If you thought a $99 netbook might spur demand, what do you think a 99-cent netbook will do? We’ll soon find out, because Sprint is subsidizing Compaq’s (s HPQ) 1040DX netbook. Customers can get the offer in a local Best Buy and have to activate the embedded EVDO module with Sprint for the one-dollar device. The same netbook with service through Verizon Wireless (s VZW) or AT&T (s T) is $199.99, while a non-contract price is $389.99, as shown on the ad page:
The Compaq 1040DX is basically a rebadge of HP’s Mini and offers the same specs: 10.1″ display with 1024 x 576 resolution, 1.6GHz Intel Atom (s INTC) N270 CPU, three-cell battery, 1GB of RAM and a 160GB hard drive. Although I use too many devices to be locked into an embedded 3G solution, the deal might appeal to some.
From a business perspective, Sprint (s S) is fully subsidizing the hardware price in order to gain a two-year service agreement. At $60 a month, the 3G service costs the consumer $1,440, for a rough net gain to Sprint of around $1,050 over two years for a single customer. Voice revenues are taking a back seat to the more lucrative data services, so I think this is a smart play for Sprint. All three carriers have invested billions of dollars in their networks, but you can’t recoup your costs and turn a profit if you can’t get customers on the network. In a recent, detailed 3G test, Sprint won out as the “most reliable” network, but you don’t earn money by winning titles. You have to get paying customers, and at 99 cents for a netbook, Sprint might do just that.
I’m wondering why the other two major carriers are still flirting with a $200 subsidy instead of the full monty. At $60 a month for service, the payback is over after the third month of a two-year contract. Why not just bite the bullet and match Sprint’s deal to gain more network subscribers? Again, I’m not the target customer for any of these deals, but I’d like to see all of the carriers widen the breadth of netbook options as well. There are plenty of excellent netbooks that offer more under the hood. How about some deals with ASUS or Samsung?