Subsidies follow AT&T into netbook market

Subsidies follow AT&T into netbook market

http://arstechnica.com/telecom/news/2009/03/subsidies-follow-att-into-netbook-market.ars

AT&T plans to expand its netbook subsidies to makers beyond Acer and Dell, eating hundreds in upfront costs in exchange for two years of high monthly 3G cellular data fees.
By Glenn Fleishman | Last updated March 3, 2009 9:25 PM CT

Subsidies follow AT&T into netbook market

AT&T plans to expand an existing subsidy program that pairs a netbook with a cellular data modem and two-year contract. With fees of $60 for unmetered service and a maximum of 5 GB of data usage each month, AT&T has plenty to give to push a new market.

Netbooks are designed with minimal functionality and low-powered processors. But connectivity is the heart that beats inside this massively growing segment of portable sales. Research firms expect sales to rise from 7 percent of portables in 2008 to 12 percent in 2009, or about 35 million units.

By pairing a subsidy, a contract, and ubiquitous high-speed data access, AT&T may have found a niche in the middle of an otherwise moribund business and consumer market. Telecoms often spend hundreds of dollars in marketing to acquire new customers for voice and data services that produce a few thousand dollars in revenue over two years.

AT&T already subsidizes certain Acer and Dell netbooks to get the price down to $99, with rebates of $250 to $350.

Investor's Business Daily reports that AT&T is working on deals with other netbook makers, and would be happy to extend subsidies far outside phones to any gadget that could sport a cellular modem, such as cameras or gaming systems.

Interestingly, Clearwire and Sprint Nextel have long extolled the notion of WiMax, a competing data network standard so far rolled out in just two US cities, as allowing an ecosystem of devices to have always-on high-speed access with a bundled data plan to avoid high per-device charges. That hasn't materialized yet.