Subsidized netbook model could sweep away 20 years of PC history
Attack of the Killer Laptot
While many stories this week rest on whether or not Apple will bother with a netbook (Steve Jobs has said the iPhone does everything a netbook does anyway, and was reported as saying “We don’t know how to build a sub-$500 computer that is not a piece of junk”), the issue really is whether or not you belong to the school of thought which says every network needs to have specialist operator supplied equipment or whether instead, you are a believer in open networks.
One rumour this week initiated by tech blog Boy Genius has it that AT&T will launch an Apple netbook subsidized down to $99 in the US, while in the UK Orange appears ready to go one step further and subsidize the bulk of a notebook computer from Apple, taking some €400 to €500 from its list price in return for a two year mobile broadband contract.
The issue with a netbook is that it should be cheaper than a small notebook computer, probably not have an optical disk, run on a lot less power, with a less powerful processing chip, most likely based on cellular style ARM cores, and it should stay connected to the internet over cellular broadband so that someone can use it for an entire day on a single battery charge. Some netbooks will have no disk storage (just using flash) so that the device is lighter and less power-hungry, and some of them are little bigger than two handsets placed together or as large as a very small notebook computer.
But there are many other issues. Notebook suppliers are not used to having their outputs subsidised, but have got used to adding an endless line of new features to try to get consumers to pick them over the competition. They would love to be subsidised and they would love to halt the endless progression of expensive differentiation. Should it even be allowed in the modern era for operators to specify and control the devices which attach to their networks? Especially in the light of what we’ve seen about what happens to prices and consumer service pricing when they do.
Take the simple case of US cable operators. Customers can only use the set tops they deliver and as a result the customer experience stays the same for an entire decade – with no innovation whatsoever. Also, cable packages are always so rigid. Do you want 100 or the 150 channel package – you can never just choose channels. You cannot decide how many tuners you have, and the prices are jacked sky high by the set top manufacturers who control the Conditional Access systems – and these systems are used to deny device competition.
No new business models emerge under this type of set-up, and one vendor or at most two dominate the scene for 20 years at a time. Where is the impetus for innovation? In that instance the impetus came from TiVo when it cut a deal with DirecTV and began stealing customers away from the cable operators in droves.
Suddenly TiVo was flavor of the month for a while on both side of the satellite-cable line, but in the end Motorola makes more money out of the invention of DVR than TiVo, encouraging that arm of Motorola to go back in its shell and once again resist all innovation.
Now it is true that cellular businesses tend to be more competitive, at least right now. But can we imagine a future where we are stuck not for 12 months, not for 24 months, but for 36 months, with the same device, the same voice and data phone rates, and the pace of innovation on devices means that we cannot get our hands on new services for up to three years at a time.
The cellular industry has only really just begun working with two-year contracts, but already as the recession mounts it is pushing for those 24 contracts every time it gives a concession to a customer. How long before the first 30 month contracts emerge, or 36 months? And then we might just as well, from the consumer and regulator point of view, buy our own device on a hire purchase contract, and take it with us to any network we like.
Which offer do you think consumers would prefer; one from AT&T which says you can have a free netbook as long as it's attached to the AT&T network and as long as you commit for two years on contract at an inflated price and there’s a choice of Apple or Apple? Or do you think consumers would like a deal from any number of suppliers, such as Dell or ASUS which says you can pay for the device over one, two or three years financed, and pick which operator you go with on a pay as you go, SIM only deal; or a short term or existing contract and swap networks whenever the deal is up? Consumers may never get offered that latter deal, but we think they might prefer it.
If you are tied in for a long time to a network and there is a recession and the operator decides not to invest in its network, you can’t express your displeasure by leaving if you are on a long contract. Much the same can be said of vendor-based MVNOs. If you have a contract with Nokia or Apple for a phone and a contract, you are in exactly the same boat, you can change neither and that’s likely to be true for some years.
Which is why regulators should do everything in their power to promote open networks. It shoves the arrangements for funding a device right back where they belong, on a consumer, and they can choose to have it from the operator or can buy it outright or can acquire it (probably not in a recession) through lease or hire purchase.
There’s another reason why it is so unhealthy. Apple may, by doing a deal with both AT&T and Orange, gain huge market share variation overnight in the netbook/PC market, the same way that its design prowess and its operator exclusives took it to the top of the desirability pile for smartphones.
COMMENTS
Fact-Checking FAIL
Back in 1980s and 90s you could either buy an Apple Mac from Apple or a Windows machine from everyone else.
Interesting, then, that I was running PRODOS, MS-DOS, and DR-DOS during that period, and only the school system was running Macintosh. (Mostly, even they were running PRODOS well into the 1990s.)
ghive-mind
All we would end up doing is replacing Microsoft with Apple. Far better if it was replaced with Google, for some reason neither explained nor very clear. Own much google stock ?
PH, not an android.
longest post ever from mr heff?
anyone done better?
and mr heff, you might as well go and crawl back into a cave with your coloured rocks to amuse you. or you could just buy an xbox and enjoy all of the activities in gta4, then you'll sleep at night.
Please accept your free PC with our cell service
Its complimentary, it ain't free.
NO USER SERVICEABLE PARTS INSIDE
Wow, a fucking _think-tank_ to tell me what I've known since I was in the single digits and OS/2 shareware vanished from the front of PC magazines. Free market forces dictate, only they arent free in the tech sector because R&D is a minor bitch, but licensing is a major one.
lets recap!
IBM said : make it IBM compatible.
Intel said : We'll pay for your advertising if you only sell our chips
Sony Said : Blu-Ray is the future; because we say so.
Apple Said : You will buy songs through us, and only us.
Cellphone networks said :you will never own your device. you 'lease' it from us.
Microsoft said : This is a EULA. you own nothing.
Nokia said : Symbian, and only Symbian.
Games Developers said : This is a more Bizarre EULA.
XBLA said : you dont buy the games. you buy points to spend on games.
Steam said : you buy the game through steam, but if we think you're pirating anything, you 'lose the rights' to everything you bought.
MS strongarmed Dell into not selling linux. Then Dell would sell linux online. on bottom end boxes, in some out of the way fucking labyrinthian part of the online sales site. on a machine you got no discounts or rebates on. they got geek credit for this,media face-time, and MS's antitrust woes waned a little.
Apple says "sure, you 'own' the iphone. but, uh, we dont want you using it in any way we cant control. but you dont own the music you paid for. also, have a crippled bluetooth stack. have a constant war over applications. and we'll issue a new patch to re-lock the phone, because you insist on jailbreaking it to do the things you want it to do that its actually capable of."
I too miss the days where the Shit I bought was MINE. Where I could pick up a game and not be lectured for ten minutes about what I am and am not allowed to do with it. Where a telephone came in a box with two pieces of paper; a guarantee and an instruction leaflet.When Music was something you got on a tape or a CD and when you were bored of it you could sell it on or give it away. Where buying a computer meant purchasing interesting things in boxes, spending a day assembling it, and never, ever once being forced into a situation where you agree to do a bunch of pointless bullshit just so a lawyer on the other side of the planet can get a lapdance at lunchtime.
These days are gone. I dont own my phone. I dont own my cable box. I dont own my operating system or a single piece of software on it other than the stuff I write myself. In the future, I wont own my television either. My kids probably wont own books, they'll lease them, or rent them through some kindle clone/descendant, which will track what they read, for how long, and what time of day. we'll rent the books on the cheap, so every other page in the rented, electronic book is an advert about other books like the one we're reading. Our TV will log our requests for On-demand TV and build a profile of what we like to watch and when. We'll subscribe to a brand of radio station that plays music I think I like, thats carefully selected by labels that subsidise the station. I'll take the cheap package. every 5 or ten songs someones upcoming gig from the label will be pushed in my face.
Give it another twenty years and owning a soldering iron will be grounds for a search of your house to make sure you arent circumventing some corporations rights by tinkering with _their_ hardware. My TV log and cellphone usage and book-rental list will be searchable by law enforcement agencies in order to ensure im not a terrorist. Another ten years after that, they'll be submitted to Credit Agencies to determine how much of a liability you are. You'll agree to this, otherwise you wont be able to rent books or watch TV or use a phone. Freedom of information act, not to mention nutbags with agendas and good old fashioned crap security means that If I watch 'Natural Born Killers' 18 times over the course of a month, someone might come and knock on my door to have a chat about _why_.
If you think this is all tin-foil-hat talk, the purchase and distributions of chemicals now places you on a watch-list, as certain chemicals are integral in the fabrication of explosives and horrid toxic shit like Sarin and the like. of course, I _might_ just be trying to start a cottage-industry soap factory in my basement, but I bet im going to have to fill out an awful lot of forms for it, and isnt it suspicious that I want to make my own soap?
We'll reach a stage where opening something to find out how it works, probably what got most of us into the tech sector to start with, will put us in breach of the law. I crack my iphones case and wire in a replacement bluetooth stack; I've just voided my contract, breached RIAA/MPAA/DCMA jargon and m now liable for a fine. because its not mine, even though I payed for it, even though Im still paying for it, even though i'll be legally obliged to continue paying for it even after my service has been withdrawn due to me tinkering with the hardware.
really. no user serviceable parts are inside.
