AT&T recently announced that it will be adding the Nokia Booklet 3G to its portfolio of netbooks. The Booklet will go for $299 with a two-year contract that runs $60 per month. The unsubsidized price of the Nokia’s booklet is $599.
The total two-year cost with device and plan is $2,038. You could get two Macbooks for that. Total cost with device and a Wi-Fi connection at your local coffee shop is $599.
Figures like these leave some questioning the business model behind netbook subsidies.
For those without an Internet connection at home – let’s say college students whose only Internet bill will be AT&T’s $60 per month – the subsidized netbook may be just what they’re looking for. However, college campuses are some of the hottest Wi-Fi spaces on earth, from libraries to dorm rooms. The location without a connection is the exception.
Some would argue that the always-on capability of a 3G connection is the real value here. And yes, the carriers’ ultimate goal seems to be a consumer who is forever staring at a screen, whether in the park or on a bus. However, for most, a place to sit and a surface upon which to rest your ultra-portable computer are almost always preferred. Always-on connectivity is a great thing for iPhone and BlackBerries. But the price for that feature on a netbook, and the available alternatives, may outweigh the benefits for many.
Perhaps what’s most troubling is that the carriers don’t seem to realize that monthly fees tend to add up for the average consumer. The average American spends at least $40 on a home Internet connection. Add in a cell phone and then a netbook, and you’re looking at the equivalent of a modest car payment each month just to connect all your devices to the Internet.
To be sure, society at large has shouted a resounding “Yes!” to wireless. There is no doubt that Americans want ubiquitous connectivity. However, the latest recession saw a significant uptick in prepaid. It also marked the first time that consumers showed the resolve to cut back on their cell phone spending. That should have been the carriers’ first clue that there is a limit to how much consumers are willing to spend on wireless per month.
The netbook needs a new business model going forward. It’s a challenge to justify the monthly price while also taking into account device limitations. If they really sat down and thought about it, most consumers would probably opt for making a monthly payment on a high-end laptop and making do with Wi-Fi where they can get it. Granted, that means forgoing the thesis written beneath a tree in the park, but then parks are supposed to be about getting away from our computers.
If carriers are serious about netbooks going forward, and it appears they are, they have to convince the consumer that an always on, ultra-portable netbook is something they need.
One way of doing that might be to figure adjusted pricing into quad plays, where consumers are able to pick one up as an add-on to their monthly Internet, phone, cable and cell phone bills. A reduced price on monthly netbook connectivity for going all-in with your carrier on everything else might resonate with those consumers who can’t fathom adding another expense to their end-of-month tally.