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More Free Netbook Promos Expected

Carrier-subsidized netbooks were promoted nationally by retailers for the first time in recent weeks, but it won’t be the last time, some analysts said.

“The subsidized 99-cent netbook is here to stay,” said Strategy Analytics analyst Bonny Joy, noting that subsidized netbooks were promoted at 1 Euro during Christmas in Western Europe.

In recent national inserts, RadioShack promoted a free Acer Aspire One with AT&T 3G data plans starting at $60/month with two-year service contract. The model this week returned to its regular $49 subsidized price. The device is also available without 3G service at $349.

Best Buy nationally advertised Hewlett-Packard’s Compaq Mini 110c-1040DX for 99 cents with Sprint two-year 3G data plans starting at about $60 a month. The netbook is also available at $389 without 3G service. With included Verizon Wireless or AT&T 3G service, Best Buy promotes the same netbook at $199.

Previously, carrier-subsidized netbooks have been available in the U.S. at subsidized prices of $49 to $199, depending on the monthly data-plan price.

At Best Buy, executive Cory Shannon said the company is able to offer the Compaq netbook at 99 cents with two-year Sprint activation, while promoting the same model at $199 with AT&T or Verizon activation, because the netbook incorporates Qualcomm’s Gobi cellular chipset. That chipset supports multiple cellular standards and cellular bands. Gobi “allows the customer to choose which network they activate,” Shannon said. “We are testing behaviors and have different pricing for different carriers.”

Best Buy launched its first cellular-embedded netbook in June following the April launch of its first cellular-embedded laptop in April, he noted.

The free and almost-free promotions are appearing now in part because carriers’ 3G networks offer better coverage than they did only a year ago, and the economy is driving some consumers to consider netbooks as replacements for desktop and laptop computers, said ABI Research senior analyst Jeff Orr. As the back-to-school season approaches, “we’ll see more [free and 99-cent] promotions,” he added.

Carriers also see 3G-equipped netbooks, as well as other 3G devices such as wireless modems and Amazon’s Kindle e-book reader, as a way to sell more subscriptions at a time when the vast majority of Americans already own a cellphone, Joy added.

The free and 99-cent recent promotions, added NPD industry analysis VP Steve Baker, underscore the fact that “everybody is still experimenting with the right way to do this [market subsidized netbooks].” With subsidized netbooks available only for a few months, he said, “August will be a great test” of the products’ potential.

Joy of Strategy Analytics believes sales of subsidized netbooks will catch on, but “they will not substantially boost sales like free phones did.” He also pointed out that consumers also have many other mobile-data options, including Wi-Fi hot spot service, wireless-data modems and battery-powered handheld Wi-Fi routers that connect to 3G networks.