The Hidden Cost of Nokia's $299 Netbook

Nokia Booklet 3G
Nokia announced yesterday that its Booklet 3G will be available this holiday season from AT&T and Best Buy at a price of $299. When the hidden costs are calculated in the Nokia Booklet 3G becomes an expensive option in a cheap device niche.

That subsidized price comes with some strings that affect the total cost of ownership though. The $299 price tag is based on a 2-year wireless service commitment with a mandatory data plan requirement. So, $299 isn't just $299. It is $299 plus $60 a month for two years which brings the total cost up to over $1700.

But wait, there's more! The data plan you get for $60 a month has a limit of 5Gb of bandwidth per month. Even moderate netbook users could easily surpass the bandwidth cap and end up hit with steep overage charges that add even more hidden costs and increase the total cost of ownership for the Booklet 3G.

To be fair, all netbooks are little more than glorified calculators without some sort of wireless network service. But, just keeping things within AT&T, I could buy an un-subsidized Acer Aspire One netbook and get DSL service from AT&T for $19.95 a month without the bandwidth limit. Granted, I would have to spring for the $40 to add a wireless router to my network, but the total cost for the netbook and Internet access over the same two years is about half the cost of the Booklet 3G contract (not including charges for going over the data limit).

You can forego the AT&T subsidy and purchase the Nokia Booklet 3G outright for $599 without the contract. That brings the total cost over two years down significantly, but the device is still almost double the cost of comparable devices.

The success of the netbook market is built on the fact that netbooks are cheap. Granted, netbooks have other advantages as well. What they lack in horsepower or bells & whistles, they make up for by being smaller and lighter and having longer battery life than their full-sized notebook cousins. But, price is still arguably the number one factor in the success of the netbook.

The Nokia has some compelling features that set it apart. It has sturdier aluminum construction, built-in GPS receiver, HSPA wireless communications, and a longer than average battery life. It is debatable if those additional features make the Booklet 3G worth twice as much as the competition though.

By Nokia's standards, coming from the mobile device handset market, a $599 price tag (or $299 subsidized) may seem perfectly reasonable. Just look at the unsubsidized cost of mobile handsets like the iPhone or the Garmin Nuvifone G60. However, in the mobile computer market, $600 can buy a range of full-sized notebook computers with faster processors, larger hard drives, more memory, and bigger displays.

The Nokia Booklet 3G faces an identity crisis. It has the price tag of a high-end netbook-- eclipsing the price of much more powerful notebook computers-- with the features of a middle-of-the-road netbook device. The subsidized cost may lure in some users who want the prestige or are willing to pay twice as much over time in order to spend less today, but compared with other netbook and notebook alternatives the Booklet 3G is just not a good value.

Nokia doesn't seem to understand the market it is getting into. It is thinking in mobile phone handset terms, competing with netbooks, and pricing like a notebook. Only a fool would take this deal.

Tony Bradley is an information security and unified communications expert with more than a decade of enterprise IT experience. He tweets as @PCSecurityNews and provides tips, advice and reviews on information security and unified communications technologies on his site at tonybradley.com.

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