The Business Centre

Mobile carriers may start giving away netbooks for free, and Linux-based application stores could help them profit by doing it, the head of a Linux advocacy group told Chinese companies on Monday.

The move by carriers to sell netbooks at a discount and seek revenue from later application downloads is an opportunity for Linux, Jim Zemlin, executive director of the Linux Foundation, said at a Beijing forum. He urged Chinese and global companies to consider offering devices and download stores based on Linux.

But while Linux has some advantages, user habits and slim software offerings on the operating system mean Windows will continue to dominate on netbooks in the near term, said Jack Gold, an analyst at J. Gold Associates.

Selling discounted netbooks to users who buy a mobile data subscription would extend a sales strategy widely used for mobile phones. Carriers often sell phones for below retail price and let a user's subscription fees make up for any loss.

AT&T already sells subsidized 3G netbooks in the U.S., and China Mobile has announced similar plans. Carriers worldwide are likely considering the option, which lets them charge for added services like downloads of music, videos and software, said Gold.

Those downloads could come from platforms like the iPhone App Store that target mainly mobile phones today.

Competition could push netbook prices down as more carriers subsidize them, which would make putting Linux on the laptops an attractive way to cut costs, said Zemlin.

"In less than a year, I predict that the new cost of a netbook will be zero," Zemlin said.

A carrier that creates its own application store using an open source OS also avoids having to share download revenue with the OS designer, he said. The carrier can then pocket more of the revenue itself under any split arranged with application developers, he said.

But users could find Linux limiting. Linux does not support the wide pool of programs that Windows does, and most users favor Windows because they are more familiar with its interface, said Gold, the analyst.

Carriers would also incur costs by customizing Linux to create their own download stores, or by handing the task to a device maker, said Gold.

Windows could get another boost if the low-end version of Windows 7 proves effective on netbooks when the new OS comes out this year, he said.

But it remains attractive for carriers to subsidize netbooks, which costs less than doing so for a high-end smartphone, Gold said. Netbooks can run from US$300 to $400 off the shelf, while an iPhone is $599, he said.

Some Linux-based download stores are already open or in the works. The Android Market for phones and upcoming netbooks is based on Google's Android OS, which uses a Linux kernel. China Mobile plans to open an application store based on an Android-based mobile OS it is developing.