Ronnie05's Blog

Booklet 3G: Missing the price equation?

Posted in Mobile Devices and Company Updates by Manas Ganguly on September 9, 2009

In an earlier post,  three months back, i had questioned the rationale of N97 pricing. N97 is history (and Nokia si trying to rewrite the fate of the product with N97 mini). In this post, we ddiscuss the prospects of Nokia Booklet 3G in face of its $819 steep price tag!

Nokia has released the specifications for its new netbook. That is no news. The largest handset company in the world has been talking about the initiative for some time. The recent news from the company on September 2, was that the machine will have an unusually long battery life of 12 hours. It will also run Microsoft’s new Windows 7 operating system.

Nokia Netbook

The press has been quick to criticize Nokia for the netbook’s price at $819. Most netbooks cost under $400 and some run under $300. That’s about double the cost of a typical netbook, though Nokia expects the device to be sold largely by wireless carriers, which will subsidize its cost to consumers opting for a monthly data access plan. This expectation is OK within business framework except that carriers who choose to feature the Nokia netbook will carry huge subsidies which will make their break evens difficult and time stretched. Operators could also look at an increase in usage tariffs which would discourage the usage of data plans making the deal a non starter. The other way to have a viable subsidy model is to contract it for longer periods, which would thus limit the consumer in switching. With a Rolls Royce pricing, Nokia expects to do a Toyota Prius volume! All this in a category with cut throat competition and relatively low margins.

None of these is the real hurdle Nokia faces. It was late to the smart-phone market and allowed a number of firms like Apple to pick off may high-end customers. Instead of focusing on getting its act right in Smartphone, the netbook move is rather inexplicable. Even by the device evolution and device eco-system view, the netbook is only a intermediary to a future in smartphones (assisted with clouds). Nokia should have ideally consolidated its smartphone portfolio for the next gen smartphones. Now it is late, very late, to the netbook business. Acer, Asus, Dell, and HP already have perfectly acceptable machines and some of these have been in the market for over a year.

Despite Nokia’s size and its 39 percent of global handset sales, the firm has been flat-footed and tardy getting into the hottest sectors of the consumer electronics business. And, in tech, the last man in rarely wins.

Watch the Booklet 3G demo:

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