Subsidized netbooks- who will pay to play?
Netbooks have tackled the world by storm due to their low price, often just $300-$500. Small useful little laptops that can hit the web running. Word has been trickling out this week that major carriers are planning on introducing netbooks at super cheap subsidized pricing to get customers to pony up for 3G data contracts. These would be enabled either by integrated WWAN when available or by USB modems. You sign the 2 or 3 year contract for the 3G and get a useful little netbook for $100 or less.
This sounds like a very compelling business model but it leaves me wondering if many will find this a good deal or not. Data plans here in the US cost from $50 – $60 with a 2 year contract so that cheap netbook suddenly gets a bit expensive. Especially when you consider that for only $200-$300 more you can buy the netbook outright with no obligation. So will folks pay to play?
This subsidized model has already been happening in the UK for a little while so maybe we can learn from them. How about it, have you picked up a subsidized netbook? How much did it cost you and how much will the data plan cost you over the life of the contract?
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I’m in Denmark and here telcos are only allowed to bind you for 6 months with a contract. They are starting to roll out netbooks now bundled with a mobile broadband subscription.
They subsidy up to a little over half of the price of the netbook and sign up for six months. If I were shopping for mobile broadband I’d take that bait any day. Especially now that the netbooks are starting to have 3G built into them.
But can a telco really bind you for 3 years in the US? That seems insane.
Unless the 3G can be used for more than one device I wouldn’t want to commit.
If it consisted of a 3G Express Card slot or similar with a PC card adapter for other laptops then I might be more interested. An external USB connection would be better replaced by a tethered phone with a data plan.
I’ve noticed that in the UK the deals really only equate to paying for the netbook over the life of the contract, i.e a £10 a month data only deal becomes a £30 per month deal for a netbook plus data, over 18 months.
So apart from my cell phone plan, I need a data plan for web access from my phone, and then a separate plan for my netbook? Not to mention my home internet connection? Nah. I might be willing to pay a few dollars extra on my phone plan if I could tether a netbook, but else I’ll wait for more wifi in more places :-)
I think that this is absolutely right on the mark (in the US) in Europe and the rest of the world you will have the option of buying data cards like voice minutes.
US: I predict that each major carrier (ATT, Verizon, T-Mobile) will partner with a specific vendor (ASUS, HP, etc) and offer their netbook with their service. Like the AT&T/Ipod T-mobile/Android phone combinations.
– AndyW
Sprint and Verizon have been throwing out broadband cards for about $50 to sometimes free when signing up for a 2-year contract at full monthly price. Using the same model for netbooks would probably call for a similar deal, I can see HP offering the mini 1000 for $100 with a 2-year broadband plan.
The problem is I don’t like it because it is a blatant ripoff.
At $60/month over 2 years that’s over $1400. Factor in the $399 price of the mininote over that same period and the savings come out to a puny $16/month. Over a period of 2 years you’ve paid $1000-$1100 for that “free” netbook, and saved only $12-16/month off the broadband plan.
The other issue is with the netbooks themselves. WWAN modules are built-in and cannot be used with other devices, unlike express card devices that can be used with certain netbooks and all notebooks. USB devices working with desktops as well.
Sure, the netbook subsidies are attractive, but only during the first two years. After that you may as well toss the old netbook for a newer model and sign up for a new plan.
For too many years now, wireless companies have been deceiving customers with free hardware offers, then milking users with locked-in contracts and intimidating anybody who wanted out with cancellation fees.
To be honest, I would feel more comfortable buying the unit at a full price, and sign up for a pay-as-you-go monthly data plan – no contract obligations, no cancellation fees and free to use as I need.
Looks like very few European/UK readers here.
I rather use BT DUN 2.1 which is a bit faster than 2.0 and this way I can use it with all my computers like the Aigo, U810, M912, SC3 and the Macbook Pro.
Expensive, USB modems dangling from the side (at least for netbooks currently) and 2 year contract minimum (at least here in Japan). Ugh.. Only if I couldn’t live without it.
I’ve been doing the sums everytime they announce one of these new deals here in the UK, and – unsurprisingly – they always make up the cost of the netbook somewhere. At first it was always as Gavin Miller observed, a more expensive data package, but recently there have been more examples of quiet limits elsewhere in the contract: 1GB of data allowed, say, rather than 3GB or 5GB if you went for the same price tariff with a basic USB modem.
The subset of netbook users who need mobile internet access so much that they want a simple, integrated option, but who aren’t wanting to ever use it on another machine, seems particularly small to me. I’d be very interested to know how many the carriers actually sell.