I’ll Just Buy a Netbook: Why Netbooks 2.0 will do More than Cannibalize

notebook_divaHaving covered netbooks since their birth and getting the little laptops into my hands before they hit the market, I am always thrown off kilter when I see one in the wild. But with close to 17 million of them out there now and an estimated 32 million to be shipped by 2012, I should get used to the fact that spotting a mini-notebook isn’t quite like finding Waldo anymore. Just last week I was eating at a diner and sitting in the booth behind me was a woman with both her daughter and her HP Mini 1000. Within a few minutes I learned that she owned her own business and had a desktop at home but needed a laptop for business and personal trips (she even had a Verizon USB dongle) to check her e-mail accounts, bank and credit card balances, etc. She had explored getting a larger laptop, but said the $429 HP Mini “worked.” Two things happened that made this nice woman, and lots of other across the globe, decide to buy a netbook instead of a regular notebook. The first was that money had to be saved. “I was looking for a notebook between $400 and $600,” she told me. Blame the tough economy and penny pinching in all facets of life, but the average $399 price of a netbook is hard to pass up these days. The second was the realization that she didn’t need a laptop to do much more than just simple computing tasks. A system that could get on the Web and run some basic applications, like Microsoft Word, Outlook or iTunes was enough. If you ask most people these days, the majority of their time on the computer is spent in the Web browser and shelling out more money for an Intel Core 2 Duo-based system just isn’t necessary. According to Stephen Baker of NPD, 50 percent of the market is following the same route as the woman I met in the diner and buying a netbook instead of a regular notebook. The other 50 percent of netbook growth has been incremental from consumers who have bought a netbook in addition to their primary laptop (the so-called “secondary PC” that Intel and others intended the netbook to be). Companies have already seen the impact on the margins: Microsoft, for instance, has admitted that revenues have been “impacted by netbooks” as license revenue is lower for these systems because most of the devices cannot run Windows Vista and instead ship with the cheaper Windows XP ULCPC. So while Intel was hoping that netbooks would only be good enough for an hour of computing and users would use higher end Centrino 2 notebooks for heavier tasks, it’s just not the case and it definitely won’t be the case as we see netbooks scale up in size to 12 inches and 13 inches in the next few months. Once 12 and 13-inch systems become common, we will see netbooks not only cannibalize but change the entire laptop industry. Coming are larger “netbooks,” or what I am calling Netbooks 2.0, and if PC vendors thought the 8.9 or 10 inch $399 netbook was the great terror, these are the notebooks or netbooks that will change it all. I am still referring to them as  netbooks  because they are still not for heavy multimedia pouncing, but light media use and primarily for surfing and basic tasks. The Samsung NC20 is the first example of this type of netbook (the Dell Inspiron Mini 12 was technically first but that system was hobbled by slow performance and a cramped keyboard). The $549 12-inch Samsung has the processing power of a netbook (though it uses VIA’s Nano CPU, rather than Intel’s Atom) but its larger screen makes it look more like an ultraportable laptop and quells the  mini-notebook pain points. The larger screen and keyboard make for a very comfortable computing experience, one that doesn’t even need a time limit. HP’s dv2, which has AMD’s competitor to Intel’s Atom inside,  is another example though it costs a bit more at $699.  Intel will be aiming its CULV processors at the same segment of laptops. Call it “under a grand” computing, but the majority of users won’t see the need to buy a notebook with a higher-end processor, unless they are video or photo editors or require loads of power (and better yet, Nvidia’s Ion solution could possibly make these systems work for this crowd). The $800 or $900 mainstream laptops we know of today will become less desirable when one can snatch up an ultraportable laptop with just enough oomph from anywhere between $500 and $700. The notebook market segment that will be hurt most by the emergence of larger netbooks will be expensive ultraportables that are heavy on style, but light on horsepower. Systems like the MacBook Air with its mere 2-hours of battery life, the Voodoo Envy 133 with its weak performance, or the new Dell Adamo with its whopping price tag will have to step up their performance, lower their prices, or prepare for weak sales figures. I really better get used to seeing the netbooks in the wild, because whatever the form factor, they are going be replacing lots of today’s notebooks and we are going to see a heck of a lot of them in the wild. Whether she’s roaming the streets of Taiwan or burning up the phone lines, LAPTOP News Editor Joanna Stern is responsible for getting the scoop on the latest must-have mobile gadgets.  Her Notebook Diva column appears on Tuesdays.

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  1. Fanfoot Says:

    Yup. I’d like to see some netbooks in the “ultraportable” 11″ size too. Why should the Sony Vaio’s be the only choices here. If over time we see decently performing mini-PCIe SSDs that don’t cost too much, these might even compete against the ultraportables on size and weight. High prices on laptops are doomed! What fun.

    And if Dell or anybody else thinks they can sell EXPENSIVE ultraportables in any volume, well they better be trying harder. Built-in Intel Graphics? 1.2GHz processors? For $1999 to “start”? Who are they kidding?

    The good news is that some people (well, me) may upgrade their netbooks more often that they would a more expensive system. I’ll likely swap out my Dell Mini 9 for something in the 10″ size with a better keyboard, the new 720p displays that should be available in the next quarter, better HD playback support, etc. And in another year, with sufficient progress, I might be upgrading again.

  2. Small Laptops Says:

    I bought a netbook when the Asus EEE PC came out, but soon found that it just couldn’t do what I wanted it to do. I have since went back to the laptop and use the netbook on occasion. I still find it handy to take on trips, it fits in the glovebox of the car and I can do basic surfing and emailing. If an inexpensive 11 inch model were available with enough options, I’d buy it. I love netbooks with solid state drives so having an 80GB SSD would be my preference and if it was less than $500, that would be even better!

  3. Brian Dougherty Says:

    Another phenomenon that will fuel netbook growth is the emergence of consumer cloud computing. Most people think of cloud computing today as an IT outsourcing solution, but companies like ours (http://www.airset.com are letting small and medium sized businesses set up a shared cloud computer for a group for just $9.95/month. This shared computer comes with 20GB of storage (that is really 60GB because every file is stored with triple redundancy) and is pre-loaded with a suite of web apps including a shared calendar for coordinating the team, shared contacts, task list, website hosting, collaborative document editing and more. Your shared storage is infinitely expandable in 5GB increments ($2/5GB/month) and is always backed up and available to all group members. As more and more compute task move into the cloud, a small, lightweight, inexpensive web access device like a netbook becomes more and more compelling. Especially if the screen size increases so there is no disadvantage in the screen size.

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