Wireless

Verizon Wireless will start selling Netbook computers from Hewlett-Packard starting Sunday, the company said in a statement released Thursday.

As previously reported by the Boy Genius Report, the HP Mini 1151NR Netbook will be priced at $199.99 after a $50 mail-in rebate and will require users sign a two-year service agreement for wireless broadband services.

Verizon Wireless will begin selling the HP Mini 1151NR Netbook on Sunday.

(Credit: Verizon Wireless)

Verizon is sticking with its current 3G wireless pricing. But it has increased the amount of data downloads per month for its lowest tier of service. Now subscribers will be able to get the $40 a month plan with 250 Megabytes of data per month. Previously, the $40 a month plan only offered 50 MB of data downloads per month. The overage charge on this plan has been reduced to 10 cents per megabyte over the limit. Previously, the company charged 25 cents per megabyte for overages.

The $60 a month plan will still offer a maximum of 5GB of data, but Verizon has reduced the overage price to 5 cents per megabyte over the 5GB limit, instead of the 25 cents it previously charged.

Verizon is also offering a Mobile Broadband DayPass for $15. This day pass gives users access to the Internet for 24 hours and can be purchased for any Verizon certified mobile device that is purchased at full retail price without a monthly service plan, the company said.

The modifications to the data plan are a sign that Verizon is trying to add more value to its wireless broadband service. But at these hefty prices, many consumers may still find the price of the two-year service contracts too stiff.

With the current pricing, Verizon Netbook users can expect to spend $1,160 to $1,640 during the life of the contract for the service and Netbook, depending on which plan they choose. (This doesn't include taxes or fees.) HP's Mini 1000 Netbooks only cost about $300 without a 3G service contract.

Verizon Wireless's international data plan is even more expensive. The device can access wireless broadband on both CDMA and GSM wireless networks in more than 175 destinations worldwide, the company said. And with a SIM card, GlobalAccess customers can sign up for one of two service plans.

They can get the GlobalAccess Monthly plan, which costs $130 a month for 100 MB worth of data downloads per month in more than 30 select international destinations. This same plan allows for 5 GB of downloads per month in the U.S. and Canada. All other destinations are charged pay-per-use rates.

The second option for globetrotters looking to stay connected with their Netbooks is the Global Access Pay Per Use plan, which allows subscribers of the $60 a month mobile broadband plan in the U.S. to get special rates on international usage. The Pay Per Use rate is $0.002 per kilobyte in Canada, $0.005 per KB in Mexico, and $0.02 KB in more than 175 other destinations.

At steep prices like these, Verizon may find more success letting consumers buy their own Netbooks and signing them up for individual $15 day passes.

Verizon Wireless is expected to launch its long-awaited Netbook from Hewlett-Packard on May 17, according to a report from the blog Boy Genius Report.

This HP Mini 1000 is similar to the one that Verizon Wireless is rumored to soon be offering on its 3G wireless network.

(Credit: CNET)

The blog said the company will be offering the 115NR Netbook from HP with wireless broadband capability for $199 after a mail-in rebate. The subsidized device will come with a two-year service contract that will likely set users back $40 to $60 a month, the site said.

Verizon declined to comment on these most recent rumors. But the company confirmed earlier this year that it is planning to launch a Netbook on its network.

The big question now is whether consumers will actually buy the device and agree to a hefty service contract. Pricing details for the 3G wireless service aren't known yet. But Verizon currently charges $40 a month for a laptop data plan that offers 50 megabytes worth of data each month. And its $60-a-month plan offers 5 gigabytes of data downloads every month.

If the Boy Genius blog is accurate about the $199 price tag for the Netbook, and Verizon sticks with its current data plan pricing, Netbook users can expect to spend $1,160 to $1,640 over the life of the contract for the service and Netbook, depending on which plan they choose. (This doesn't include taxes or fees.) Considering that HP's Mini 1000 Netbooks retail for about $300 without a 3G service contract, this might seem a bit much for some consumers to stomach.

It's clear that Verizon sees Netbooks and other wireless-enabled devices as its future. Today, nearly 85 percent of the U.S. population owns a cell phone. As this penetration rate approaches 100 percent, it's unlikely that cell phone operators will experience much new growth simply by adding new cell phone subscribers.

In fact, the bulk of Verizon's new wireless customers in the most recent quarter came from its acquisition of regional wireless operator Alltel. If Verizon had owned Alltel in the first quarter of 2008, Verizon's subscriber base in the first quarter of 2009 would have only grown 3.3 percent year-over-year.

Other wireless providers are in the same boat. And they are also looking for new ways to generate revenue. Sprint Nextel, the nation's third largest wireless operator, provides the wireless service for Amazon's Kindle. CEO Dan Hesse said during the company's first quarter 2009 conference call that he sees devices like the Kindle providing a big boost to the company's wholesale business.

AT&T, which has already been offering subsidized Netbooks on its network, is also interested in expanding its business opportunity with wireless-enabled devices. As a result, the company has established a new business unit, which is tasked with finding new consumer and embedded devices to use AT&T's wireless network.

But in order for these wireless companies to be successful, they will need new business models. Ralph de la Vega, president for AT&T mobility, recently said as much at the CTIA tradeshow in Las Vegas.

"We need to be more flexible," he said. "This is a new frontier. And we need to approach it with new ideas. We can't be forced to go down an old path."

But when it comes to Netbooks, it looks like AT&T and Verizon Wireless have simply taken a page out of their own cell phone playbooks. AT&T is also charging $40 to $60 a month for data service. The idea is that the companies subsidize the devices, and then make up that subsidy quickly with a hefty monthly service charge.

To their credit, this business model has worked well in the cell phone market. But I don't think they will find the same success as they try to expand the wireless services market to include other devices. And the reason is simple. A cell phone is essentially useless without a voice plan. And in order to ensure consumers sign up for expensive data plans, some new smartphones, such as Apple's iPhone and Research In Motion's BlackBerry devices, require users to sign up for data plans.

But Netbooks and other devices, such as digital cameras, Netbooks or MP3 players, can be used without connecting to the Internet wirelessly. And many of these products already come with Wi-Fi, which can often be accessed for free and without a lengthy contract. What's more, these devices can also be bought easily through other retailers.

For these reasons, I think it will take more than a $100 subsidy to get consumers to sign up for these Netbook deals. Verizon and other wireless operators will have to rethink their business models, especially in this economy when people are looking to reduce their monthly bills. Cheaper data plans could certainly help.

Hewlett-Packard is considering using Google's Android operating system on its low-cost Netbooks, an executive at the company told The Wall Street Journal.

In a story posted Tuesday, the Journal reported that Satjiv Chahil, a vice president of HP's PC division, confirmed that the company was studying the Google software.

"We want to assess the capability Android may have for the computer and communications industries, and so we are studying it," Chahil was quoted as saying in the Journal article.

Chahil declined to say for certain whether HP plans to sell Android devices, the article stated.

Android is a Linux-based operating system that was originally designed for cell phones. The operating system is currently available on only one phone, T-Mobile's G1 made by HTC. In February, HTC also announced it will offer Android on another phone called the HTC Magic. Several other handset makers, including Samsung and Motorola, have also promised Android-based phones.

But now experts are predicting that the open-source operating system could be used on other devices, such as the emerging low-cost laptops known as Netbooks. In fact, market research firm Ovum recently predicted that Android-powered Netbooks will emerge in 2009, as manufacturers attempt to drive the price of Netbooks to around $200 or less.

The reason is simple. Linux-based software, such as Android, is free, while Microsoft charges a hefty licensing fee for the Windows operating system. In order to hit super low price points, manufacturers need to cut costs wherever they can and that means ditching Microsoft's Windows software.

The problem is that most consumers are comfortable and familiar with Windows PCs and thus prefer a Windows-based Netbook to one using a generic Linux operating system.

Laurent Lachal, the open-source research director at Ovum, believes that Android could reverse this trend, especially as the Android software finds its way onto more mobile phones and Google's Android application store, known as Android Market, builds its inventory of new applications.

Independent software developers can now charge for applications on Android Market, which Laurent believes will increase support from the developer community.

HP has already been working on ways to offer an inexpensive and easy-to-use interface for its Netbooks that is an alternative to Microsoft's Windows. In October last year, it announced the Mini 1000 MIE, a Linux version of its Mini 1000 Netbook that is meant for casual, online use. The device costs $379 versus another version of the Mini 1000, which comes with with Windows XP and either an 8.9-inch or 10.2-inch screen for $449.

Android isn't currently available on PCs, but other PC makers have said they are considering using the software. Asustek Computer has already said it is considering using Android. And Dell is also considering the software for its upcoming smartphone.

Google declined to comment on whether HP or any other Netbook maker is planning to use its Android software, but the company emphasized that its Android software is not restricted to mobile phones.

"The Android smartphone platform was designed from the beginning to scale downward to feature phones and upward to MID and Netbook-style devices," a Google spokeswoman said. "We look forward to seeing what contributions are made and how an open platform spurs innovation, but we have nothing to announce at this time."

Verizon Wireless is poised to sell at least one Netbook in the next few months, according to reports in Bloomberg and TheStreet.com.

Both outlets cite unnamed sources, but Bloomberg's source, said to be someone close to the project at Verizon, says a partnership is being negotiated with more than one PC maker. No word on what the service contract for a Netbook from Verizon would entail.

Is Verizon getting ready to sell 3G-enabled Netbooks?

(Credit: Dell)

Currently, Verizon doesn't sell a 3G-enabled Netbook, but chief rival AT&T does. AT&T sells Acer Netbooks for $99 with service through RadioShack, and also sells Dell Mini Inspirons through the wireless provider's Web site. Though Verizon isn't confirming the report, a move to sell Netbooks is widely seen as a way to keep up with its rival.

The report suggests Verizon is working with more than one PC vendor, and Dell seems like an obvious candidate as one of them, though a Dell representative did not have an immediate comment. Dell already has a relationship with Verizon parent company Vodafone, which has sold Dell Netbooks in Europe since September 2008.

So who could be the other Netbook maker? A similar rumor floated around the Web last week regarding HP hooking up with Verizon. HP had no comment, but provided a statement from Kevin Frost, HP's general manager of consumer notebooks: "It's natural for carriers the world over to be interested in HP's broad portfolio of thin and light minis. We are talking with carriers all over the world. We are talking with carriers all over the world."

Netbooks are the fastest-growing category of PCs in the last year. Starting from virtually zero in late 2007, 10 million Netbooks were shipped by the end of 2008, accounting for 7 percent of all portable PCs shipped.

The limited capability of Netbooks is also intended to be their appeal: they're basically good for getting online and doing light word processing. But their small size makes them easily transportable, and having the ability to access the Web easily and from anywhere only increases their value. Though the bundled Internet-service model has failed in the U.S. in the past, our reliance on the Web makes it seem like this model could fare better this time around.