Indian Telco Offers Free Netbook With a Wireless Contract

45 Comments

The concept of offering free portable computers bundled with wireless Internet connections has been kicked around for a while, but not many have gone ahead and done it. Till now. Reliance Communications, a large telecom carrier in India, says that it will be giving away free netbooks for those who sign up for its two-year wireless Internet service. It has teamed up with Intel, Acer, Asus, HCL and Lenovo in order to make this happen.

Netbooks are highly portable versions of laptops that are typically powered by Intel’s Atom or Via Technologies’ chip. They are being viewed as the next big thing and are already logging robust sales. (I like to call them cloud computers.) Intel has placed a big bet on this technology trend. This is an announcement that brings the handset economics to the computer business — a major shift in how computers have been viewed — till today.

This application of the wireless industry business model (subscription) to the computing business means that we may finally see computer penetration go up in emerging economies. It is not easy for people to buy expensive computers in the emerging economies, but these smaller netbooks that can be attached to a keyboard, mouse and a monitor can help overcome those barriers.

The new offer holds hope for Intel specifically. It can help the chip giant find success for its Atom-platform and turn it into a new engine of growth. ABI Research projects that there will be 200 million mobile Internet devices sold in 2013 and half of them will be powered by Atom. For Intel, which has been struggling to get a toehold into the wireless industry, this might be the best way.

In order to get a free netbook, consumers will need to sign a two-year deal for Reliance NetConnect that will cost about 1,500 rupees or $30 a month and currently runs on the older 1xRTT technologies.

The $30-a-month offer is still too expensive, and Reliance might need to lower prices on Internet access. Of course, given the competitive nature of the Indian mobile market, don’t be surprised to see similar announcements from other major mobile carriers such as Bharti Airtel, Vodafone and Tata.

That would ensure mobile data prices decline rapidly. But till then Reliance can sign up customers quickly and lock them into two-year contracts, giving the company a platform on which to sell its 3G services to its customers. Reliance will transition to 3G technologies soon. The Indian telecom regulator recently cleared the way for 3G networks to be set up in India. Reliance is also in the process of moving away from CDMA to GSM-based networks.

Update: As outlined in our comments, Reliance joins Orange Slovekia and Carphone Warehouse in UK in offering Broadband-subsidized laptops and netbooks.

45 Comments

jjray

I was wondering when this was coming. You get a free phone with a 2 year contract with a cel phone company. They now make very cheap laptops designed mainly for browsing the web. Broadband internet packages in many areas of the country are still highly priced (due to lack of competition). Gotta think broadband providers will adopt the loss leader marketing strategy of the cel phone companies sooner or later.

Habib Ullah Khan

“I like to call them cloud computers.”

Too much of a mouthful! Lets settle for The Cloudbook. Mmmmmmmmmm.

TechPuree

Though the idea looks quite promising but keeping the current economic meltdown in mind, it may take some time to “really” take off. But with Reliance anything is possible as they are known for their blitzkrieg marketing.

amolpatil2k

The trouble with any discussion is that there are too many aspects and too little expertise. On top of which, blog comments are usually one off – people comment and get on with life. Why should they stick around?

The Web is still young. Through trial and error, we would get to know what works and what doesn’t. As a medium, it is so powerful that changes would keep getting swifter and deeper. Then the only worry is how would Big Brother choose to interfere (as it always does in the affairs of men.)

My take on netbooks is to draw lessons from advertising (??!)

I have this crazy theory that when the Net is about to destroy a revenue model, it uses an outsider. So Google killed the traditional advertising revenue streams and performance benchmarks.

There are many such examples. In the same vein, ASUS killed the ultra portable notebook niche. Naturally, it didn’t do so in specs. But in effect. Let’s face it top executives plunk down thousands of dollars on some sleek baby then use it for email (duh!).

Then we have the roadmap factor. Flash has been with us a long time. We could have had a cheap battery-life-extending HDD-less, ODD-less notebook a long time back, but everything must wait its turn in the great roadmap factor.

The same roadmap factor has delayed mobile internet options by so many years. A very conspiracy-theory way of putting things would be that the roadmap factor wants to delay mobile internet products and services as much as possible. Then there is the problem of lack of standardization in wireless security. Also why is GPS still out of reach?

The Internet has caused enough damage to brick and mortar. Having Internet in our pockets would accelerate the process many times over. The only thing that can save brick and mortar is noise. Most people would break down under the information overload. If Big Brother excels at watching, it absolutely shines at confusing.

Ashish Prasad

I don’t think this will work well in India. I can’t see typical Indian population (myself being a proud one) moving around with a netbook in their hand. The mobile phone has been so successful mainly due to low cost, availability everywhere and small form factor. I have went to villages with no electricity but with great signal on the cell phone. They pay like Rs. 5 per day to charge the phone with diesel generators.

Remember bulk of Indians still use a two wheeler as means of transportation. While they can carry a cell phone pretty easily (and perhaps use them while riding a motorcycle), I can’t see them using any device larger than a cell phone.

Besides, the cell phone is primarily used for text and voice exchange; it’s not being used for web surfing at all. I can’t see folks Googling for a restaurant or a shop on their cell phone, they know that already.

Dean Bubley

Om

You’ve got to bear in mind that 91% of Reliance’s subscribers use prepaid accounts, not postpaid contract subscriptions. And that $30 is about 2.5x the average India ARPU for the contract customers, and more than 5x prepaid ARPU.

http://disruptivewireless.blogspot.com/2008/10/free-netbooks-in-india-big-deal.html

By comparison, the Dell embedded-3G netbook available on a similar deal in the UK on Vodafone at £25 a month – about 60% of the equivalent average ARPU.

Interesting though it is, in my view the realistic addressable market for this type of deal is only a tiny fraction of the overall Indian population.

Dean

krishnarao

I think it is a start of an interesting business model from an Indian company. But the deal is not at all sweet for Indian customers. I have to buy a data plan that will cost me Rs36,000 over a period of 2 years — whose speed is not guaranteed — just because it offers me a netbook that costs Rs16K (Asus Eee). I don’t think it is a good enough incentive.

But like I mentioned, the business model is new. I hope it extends to smartphones (not the normal phones) whose prices are ridiculously high. A higher end Blackberry model costs nothing less than Rs30K.

Raghav B

i just scoured the reliance website for this offer and cant seem to find it. can someone pls give me the link to the offer page or the press release.

Neeraj Arora

What I do not understand is how is this offer a wireless broadband offer? We do not have wireless broadband in India so far. The Aircard that Reliance sells is as slow as a dialup connection. To me it makes no sense till we have 3G / Mobile WIMAX.

Sanket

Reliance seems to be trying the same model that it so successfully used with their mobile network by giving away free basic cell phones

Om Malik

@Ram Krishnan

I think the fact that this is being pushed in INdia where the market is relatively large, this could have a major impact in my opinion.

I am guessing their decision to not roll out WiMAX just yet is because the networks are not ready while this seems to be ready to go. Of course, there is the issue of what kind of mobility comes with that WiMAX. I wouldn’t write them off just yet.

Ram Krishnan

Operators in Eastern Europe have been using the subsidized model for a while now. In fact, Orange Slovakia is apparently the second largest retailer of laptops there! Michael Dell is betting his netbooks will take off based on this model. The surprising element here is that Reliance is not offering WIMAX with this offer, given that they are deploying fixed WIMAX all over India.

http://mobilebroadbandblog.wordpress.com/2008/09/26/3g-embedded-netbooks-killer-product/

Doug Mohney

With a list price in the states of around $300-350 for the Linux-y flavors of Netbooks, and $350-450 for XP versions, you’re basically at the point of the cost of a cell phone (which should kinda beg the question on the BoM for a phone vs a NetBook, but that’s another day’s journey…)

But make no mistake, computers into developing markets is a long march, not a sprint….

Going into emerging markets gets you into long-tail/long-headache issues for penetration, specifically power and education. You don’t have to have a high level of literacy to use a cell phone. Power is a more interesting issue that I suspect is going to be overrun by the GreenTech types with a combination of cheap(er) solar and locally generated power (wind, bio, maybe hydro).

As for Netbooks = cloud computers, I think you’re a little foggy. :) Having sufficient resources to do work when the network is down/unavailable (and it will be down) is the real key to utility, otherwise the X-terminal/Citrix/Failed Larry Ellison company models would have already taken over the earth.

mark

Offers subsidising laptops (to free) have been around of a while in the UK with both fixed and wireless broadband services. Carphone warehouse even offers “free” PS3 or Wii with longer fixed broadband contracts

Om Malik

@Joe_90… I thought that offer was for broadband connections not wireless. Can you clarify and point me to the details of that wireless deal so I can update my post. Thanks

Om Malik

@Arthur Guy

I agree with you totally. but in rest of the world this is an approach that makes sense and while i think the $30 a month is too much I believe that the free market is going to take care of that. On the netbooks, the profit margins are so low that everyone is looking for volumes – hardware makers to Intel to seller. This can be lucrative for INtel for sure in my opinion.

Joe_90

The carphonewarehouse in the UK has been offering free laptops when you purchase wireless broadband for quite a while.

Arthur Guy

Free laptops with home Internet connections have been around for a while in the UK and recently this has changed to mobile internet connections and netbooks.
The problem with providing the internet connection with a laptop is there is rarely any profit on computers, at least not on the low end machines, where as a £20/$40 a month contract ensures a constant revenue stream.

Om Malik

@spg, that kind of model would work when the money is cheap. not right now — there isn’t much room for carriers to do that kind of dance. :-)

spg

i think that an even more interesting model would be for the network operator to get a fixed cut out of the retail sale of netbooks/laptops and provide lifetime free internet. with the cash flow going business to business they should be able to offer much cheaper prices since they would not have to huge consumer marketing expense.

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