Are ISP Subsidies Coming Back?

During the recession eight years ago, major retailers offered PCs anywhere from free to a few hundred dollars with typically three-year ISP commitments. Major ISPs like AOL, Prodigy or MSN subsidized the discounts, which helped keep PCs selling at least during the recession's early days.

Another recession is upon us, with a new category of low-cost PC and another kind of ISP. Netbooks are cheap, light, tiny and increasingly popular. Some newer models are wired up for wireless broadband via 3G services from carriers like AT&T. Netbooks are computers crying out to be wired—ah, unwired—by 3G. Typical screen size ranges from 8.9-to-10.3 inches for a PC typically weighing 2-to-3 pounds. They're truly ultraportable. Newer models feature a 1.6GHz Intel Atom processor and larger hard drives, typically 120GB or more.

Netbook carrier subsidies already are fairly common outside the United States, according to IDC (in early December) and DisplaySearch (yesterday). According to IDC, 60 percent of netbooks were sold into the European market during the first three quarters, with telco deals generating half of the volume.

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