Attack of the $0.99 Netbook

If you have the pocket change, Best Buy (NYSE: BBY  ) has your netbook.

The leading consumer-electronics chain is offering a Hewlett-Packard (NYSE: HPQ  ) Compaq Mini netbook, which it typically sells for $389.99, for just $0.99 this week.

There's a catch, of course. You have to commit to paying SprintNextel (NYSE: S  ) at least $59.99 a month for the next two years, in exchange for online connectivity through Sprint's 3G mobile broadband plan.

If portable cybersurfing is important to you, paying $1,441 over two years may not sound like a ludicrous trade-off to paying $390 and praying for free Wi-Fi hotspots along the way. However, if you're willing to fork over $60 a month to be perpetually online (well, within the confines of 5 gigs of data usage a month), wouldn't you probably be in the market for something more than a netbook? 

Subsidized netbooks aren't new. RadioShack (NYSE: RSH  ) turned heads over the holidays when it began selling an Acer Aspire One netbook for just $99.99. The catch? A two-year mobile broadband contract requirement with AT&T (NYSE: T  ) .

But Best Buy's deal is unique, in that the retailer is offering customers three wireless carriers to choose from. Unfortunately, going with AT&T or Verizon (NYSE: VZ  ) Wireless will mean a price tag of $199.99. Sprint is apparently the only company bold enough -- or perhaps stupid enough -- to essentially subsidize the entire price of the netbook.

You've seen this happen for years in the cell-phone space. When AT&T moves an Apple (Nasdaq: AAPL  ) iPhone for as little as $100, it's actually paying Apple hundreds of dollars more per unit for the exclusivity behind the required two-year contract. It's only natural for netbook makers to make the same offer, but how big can this potential market be?

Netbooks sold like crazy over the holidays, but they probably went to Wi-Fi-enabled homes where residents were looking for an entry-level portable computing device to take from room to room. Netbooks' cheap prices were as big a factor as their compact designs. So how many people want to pay $60 a month for connectivity on a secondary machine?

More to the point, shouldn't the full-sized laptops -- and especially Apple -- be making the leap to subsidized mobile broadband deals? Netbooks are lightweight and extremely portable, but who even knows whether they'll still be relevant in two years? As a bargain-priced alternative between smartphones and notebooks, netbooks hold a huge appeal today -- but don't go stapling me to a two-year mobile broadband contract. I may have other plans come June of 2011.

What's the deal with netbooks these days?

Apple and Best Buy are Motley Fool Stock Advisor recommendations. The Fool owns shares of Best Buy. SprintNextel and Best Buy are Motley Fool Inside Value recommendations. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz is still holding out for an Apple netbook. He owns no shares in any of the stocks in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 07, 2009, at 5:14 PM, DQKISS wrote:

    You are missing the Value here and would venture to guess that you must not have used a Wireless Broadband Network before.

    If you are a mobile consumer, prosumer or professional, what good is your DSL or Cable modem at home/office when you are not really at home all the time. What if you could take the Internet Wireless and not have to worry about finding tiny hotspots to connect. That is the value of the WLess Broadband network and by the way you get the Netbook for a buck.

    I cut the cord with the Phone Company Verizon (NO phone line NO DSL - saving me over $65/month) because having those sitting at home and paying a monthly fee is a waist of money. Pay for the services that you have with you all the time (mobile Phone and Wireless Internet). Sprint works very well for me in keeping me connected where ever I go.

  • Report this Comment On July 07, 2009, at 6:53 PM, TMFBreakerRick wrote:

    DQ, I've actually had a Sprint mobile broadband account for 3 years. I had the laptop card at first, but upgraded to the USB card when my 2 year deal was up so I can actually use it on PCs (when my cable modem goes out) and ANY laptop I want. I can't see too many people wanting to pay $60 a month when it is shackled to an entry-level netbook.

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