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Why Nokia's Netbook Plan Makes No Sense

By Tim Beyers – Updated Apr 6, 2017 at 1:04AM

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If carriers can't handle the iPhone, how will they handle netbooks?

Nokia (NYSE:NOK) has a new netbook, but it'll cost you 575 euro --  roughly $820. Who's smoking the smoked fish in Espoo?

The trouble with this plan isn't so much the price, but who Nokia expects to pay the bill. Cell-phone network carriers will distribute the Booklet 3G, which usually means purchase prices are lowered thanks to carrier subsidies.

We don't know which carriers, of course, but Europe and America's top names are the likeliest choices. Vodafone (NYSE:VOD), France Telecom (NYSE:FTE), Verizon (NYSE:VZ), and Sprint Nextel (NYSE:S) all come to mind.

So does AT&T (NYSE:T), yet I wonder if Ma Bell's network is too tapped to handle another smart device. The data deluge caused by Apple's (NASDAQ:AAPL) iPhone is causing enough trouble as is.

More than anything, the iPhone illustrates the problem with Nokia's plan. AT&T pays a fortune to subsidize iPhone sales, only to be forced to reinvest billions in profits to bolster its network infrastructure. If you're wondering whether AT&T will ever catch up to the data demand the iPhone creates, you aren't alone.

Growing a new crop of advanced devices won't help. Certainly not the Booklet 3G, which the AP says will include a small, insertable card designed to access high-speed carrier networks when the device is out of range of a Wi-Fi network.

What's more, this so-called netbook -- can anything costing more than $800 really be called a netbook? -- will include a built-in navigation chip that will apparently connect to Nokia's map software.

In short: This device is going to be one heck of a data consumer. Carriers are supposed to subsidize this, an aluminum-plated guarantee that they'll soon be forced to upgrade their networks? I'm not so sure they will. Not without some concessions, anyway.

Smart devices such as the iPhone and Booklet 3G are here to stay, and mobile data will flow more freely as a result. Carriers can't escape this truth. But no one should be surprised if they're reluctant to pay more to connect to the revolution when the price of doing so is already high. 

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Apple is a Stock Advisor selection. Nokia and Sprint Nextel are Inside Value picks. France Telecom is an Income Investor recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers had stock and options positions in Apple and a stock position in Nokia at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is a connecter, not a separator.

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Stocks Mentioned

Nokia Corporation Stock Quote
Nokia Corporation
NOK
$4.24 (-0.47%) $0.02
Apple Inc. Stock Quote
Apple Inc.
AAPL
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Verizon Communications Inc. Stock Quote
Verizon Communications Inc.
VZ
$38.93 (-1.49%) $0.59
Sprint Corporation Stock Quote
Sprint Corporation
S
AT&T Inc. Stock Quote
AT&T Inc.
T
$15.67 (-2.12%) $0.34
Vodafone Group Plc Stock Quote
Vodafone Group Plc
VOD
$11.51 (-3.84%) $0.46
Orange Stock Quote
Orange
ORAN
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