Sprint is not the first mobile operator to subsidize a netbook in order to sell mobile data contracts, but it is the first to do so at such an aggressive price point.
Sprint Nextel is teaming with Best Buy to offer consumers a 99-cent netbook with a new two-year mobile data contract.
The deal means users can get a Compaq Mini netbook for less than a dollar, and it comes with an embedded modem that uses Sprint's EV-DO 3G network. The mini-notebook also has a built-in webcam, Intel's Atom processor, a 10-inch screen, 160 GB of hard drive memory, Windows XP, and built-in Wi-Fi and digital media readers.
Sprint is not the first mobile operator to subsidize a netbook, but it is the first to do so at such an aggressive price point. Rivals AT&T and Verizon Wireless offer a similar netbook for about $199 with a new two-year contract, and the Compaq netbook costs $389 without subsidies. The promotion is only available in-store at certain Best Buy stores.
The subsidy model has been the traditional way for the major U.S. carriers to sell phones and services, and Sprint is trying to capitalize on the hottest-selling segment of the PC market. While standard desktop computers and laptops are expected to see a decline in sales this year due to the recession, Gartner estimates netbook sales to increase 80% over last year to account for about 8% of the PC market.
For Sprint, the move potentially enables it to have a new revenue stream as it sees traditional voice revenues decline. The mobile data plans costs $60 a month, which means the average consumer will pay roughly $1,440 over the life of the contract.
The netbook subsidy model is still in its infancy, so it's unclear how strong consumer demand will be. One issue that has already come up is that most major mobile operators have a 5GB monthly data cap for mobile data services. This has already led to lawsuits regarding overage fees.
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