Is Nokia's Netbook Too Expensive?

Posted by: Olga Kharif on September 02, 2009

On Sept. 2, Nokia announced the specs of its first netbook, the Nokia Booklet 3G. The netbook, which comes with a global positioning system and runs Nokia mobile services, will cost $819. Most analysts I’ve talked to expected it to cost less than $500, which is the price of premium netbooks today.

The same day, Nokia also announced some neat Facebook features.

The high price could dramatically impede Nokia’s progress in conquering the netbooks market. Nowadays, most manufacturers’ netbooks cost between $200 and $350 to the carriers, which subsidize and sell them for consumers for as little as zero dollars with a wireless service contract. But no carrier can afford to subsidize the Booklet’s full cost. Germany’s O2 plans to sell the Booklet to consumers for about $356, after subsidies and with a long-term wireless contact. That’s a lot of money for a consumer to shell out. And my hunch is, not many consumers will take O2 up on this offer.

Even though its product looks attractive and works well, according to demos, the high price leaves little hope for Nokia’s success in this market. While the company does not want to cheapen its brand, or jeopardize its margins with a cheap netbook, it has to come out with a competitively priced device to make sales. Today, in my opinion, Nokia prices itself right out of the market.

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Reader Comments

Div

September 2, 2009 03:01 PM

I completely agree with your conclusion. I was actually looking forward to buying this netbook but at $820, I might as well get a new laptop. It is sad to see such a worthy competitor fall behind because of non-aggressive pricing.

tressie

September 3, 2009 12:51 AM

There is almost too much wrong with Nokia's position to talk about it accurately. First, they chose a global recession to offer the highest priced netbook on the market. Second, the cache of brand loyalty -- i.e. Apple -- is simply not there, and even if it was Nokia would still be out of step with the pragmatic buying impulses of a large share of the population. Next, they are operating under a common misconception in business. That is that whatever people like as it is, they will LOVE all souped up. The netbook didn't become a blockbuster because it is neat. It became a blockbuster because it is CHEAP. By that logic, one would need to give the market more CHEAP, not more neat.

Finally, are they crazy??!!! LOL

Nokia user

September 3, 2009 02:48 AM

Yep. The price is too high. However, the true problem with this machine is the operating system. Nokia should have used an operating system of their own. Why wouldn't they use the Linux based Maemo, since that is an evolving platform and they already have that in the coming N900? Maemo would have given some special-feeling to this machine. Now it's just another Windows notebook.

Jed

September 3, 2009 10:36 AM

They do seem to have gone the Apple route - and don't forget the Nokia brand is much bigger outside of North America.

But if Netbook = Small Cheap Computer then this is not a Netbook. With 3G, GPS, HDMI and single-block-of-aluminum construction and promised 12 hour battery life, this is a 'premium' small laptop, not a 'Netbook' as we know it, and so its designed for a different market ?

fredziffle

September 3, 2009 09:50 PM

is business week owned by nokia or r u paid to promote nokia products

another nokia user

October 7, 2009 12:16 AM

@fredziffle
If they were owned by or paid to promote, why would the writer be questioning the tactics and positioning of the device?
@Olga Karif
I too agree the price is a bit high. Knowing Nokia thought process is does not suprise me that they overestimated people's willingness to spend money on a product that has the Nokia brand on it. Sometimes they just need to stop being so greedy and just make a device this appealing at a realistic price...

dkoi

October 24, 2009 08:34 AM

Why is all the information in this article completely wrong? Seriously, either take this down or edit it to reflect the correct information. This is sloppy.

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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