Verizon, Too, Turns To Subsidized Netbooks
from the lock-em-in dept
We've wondered before why mobile operators say they hate the subsidies they pay to discount handset prices, but then expand their use of them to include laptops and netbooks. The trend looks like it's here to stay, as Verizon Wireless has now confirmed it will start selling 3G-equipped netbooks by the end of June, so now, in addition to tying yourself into a 2-year contract where you're paying back the cost of your cell phone, you'll soon be able to tie yourself into a long-term data-service contract to pay back the price of a laptop, too. Of course, once that contract's up, the device will still be locked to the operator from which you bought it, making it difficult (or impossible) to take your business elsewhere. Meanwhile, business is flowing the other direction, too: Dell is reportedly looking to set up a virtual operator in Japan, selling its customers network access on another operator's mobile network to use with their mobile-equipped laptops. It's an interesting contrast in models, because it's unlikely Dell will subsidize the hardware like the operators. Part of the issue with handset subsidies is that consumers are used to paying the lower subsidized prices, and so any change that raises prices will be met with disdain. But people aren't used to the benefit of subsidies for their PCs, so may be more open to paying a higher upfront cost for the hardware if it means they don't have to sign a long-term contract with a high monthly service charge.
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kind of off topic but if companies from the west start opening up there business in Japan perhaps they can learn a few things, granted i do not know much on Japan Telecom business but i do know that:
you can get 1 gbps (both up and down) for under 60 USD, and that includes telephone service
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Re:
As far as 1 gpbs that would have to be a land line broadband plan as there are currently no mobile technologies that offer more than 7.2 mbps.
As to Verizon starting to sell their subsidized mini 1000 in June that would mean that if would be their current 3G network of EVDO Rev A with 3.1 mbps download. Yes you could probably "jail break" the netbook but you would only be able to use it on Sprint's 3G network which is also EVDo 3.1 mbps.
This is most likely a cash grab move to offset the price of rolling out their 4G network (LTE) later this year and into 2010 as the only mobile broadband package that they currently have is $60/mon with a 5 GB cap - the same as every other carrier in the US (Sprint, AT&T). Wether you get a "Free" netbook and a new 2 year subscription or you provide your own netbook your end user price will be the same - $60 a month and a bonus you get a "Free" netbook.
The European cell carriers are actually moving somewhat in the direction of the US carriers and offering subsidized phones to new subscribers. However, they differ greatly in that you can get a high end smart phone for free (Nokia 5800 Express Music) on a new 2 year contract as opposed to here in the US where the Iphone has put that figure squarely at $199.
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Wait, are you saying the laptop itself is locked to the operator? How do you do that? Even if the 3G modem is built-in (which is uncommon, usually they're USB devices), jailbreaking it should be possible. And the rest of the device is free, or at least as free as a modern computer can be.
And before some "smart" Anonymous Coward peeps in, no, that doesn't mean the operator loses money; you'd still have to uphold your end of the two-year contract.
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I would imagine Verizon, and potentially many competitors are instead trying to find ways to drive LTE model technology down in cost such that buying a laptop would be a standard feature similar to Bluetooth or 802.11G.
By subsidizing a technology, consequently, it could potentially allow for a "FREE" netbook to exist. But do users want to be locked into a long term contract should the screen break or some other unfortunate accident occur? What a horrible predicament to pay for service you'll never use, for 3 months because it costs less than breaking a contract.
I often find myself in agreement that the "FREE" phone business model was the worst invention and hindrance to the entire wireless industry.
And considering many who would adopt a wireless ideology are well versed with Moore's law, it will probably drive people away from a long-term contract.
Instead, probably the best business model would imitate what the Eurozone has seen for years with GSM, and sell Netbooks with the technology as an option. This, in turn would create something closer to a pay-per-use model.
Would Verizon be able to support such a pay-per-use model? Who knows. In the world of the blind, Amdocs is King. But they want to give you a cheap netbook. Just know if you moved, you may have to sign a new contract. Get any promises in writing.
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Benefit? Hmm I would have used "trap".
Subsidy is just another way of saying loan. It's lease to buy finance with terms that barely fall short of those offered by sharks.
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And in related news ...
http://www.msnbc.msn.com/id/29972734/
What could possibly go wrong?
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