From The Register.

Google CEO Eric Schmidt has hinted that his company – or at least its partners – will one day subsidize the purchase of extra-low-cost Linux netbooks in an effort to promote the use of its myriad cloud online services.

“What’s particularly interesting about netbooks is the price point,” Google’s Willy Wonka told a room full of financial types this afternoon at the Morgan Stanley Technology Conference in downtown San Francisco. “Eventually, it will make sense for operators and so forth to subsidize the use of netbooks so they can make services revenue and advertising revenue on the consumption. That’s another new model that’s coming.”

Schmidt called netbooks the “next generation” of the low-cost machines produced by Nicholas Negroponte’s One Laptop Per Child (OLPC) initiative. “Products today are not completely done. Things are missing. It’s perfectly possible that operating systems that are Linux-based will become a significant player in that space, whereas they have historically not been a significant player in the PC space.”

In other words, Schmidt believes the US is going back to the future. The subsidized-PC model famously failed in the late 90s and early aughts, with outfits like PeoplePC and emachines. In the UK, mobile operators are already offering free laptops with wireless contracts.

It’s obvious, really. The only thing that current Netbooks lack is inbuilt 3G. Retrofitting them with dongles is, in my experience, a pain.

UPDATE: I should have known — Vodafone is already offering such a product. Thanks to Keren for alerting me.