Rogers and HP bring embedded notebook to the Canadian channel

Rogers Communications Inc. has become the first Canadian wireless operator to leverage the exploding popularity of netbooks by bundling one of the small Hewlett-Packard Development Company LP devices with a data plan.

Intended as an out-of-the-box solution for small businesses and consumers, the PC includes a wireless broadband modem and is sold at Future Shop and Best Buy for $299 with a minimum two-year plan.

The move comes months after European and American carriers started selling subsidized netbooks as a way to drive traffic to their data networks.

The HP Mini 110 is a 10-inch notebook weighing roughly 2.5 pounds and providing approximately three hours of battery life. It includes an Intel Atom processor, 160GB hard drive and supports up to 1GB of memory. The keyboard is 92 per cent full-size.

An embedded modem, which takes the place of an external USB Rogers Rocket Stick, allows the device to operate over the Rogers Wireless 3.5G wireless network in addition to Wi-Fi.

While most sales will be to consumers, the enterprise market is an area Rogers is investigating for notebooks, said Jon Spencer, director of Mobile Broadband for Rogers Wireless.

Data plans start at $25 for 500MB per month, which represents the average monthly data usage for customers. A flexible data rate plan is also available, starting at $30.

Rogers customers are currently allowed to share data buckets between their smartphones and Rocket Sticks, but a plan that shares data between smartphones and the HP Mini 110 is not yet offered. “That is something we are looking at,” said Spencer.

The benefit to customers, according Spencer, is “broadband-type experiences similar to the types of speeds you’d get at home using the HSPA network, which is speeds up to 7.2 Mbps. So that’s approximately two to three times faster than our competitors.”

Using the Rogers Wireless network also offers a security benefit over public Wi-Fi in that it is a unique connection you’re not sharing with other users, Spencer pointed out.

Rogers is positioning the device as a complimentary to smartphones and primary home PCs. Spencer referred to a 3-30-3 rule: three minutes browsing through a smartphone, 30 minutes browsing through a network and three hours through a home PC.

Smartphones are typically for e-mail, instant messaging and light browsing, while the netbook offers a more extensive Web browsing experience through the larger keyboard and screen, he said.

“It’s probably not the sort of thing you’re going to use for more serious business applications, such as developing a PowerPoint presentation or a detailed spreadsheet. That’s the sort of thing you’ll do at home through your VPN connection,” said Spencer.

From HP’s perspective, the value proposition for customers is “the ability to work with a very ultra mobile product they can sync up as soon as they get home or as soon as they get into the office, take care of a couple of files and be on their way quickly,” said Jenna Mann, Business Development Manager at HP Canada. The device runs everyday productivity applications, she pointed out.

“The netbook category is one of the fastest growing PC categories in the world … from Rogers’ perspective, we see it as an opportunity and customers obviously like these types of PC devices,” said Spencer.

Such bundled deals, common in the U.S. and Europe, “make a lot of sense for both the hardware manufacturers and carriers,” said Amit Kaminer, an industry analyst at SeaBoard Group, a Montreal-based telecommunications consultancy.

Manufacturers can tie a product to an appealing communications platform users want, he said, while carriers use netbooks to lure subscribers and increase average revenue per user if data traffic exceeds the limit of the subscriber’s plan.

For Rogers, offering the deal through retail chains rather that its own stores also means it doesn’t have to carry the burden of stocking inventory.

Also, for carriers the cost of buying netbooks is relatively lower than buying certain models of smartphones, Kaminer said.

“Everybody walks away happy,” he said.

Netbooks are so popular in the U.S. that wireless operators are in a price war over them. This month Sprint began offering a Compaq 1040DX netbook for 99 cents on a two year plan.

Canadian wireless operators have been eyeing the possibility of bundling netbooks since the beginning of the year. Shortly after AT&T in the U.S. began selling the devices, Telus tested the market in April in a promotion with Best Buy, tossing in an Acer netbook to buyers who bought a pair of $49 LG handsets on a 36-month air plan.

However, it wasn’t linked to a data plan.

With four new wireless companies set to open their doors either late this year or early next year, bundling products will become a key marketing weapon for all wireless operators.

Rogers, Bell and Telus are expected to fight the new entrants by honing existing deals combining their cable, IPTV, Internet, voice-over-IP and long distance products. Of the new entrants, only Videotron in Quebec can match that line-up.

Globalive Wireless is owned by Globalive Communications, and is expected to bundle the parent company’s long-distance and VoIP offerings. DAVE Wireless is jointly owned by Toronto entrepreneur John Bitove, who controls the XM Canada satellite franchise and is expected to bundle satellite radio with its cellphones.

Netbooks started to be marketed seriously here in the first quarter of last year, said Tim Brunt, IDC Canada’s senior analyst for personal technology, but the initial response from buyers was cool because they were underpowered.

Return rates to stores of up to 30 per cent were common, he said.

It wasn’t until late last year when manufacturers began putting more powerful CPUs and increased RAM when sales firmed up. “As the machines became more powerful, and you were able to run Windows XP, the return rates dropped.”

Now, Brunt sees “explosive growth.” In the fourth quarter of 2008, some 95,000 mini-notebooks with screens under 12 inches were shipped here, and another 90,000 in the first quarter of this year. In the fourth quarter of this year, IDC Canada sees shipments nearly hitting a peak of 140,000.

By comparison, 681,000 laptops with screens 12 inches and above were sold in Q1.

Acer accounts for 60 per cent of Canadian netbook sales, followed by Hewlett-Packard and Dell (Nasdaq: DELL).

One of the reasons is that netbooks break what Brunt calls the $500 psychological barrier between the small devices and laptops.

Not all netbooks are going to consumers. IDC Canada figures about 20 per cent are sold to organizations for what Brunt calls “try it out and see if it works” trials.

Netbooks are aimed at people who want a light, relatively inexpensive device with a readable screen for checking e-mail and cruising the Web. With modestly powerful, single-core CPUs and screens no bigger than 10 inches, they aren’t intended for heavy use of productivity software such as Microsoft Office or Photoshop that has to be installed on a PC.

However, many organizations make data available to staffers through Web applications, which lessens their burden.

Until netbooks came along, PC manufacturers made buyers pay a substantial price for a laptop that weighed less than 2.3kg – usually at least $1,800. Prices have been dropping steadily for some time, but a low-priced laptop didn’t mean one that saved weight.

Netbooks break that rule, although admittedly at a cost of power.

Still, Brunt observed that “this is the first time [in a laptop] where there has not been a premium for a smaller sized product.”

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Jim Love, Chief Content Officer, IT World Canada

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