AT&T and the $1,500 Netbook

Netbooks. They’re not laptops, and they’re not smartphones. They exist in that nebulous middle area — small but not too small, with decent processing power but they’re not the same as laptops. And they usually cost around $350. They’re optimized for road warrior-type apps like looking at PowerPoints, e-mail and one-click true Internet connectivity.

Now, AT&T Inc. is following in the footsteps of T-Mobile in Germany and Bougyues in France, cutting a deal to bundle a netbook with its mobile data connectivity. It’s turning to Radio Shack to distribute the Acer Aspire One netbook for $99.99, bundled with a two-year contract for a $60 per month data plan.

And sure, users are getting a $250 discount over the standalone price of the device, but when you consider the data plan, the whole shebang adds up to $1,540 over two years. And this is something that has some industry-watchers wondering if the price points will be too high to translate into a viable business model.

The $60 per month data fee is something carriers have justified for laptop 3G dongles by saying that laptop users will be doing more bandwidth-intensive activities, like streaming video, which has a higher cost per bit than say looking up something on Google Maps or pushing e-mail, which are core activities on the smartphone side. Smartphone contracts meanwhile tend to go for less, around $30 per month. And like a smartphone — and unlike a notebook — a netbook is primarily a connected device; it doesn’t have the processing oomph to be an all-in-one multitasker like a laptop. It also doesn’t have native voice, unlike a smartphone. So does the value proposition translate? Who is the target market?

And perhaps more interestingly, will we see an according race to zero? As an object lesson, T-Mobile in Germany offers its netbook for one Euro and a €35 per month two-year data contract.

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