Rogers CommunicationsInc. has become the first Canadian wireless operator to leverage the explodingpopularity of netbooks by bundling one of the small Hewlett-Packard DevelopmentCompany LP devices with a data plan.
Intended as anout-of-the-box solution for small businesses and consumers, the PC includes awireless broadband modem and is sold at Future Shop and Best Buy for $299 witha minimum two-year plan.
The move comes monthsafter European and American carriers started selling subsidized netbooks as away to drive traffic to thier data networks.
The HP Mini 110 is a10-inch notebook weighing roughly 2.5 pounds and providing approximately threehours of battery life. It includes an Intel Atom processor, 160GB hard driveand supports up to 1GB of memory. The keyboard is 92 per cent full-size.
An embedded modem,which takes the place of an external USB Rogers Rocket Stick, allows the deviceto operate over the Rogers Wireless 3.5G wireless network in addition to Wi-Fi.
While most sales willbe to consumers, the enterprise market is an area Rogers is investigating for notebooks, saidJon Spencer, director of Mobile Broadband for Rogers Wireless.
Data plans start at $25for 500MB per month, which represents the average monthly data usage forcustomers. A flexible data rate plan is also available, starting at $30.
Rogers customers are currently allowed to share databuckets between their smartphones and Rocket Sticks, but a plan that sharesdata between smartphones and the HP Mini 110 is not yet offered. “That issomething we are looking at,” said Spencer.
The benefit tocustomers, according Spencer, is “broadband-type experiences similar to thetypes of speeds you’d get at home using the HSPA network, which is speeds up to7.2 Mbps. So that’s approximately two to three times faster than ourcompetitors.”
Using the RogersWireless network also offers a security benefit over public Wi-Fi in that it isa unique connection you’re not sharing with other users, Spencer pointed out.
Rogers is positioning the device as a complimentary tosmartphones and primary home PCs. Spencer referred to a 3-30-3 rule: threeminutes browsing through a smartphone, 30 minutes browsing through a networkand three hours through a home PC.
Smartphones aretypically for e-mail, instant messaging and light browsing, while the netbookoffers a more extensive Web browsing experience through the larger keyboard andscreen, he said.
“It’s probably not thesort of thing you’re going to use for more serious business applications, suchas developing a PowerPoint presentation or a detailed spreadsheet. That’s thesort of thing you’ll do at home through your VPN connection,” said Spencer.
From HP’s perspective,the value proposition for customers is “the ability to work with a very ultramobile product they can sync up as soon as they get home or as soon as they getinto the office, take care of a couple of files and be on their way quickly,”said Jenna Mann, Business Development Manager at HP Canada. The device runseveryday productivity applications, she pointed out.
“The netbook categoryis one of the fastest growing PC categories in the world … from Rogers’perspective, we see it as an opportunity and customers obviously like thesetypes of PC devices,” said Spencer.
Such bundled deals,common in the U.S. and Europe, “make a lot of sense for both the hardwaremanufacturers and carriers,” said Amit Kaminer, an industry analyst at SeaBoardGroup, a Montreal-based telecommunications consultancy.
Manufacturers can tie aproduct to an appealing communications platform users want, he said, whilecarriers use netbooks to lure subscribers and increase average revenue per userif data traffic exceeds the limit of the subscriber’s plan.
For Rogers, offeringthe deal through retail chains rather that its own stores also means it doesn’thave to carry the burden of stocking inventory.
Also, for carriers thecost of buying netbooks is relatively lower than buying certain models ofsmartphones, Kaminer said.
“Everybody walks awayhappy,” he said.
Netbooks are so popularin the U.S. that wireless operators are in a price war over them. This monthSprint began offering a Compaq 1040DX netbook for 99 cents on a two year plan.
Canadian wirelessoperators have been eyeing the possibility of bundling netbooks since thebeginning of the year. Shortly after AT&T in the U.S. began selling thedevices, Telus tested the market in April in a promotion with Best Buy, tossingin an Acer netbook to buyers who bought a pair of $49 LG handsets on a 36-monthair plan.
However, it wasn’tlinked to a data plan.
With four new wirelesscompanies set to open their doors either late this year or early next year,bundling products will become a key marketing weapon for all wirelessoperators.
Rogers, Bell and Telusare expected to fight the new entrants by honing existing deals combining theircable, IPTV, Internet, voice-over-IP and long distance products. Of the newentrants, only Videotron in Quebec can match that line-up.
Globalive Wireless isowned by Globalive Communications, and is expected to bundle the parentcompany’s long-distance and VoIP offerings. DAVE Wireless is jointly owned byToronto entrepreneur John Bitove, who controls the XM Canada satellitefranchise and is expected to bundle satellite radio with its cellphones.
Netbooks started to bemarketed seriously here in the first quarter of last year, said Tim Brunt, IDCCanada’s senior analyst for personal technology, but the initial response frombuyers was cool because they were underpowered.
Return rates to storesof up to 30 per cent were common, he said.
It wasn’t until latelast year when manufacturers began putting more powerful CPUs and increased RAMwhen sales firmed up. “As the machines became more powerful, and you were ableto run Windows XP, the return rates dropped.”
Now, Brunt sees“explosive growth.” In the fourth quarter of 2008, some 95,000 mini-notebookswith screens under 12 inches were shipped here, and another 90,000 in the firstquarter of this year. In the fourth quarter of this year, IDC Canada seesshipments nearly hitting a peak of 140,000.
By comparison, 681,000laptops with screens 12 inches and above were sold in Q1.
Acer accounts for 60per cent of Canadian netbook sales, followed by Hewlett-Packard and Dell.
One of the reasons isthat netbooks break what Brunt calls the $500 psychological barrier between thesmall devices and laptops.
Not all netbooks aregoing to consumers. IDC Canada figures about 20 per cent are sold toorganizations for what Brunt calls “try it out and see if it works” trials.
Netbooks are aimed atpeople who want a light, relatively inexpensive device with a readable screenfor checking e-mail and cruising the Web. With modestly powerful, single-coreCPUs and screens no bigger than 10 inches, they aren’t intended for heavy useof productivity software such as Microsoft Office or Photoshop that has to beinstalled on a PC.
However, manyorganizations make data available to staffers through Web applications, whichlessens their burden.
Until netbooks camealong, PC manufacturers made buyers pay a substantial price for a laptop thatweighed less than 2.3kg – usually at least $1,800. Prices have been droppingsteadily for some time, but a low-priced laptop didn’t mean one that savedweight.
Netbooks break thatrule, although admittedly at a cost of power.
Still, Brunt observedthat “this is the first time (in a laptop) where there has not been a premiumfor a smaller sized product.”