Netbooks, and who pays for what

There is an awful lot of attention lately on netbooks (the small mini laptops with lightweight operating systems – presumably – and lighter weight hardware architectures – presumably). Most of the PC OEMs have one available in the market. The first of any notoriety was the Asus EeePC and several followed suit afterwards. We’re now seeing several netbooks being subsidized by carriers as far down as to the tune of $99 with a multi year contract to be signed by the user. In a recent article in FierceBroadbandWireless (,13t6s,8mf,b5mx,in61,4hnu,ir9d), AT&T is subsidizing an Acer network down to $99 available at RadioShack. Wow! Less than a hundred bucks for a computing device far more capable than a typical cell or smartphone is a decent deal, especially in a down macroeconomic environment. So the netbook-for-customers acquisition model seems to be taking off in the US, and has been for a little while now in Europe. Now a new feature is being introduced into netbooks, and that is embedded 3G data modems. That is a whole different dimension to the value proposition for the end user. Because the problem lay in that someone (the carrier, the OEM, the end user themselves, or some combination of retailers+content providers+aforementioned folks) has to pay for the embedded modem, say nominally anywhere from $50 to $100. In Dean Bubley’s recent blog post on Who Pays for an Unused 3G Module in a Laptop (, he does a nice job is breaking down the ecosystem players, the costs associated with the embedded modems, a range of gross margins for different laptop types, and his conclusion that he foresees slow uptake on embedded 3G modems in laptops. Might the answer lay in more disruptive pricing plans to end users in the form of try-before-buy, session based pricing (pay only when needed), or subsidized connectivity (through advertising and other enticements from content providers, such as AOL or Google)? Given the fact that the 3G modems are not going to be free anytime soon (unless a well known company in San Diego, Finland, or Stockholm relinquish their stranglehold on IP royalties), there will need to be novel ways of getting paid but at the same time enticing the user (in a controlled fashion) to actually use the connectivity service much as they do with WiFi today. And with the proper connectivity and session management, I think a way bettter user experience can be created. Given today’s parameters for the pricing plans and royalty streams throughout the ecosystem, there is NO WAY that what we have now will drive adoption to the kinds of mass market numbers many of us in the mobile industry are looking for. We all need to work together and come together with innovative business and pricing models!!! No one company will be able to do it all by themselves, but it’s not solely an operator, OEM, or chipset company’s problem to solve. Agree or disagree?


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