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Dongles out, 3G netbooks are swinging

Sure, better 3G coverage is good for competition, but it's what you do with the 3G that will ultimately make the difference. As Vodafone expands its network footprint, the practice of selling 3G-enabled netbooks like mobile phones should really resonate with end users.
Written by David Braue, Contributor

Vodafone's announcement that it's nearly done expanding its 3G network into rural and regional centres can only be good for competition in the burgeoning mobile data space.

By 2014, Ovum expects the world will have 258 million notebook-based users — a 1022 per cent increase over 2008.

As the company's merger with 3 progresses, we can only assume the two companies are planning together in an effort that will bring much-needed choice in the areas that need it most.

Yet while many have focused on this network expansion's potential to improve mobile voice coverage and potentially push down its prices, it's also worth mentioning the potentially vast improvements this coverage will provide for what I reckon is a business model with real legs: netbook/3G bundles.

The idea of using an inexpensive netbook to get online from anywhere, any time, isn't exactly new: users have been sticking their 3G dongles into netbooks since Asus created the netbook category by debuting its first Eee PC a year ago, and Lenovo did a similar thing with 3G-enabled laptops back in 2006.

The dongles have been on sale for several years, and signs are that they've been a runaway hit: analyst firm Ovum recently pegged the mobile broadband market as being worth $US137 billion five years from now, a 450 per cent increase compared with last year. Admittedly, most of that will come from mobile phones, of which the firm expects there will be over 2 billion by 2014 — but many of these phones will be owned by people who don't necessarily use the broadband features heavily.

The bright spot in this analysis, however, is laptops. By 2014, Ovum expects the world will have 258 million notebook-based users — a 1022 per cent increase over 2008 — all of whom one can assume will be using the broadband features heavily, since that's why they bought the dongles. Interestingly, 40 per cent of the total base of mobile broadband laptop users are expected to come from the Asia-Pacific region in 2014.

So while smartphones will be the access method preferred by many, laptops will still have a very strong showing as people increasingly just expect to be online wherever they're computing.

For this reason, the cross-subsidised netbook-3G bundles like that available from Vodafone — which offers the well-received Dell Inspiron Mini 9 with 3G connectivity built in — can't help but become a compelling option for many, especially as swinging dongles are displaced by netbooks with built-in 3G. In short, these deals will sell computers in the same way we've been accustomed to buying mobile phones for years.

[A netbook's value lies] in its ability to do just what most people need... This will not change in two years, even if the hardware is worth zero by then.

Consumer advocates may warn about such deals because they invariably see you paying for outdated hardware by the end of your contract — a fact of which US customers still using first-generation iPhones, for example, are still painfully aware.

Yet those economics don't necessarily apply in netbook broadband, since the netbook you buy today is already way behind the technology curve. Its value lies not in its sheer computing power, but in its ability to do just what most people need: surf the web, download pictures from your digital camera and manage them, and do word processing and the like. This will not change in two years, even if the hardware is worth zero by then.

With 3G networks expanding, the netbook-3G bundle is no longer a metropolitan-area novelty; companies looking for low-cost ways to keep their employees in touch while travelling can consider them as a ready-to-go mobility alternative that sidesteps the massive administrative and management expense of conventional (read: $2000-plus) business laptops.

Recognising that they can control their costs much better with hardware-and-service bundles, cost-conscious companies could do worse than buy these devices by the dozen, arming their sales teams with everything they need for the road and a built-in data hotline back to the office. Prudent data protection strategies — including software for remotely accessing office desktops, cloud-based data storage that centralises and protects all data, and web-based client apps — can be used to convert employees' mobile PCs from distributed potential points of failure into constant-companion computing devices.

The possibilities are significant, and the technology is seemingly well-supported enough that companies may finally be able to stop having to limit their technology decisions based on real-world mobile service availability.

Even Telstra, whose Next G network still has arguably the best coverage in many regional areas, is contemplating the market, as Sol Trujillo conceded in a recent media and analyst conference: "Netbooks have turned out to be a much hotter commodity than many people expected a year ago," he said. "We won't say whether we are or aren't [going to launch a bundle], but it is an option to stimulate customers and take them to a new experience level."

Terms like "experience level" drift into the hated world of marketing speak, but his point is clear: this is a market that's only going to get better. Paired with stronger 3G offerings from major players, we can expect great things from the diminutive netbooks as rivals follow Vodafone's lead.

Have you made the netbook shift? Would built-in 3G and a bundled contract sweeten the deal?

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