Summary
As with other laptops and netbooks with built-in 3G, it's important to look beyond total sales of a particular model. Instead, focus on how many customers are buying them with a wireless data plan and how many are buying them without. Those numbers are key because they provide insights into the market for embedded laptops/netbooks.
Analysis
The Nokia Booklet 3G is yet another opportunity to assess the market for flat-rate wireless data plans. Let's do the math from a consumer's perspective:
- Best Buy sells the Booklet for $299 for customers who agree to a two-year wireless data contract with AT&T. At about $60/month, that puts the total cost of the netbook and service at $1,739 before taxes.
- Best Buy also sells the Booklet for $599 for customers who don't want a data plan. Those folks are saving $1,440 before taxes.
Is $1,739 for a $599 netbook a good deal? The answer depends on whether you've already got cable, DSL or fiber at home. If you do, then you're looking at spending at least $120/month for wired and wireless broadband. That's a tough sell in this economy, especially considering that netbooks are aimed primarily at budget-conscious consumers.
One way to overcome price sensitivity is to offer a bundle of broadband services, instead of just cellular. For example, in April 2009, AT&T began a trial where customers can buy an embedded netbook for as little as $50 if they sign up for the $60 "Internet at Home and On the Go" plan, which includes access to AT&T's DSL, 3G and public Wi-Fi networks. This offering should be attractive to people who want a netbook and wireless broadband but are unwilling or unable to fork over an extra $60 per month just for 3G's convenience.
Such netbook bundles also benefit the service provider. The more services they get from AT&T, the less likely they are to churn one or more of those services. In the process, the PC vendor benefits because its netbook stands out as a better deal in the long run. It's important that the service provider and the PC vendor, as well as any retailer involved, do this math for the customer in their advertising in order to hammer home the value proposition relative to rival offerings.
This author consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
