plan on the secondary notebook. See where I am going with this? You may end up spending $60 a month for Internet connectivity on a notebook that isn’t regularly used. It’s like buying an expensive pair of shoes you will only wear once or twice, you just don’t get your money’s worth.

My simple answer for those of us who don’t like to rely on WiFi but prefer a mobile broadband connection for our netbooks is to buy a MiFi or a mobile broadband card. This solution links the cellular plan to a portable and swappable card that can be used with multiple laptops or devices (with the MiFi up to five at the same time!)

But I do understand that a standalone device, even if bundled with a netbook, doesn’t have the same appeal as an integrated option. That’s why carriers should design netbook plans differently. Similar to the way HP netbooks are being sold in Japan, a pay-as-you-go service would hold water here in the U.S. Instead of customer contracts, the netbooks would come with SIM cards that could be refilled as needed. This would alleviate the $60-a-month data plan and you’d only pay for the minutes or mega/gigabytes that you use. How would customers monitor their usage? Just like with a pay-as-you-go cell phone plan, you would be alerted to the amount of dollars or GBs (or maybe even time) you have left to use.

Although this concept may at first appear like a hit for carriers since customers would not be locking into contracts, the possibilities for this model would become increasingly profitable as more devices become available. It also opens the door to customers who previously would not consider spending money on a 3G connection because of the fine-print contracts and the monthly cost.

So dear carriers, as you polish up those holiday lines with more shiny netbooks, please consider sprucing up the plans too. You can’t pull the merino wool over our eyes this holiday season: that $299 netbook isn’t $299 at all!


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