Riding the Netbook wave
We have seen a number of announcements from Wireless Operators recently regarding Netbooks. Most of them have either announced plans to sell netbooks or have already started selling them. With advent of iPhone and other Smart Phones, a new form factor of devices emerged which was seen as an opportunity for Wireless operators to promote high-priced data plans. This not only helped them to monetize these phones and grow their customer base but they also saw a multi-fold rise in data usage.
Many industry analysts have reported sluggishness and slow down in the uptake of smart phones in general given this economic climate. Operators have now started to see these ultraportable laptops (with built-in wireless broadband) as a means to promote their Wireless Broadband services through higher priced data plans.
With evolution of these devices, many leading PC makers and even Mobile equipment makers have announced plans to introduce Netbooks. We are starting to see intense competition brewing in this space. I believe the most interesting competition will be in the retail sales of these devices. I am waiting to see who will lead the sales of these devices (whether it will be the PC/Laptop retailers or the Wireless Operators). With a wide network of Retail locations, I believe Wireless Operators are in a much better position to succeed in this space.
The price of these devices will also determine its adoption. Wireless operators have usually promoted mobile device adoption by subsidizing the price of the devices and relying on the service contracts. We are starting to see the same kind of subsidies on Netbooks also. With the GEN Y population wanting to be always connected, these subsidies (resulting in prices as low as $99) will definitely increase the uptake of these devices by Gen Y and students especially.
I am definitely interested in seeing how this is going to take shape in developing countries where internet usage is still low. Subsidized netbooks can reach a wider population in these countries and result in the proliferation of Internet usage (similar to the way mobile phone usage proliferated).
What are your thoughts on this new emerging device category? Will Netbooks provide more revenue opportunities for the Wireless Operators or will these devices result in operators becoming simple pipes carrying data (like the traditional broadband operators) in an already “open” world where the walled gardens have already crumbled in the Mobile space?
Comments
Nowadays, with hardware becoming more of a commodity and their prices reflecting a southward trend (even for established “full service” machines), it will be interesting to observe the pricing strategy adopted by key established players in the Netbooks space.
There has to be a significant price difference between “full service” and “no frills” (Netbook) machines, in order to have a distinct cost advantage (from end user’s perspective) in owning a Netbook.
Netbooks, no doubt, will offer a plethora of opportunities to aspiring strata of society to participate in the already “Open” world. This will in turn provide additional revenue streams to Wireless Service providers (provided they come up with innovative apps/value propositions to manage Netbooks' real estate and usage)
Service providers can also tie up with Netbooks vendors to come up with a compelling packaged deal so as to benefit everybody in the game. Let’s see who wins?
Posted by: Vinay Singh | June 1, 2009 09:26 AM
Vinay - Thanks for some very interesting thoughts. Yes, the pricing strategy is really going to play a big role in the user uptake. If Wireless operators follow their traditional subsidy w/ contract model for Netbooks which come with Wireless Broadband, then I presume the prices are going to be really attractive.
You have brought up a very good point. I am more interested in seeing what is the application/service strategy of the operators to exploit the real estate of these devices and offer services to increase their customer share-of-the-wallet. If they dont do this, they will just become pipes and over-the-top (OTT) service providers will start minting revenues like what has happened in the traditional internet world.
Posted by: Sandeep Chandrasekar Seshadri | June 1, 2009 09:40 PM