Newest Netbook Competitor: Verizon

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Verizon Wireless (NYSE: VZ) is entering the netbook market with plans to sell 3G-equipped versions of the tiny laptops in its stores as early as next month.

But observers warn that its pricing on service plans will be the deciding factor in whether it can unseat rival AT&T in the nascent carrier-netbook space.

“Verizon Wireless could start selling netbooks as early as next quarter in Verizon Wireless Communications stores,” said Brenda Raney of Verizon’s product distribution and marketing. “No further information on pricing or availability at this point.”

While it remains to be seen which hardware manufacturers and electronics retailers Verizon is working with, industry watchers say the move to sell netbooks — ultra-light, low-cost laptops that focus on Internet access and light word-processing — is in step with the competition. AT&T (NYSE:T) sells Acer Netbooks for $99, with a two-year mobile broadband service contract of $60 a month, through RadioShack, and also sells Dell Mini Inspirons through its Web site.

“It’s a natural evolution for Verizon to provide netbooks, and they have appeal because of the price point at only $99, but the challenge is to provide competitive service pricing,” said Carrie MacGillivray, a senior mobile enterprise analyst at IDC. “Plans of $60 month over month, that adds up quickly, especially because most consumers have data plans, voice on top of that.”

The news comes at a time when low-cost netbooks, some are just $250, are having a huge effect on the computer industry – the number of netbooks shipped this year is expected to double, to 20 million, according to IDC, reaching 15 percent of all portable PC shipments. Just this month reports circulated that Apple may enter the netbook market.

Meanwhile, PC makers are already suffering from a recession and double-digit price drops, 14 percent on average in Q4 of last year says IDC, that we haven’t seen since the dot-com bust, as well as the threat of smartphones, predicted to nibble away at profits as they become more like mobile computers.

While the growing popularity of netbooks continues to influence the PC market, so-called “subsidized netbooks,” meaning the service carriers underwrite the cost by getting a two-year data plan commitment, aren’t likely to impact smartphone sales.”It’s two distinct markets with different uses,” MacGillivray said.

In other carrier competition this week, T-Mobile released a 3G USB modem stick, as Verizon and AT & T already offer similar devices at about the same price point.
The portable modem lets users connect their notebooks to T-Mobile’s 3G network and other Wi-Fi networks.

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