Nokia's New Netbook Faces Price Battle

NEW YORK ( TheStreet) -- Nokia ( NOK) took a sleek plunge into the PC market Tuesday with the introduction of its first netbook computer.

The device, called Booklet, will cost $299 at Best Buy with a two-year, $60 data plan on AT&T ( T), a $1,740 total price over the course of the contract. The thin, metal mini-laptop runs on Microsoft's ( MSFT) new Windows 7 operating systems and Intel's ( INTC) stripped down Atom chip.

In appearances, the slim shiny body approximates Apple's ( AAPL) MacBooks and boasts a 12-hour battery time, though use of the 3G connection will cut that battery time significantly. In addition to the 3G network access, the Booklet includes GPS and WiFi.
Nokia 3G Booklet

AT&T's emerging devices manager Glenn Lurie told reporters at a New York Nokia media event that Best Buy ( BBY) made the decision to sell the Booklet for $299 and for $599 without a service contract.

Lurie also hinted that there would be cheaper data plans coming from AT&T. Most netbooks sell for around $300 and users typically connect to the Internet through WiFi or a wire from their home networks. Telcos subsidize the consumer cost of the devices in exchange for two-year data plans. But the steep additional costs have been one of the barriers to better sales.

AT&T is aware of that, and the company has started to show some flexibility with data pricing.

"We need to give customers more choice" on data plans, Lurie said, adding that AT&T "will have some announcements before the holidays."

The news comes as Deutsche Telekom's T-Mobile U.S. unit prepares a "Project Black" that is expected to spur a bloody round of deep price cuts in the wireless industry.

Nokia needs the $300 telco subsidy from AT&T for its netbook experiment to work. But Nokia is a late entry into the netbook market, coming two years after low-cost producers like Asus and Acer have dominated the segment.

For Nokia, netbooks represent a bold strategy to defend some of the business it has been losing in the smartphone market to Apple and Research In Motion's ( RIMM) BlackBerry. The Booklet is the first of a range of mobile computing devices Nokia is expected to have this year and later next year. This summer, Nokia introduced a handheld mobile computer that uses a Linux-based Maemo operating software.

Behind T-Mobile's Project Black

Nokia hired contract manufacturer Foxconn to produce the Booklet in time for the holiday gift buying season.

The computer market could prove challenging for Nokia as it tries to find an opening between cheaper netbooks and a host of more powerful notebooks from Dell ( DELL), Hewlett-Packard ( HPQ) and Apple.

Palm's ( PALM) brief and brutal failure of Foleo, for example was a similar effort by a phone maker to expand beyond smartphones into netbooks. For the Booklet to succeed, Nokia needs the support of telcos, an area where the Finnish phone giant has been particularly weak.

Nokia shares were up a dime to $14.95 in midday trading Tuesday.

-- Written by Scott Moritz in New York.

More from Technology

10 Big Tech Companies Are Spending $100 Billion in 2018 to Dominate Even More

10 Big Tech Companies Are Spending $100 Billion in 2018 to Dominate Even More

Listen: Smart Technologies That Could Lure Millennials Back to Motorcycle Riding

Listen: Smart Technologies That Could Lure Millennials Back to Motorcycle Riding

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Pegasystems Founder Explains Why He Has One of the Hottest Tech Stocks Around

Tesla's $78,000 Model 3 Is a Bargain. Here's Why

Tesla's $78,000 Model 3 Is a Bargain. Here's Why

Tesla Model 3 Delivery Time Falls, but Will It Help the Stock?

Tesla Model 3 Delivery Time Falls, but Will It Help the Stock?