Monday, November 3, 2008

Business Model or Advertising Gimmick?

AT&T has announced plans to bring its mobile phone service business model to laptops, subsidizing the cost of the devices for customers who sign a 2-year service agreement.

A closer look at the plan reveals significant differences between the phone and laptop programs that make them apples and oranges.

First off, laptops cost more to begin with. This means that while mobile handset subsidies generally account for more than 50% of the device's total cost, laptop subsidies will probably be in the 15% to 30% range.

Next, laptop net service traditionally costs less. That may be because it was only available in a very limited way, but so what: the point is - phone service expense is already a consumer budget item, but people aren't used to paying monthly for their laptop. Just ask Boingo.

Finally, the laptop is not exclusive to AT&T like so many mobile handsets are. That element of lock-in doesn't exist in the computer industry. (And let's hope it never does...)

AT&T, Lenovo Offer Subsidized Laptops, Information Week

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