One way other carriers can compete with AT&T for these contracts is to offer very low-cost netbooks outfitted with VoIP capability or, more likely, mobile phone/netbook combo deals where for, say, $200 you get a mobile phone, an Asus Eee PC and a wireless contract that covers both devices.
The idea of subsidizing laptops and netbooks isn't new. Such subsidies are common outside the US. In Taiwan, you can buy an Asus Eee PC for US$29 with a two-year contract from carrier Far EasTone. And in the UK, free laptops have been used for more than a year as an enticement to sign up for mobile broadband contracts.
The US has long resisted this model. But I think this is about to change because of seven recent trends:
1. The economy will squeeze carriers. Budgets are tight. Credit has dried up. Layoffs are already happening. The economy is shrinking. Naturally, consumers will start looking for ways to cut costs. One of the most accessible areas to cut is mobile phone bills. Millions of people will downgrade their wireless plans over the next year, which will squeeze carriers and panic them into hunting for revenue alternatives.
2. Mobile phone sales are crashing. IDC reported this week that mobile phone handset sales have fallen because of the economy. For carriers, that means fewer upgrades to costlier plans and fewer new customers walking in the door.
3. Notebook sales are rising. For the first time in the history of the PC industry, notebook sales have officially exceeded desktop PC sales. IDC reports that notebook sales accounted for a whopping 55.2 percent of all PC sales in the quarter that ended in September. And the fastest growing segment of notebooks is netbooks.
4. The netbook market is overcrowded. A year ago, it was all about the Asus Eee PC. Because of their initial and surprising success, everyone has jumped into the market in the past year. Lenovo, Dell and HP already have products in the market. Fujitsu, Packard Bell, LG, Toshiba, Samsung, Sharp and others will add their offerings soon. With margins already very thin, and vendors looking for ways to differentiate, you can bet that companies will become very cooperative in working with carriers to make subsidized deals a reality.