mocoNews - AT&T To Subsidize Netbooks To Get People Onto Data Plans; Looks At Cameras, Game Devices, GPS
Tuesday, March 3, 2009; 4:00 PM
Now that mobile data speeds are worth talking about it seems that people are willing to use them, and pay enough to make them profitable. The result is an increase in the number of devices that telcos are willing to subsidise?after AT&T (NYSE: T) found such good customers in iPhone users that it subsidized the retail cost to $199 to get more users, it's now looking at doing the same for netbooks. "The economics for us are terrific. We're willing to invest to get a customer," said Glenn Lurie, AT&T's president of emerging devices. "We're very comfortable with the margins we're going to receive on these netbooks, in the deals we're talking about" reports Investors.com. The netbooks will be on a $60 per month data plan, twice as much as the iPhone. AT&T isn't alone: T-Mobile in Germany and Verizon Wireless (NYSE: VZ) in the US are also subsidizing netbooks. AT&T plans to go a lot further in its bid to get people onto data plans, intending to expand its subsidy program to "cameras, portable video game machines, GPS devices?anything that gobbles up data".
Does it make good business sense to heavily subsidize a gadget and try to recoup the cost via service plans? "It's hard to pass up the siren song of subsidies," said Craig Moffett, an analyst at Bernstein Research. "The iPhone demonstrates nothing if not that American consumers will gladly sign up for higher monthly fees in return for a lower upfront sticker price on the piece of metal that service is connected to."