Entelligence: Netbooks, R.I.P.

Entelligence is a column by technology strategist and author Michael Gartenberg, a man whose desire for a delicious cup of coffee and a quality New York bagel is dwarfed only by his passion for tech. In these articles, he'll explore where our industry is and where it's going -- on both micro and macro levels -- with the unique wit and insight only he can provide.

It's one of the hottest selling items in the consumer electronics market today. At a time when vendors are struggling to sell PCs, it's the one category that has been selling consistently in Amazon's top ten list of technology purchases. Apple and Sony have both dismissed the category, even as other vendors bring more models to market. Yes, I'm talking about the phenomenon called the netbook. Here's why I think it's going to be pretty short lived as a category.

"What's in a name?" Shakespeare asked, adding "a rose by any other name would smell as sweet." While some perceive the netbook as a new product category -- a class of device that's never existed -- I would have to beg to differ. A netbook is merely a laptop with the pivotal axis based on price first and foremost. In other words, "how much computer can I build for $300-500?" (which is about the average selling price of most netbooks). When Apple or Sony designs products, they look at what materials they want in a device. If it costs too much to deliver, it gets scrapped. If the materials are too shoddy to deliver at a price point, it gets scrapped. That's why we don't see netbooks from either vendor. At least... not yet.

Sure, my price-oriented definition might sound heretical to those who view the netbook as an ode to cloud computing, ubiquitous usage scenarios, and freedom from Microsoft OS tyranny, but that's not how the market has shaped out.

Let's look at history. At the end of 2007 a netbook (or laptop you could build for about $300-$500) had about a 7-inch screen, a tiny keyboard, about 4GB of storage, half a gig of RAM and no Windows OS (that Windows thing adds to price). Purists argued that the max screen size for a netbook was 7-inches. Fast forward to today: that same price point will deliver you a 10-inch screen or so, a gig of RAM and perhaps 160GB of storage. It also gets you a copy of Windows for the most part. By year's end, we'll see vendors offering 12-inch screens, full keyboards, and 300GB of storage. And they'll be called netbooks. But that doesn't matter, does it? Because that rose still smells the same -- no matter what we call it.

Sure, there are some folks who adopted netbooks as an additional PC or even a primary machine -- but the driver has consistently been price. Tiny, underpowered laptops have been around for more than a decade, but few people bought them because there was a premium price associated with them. As prices came down, capabilities

increased and more folks bought them. But not as netbooks -- rather as laptop replacements. The proof? Look at the sales and return rates of Linux netbooks vs. Windows-based ones. The vast majority of folks want Windows. The reason? It's their laptop replacement. No one carries a netbook and a laptop.

The cellphone and laptop represent the core part of a user's mobile experience. With most consumers willing to carry two devices total, there's not a lot of room for 'tweener devices. That's one reason vendors have worked so hard to increase netbook capabilities. The more they increase, the more they can displace the laptop for more users. Of course there's a downside. Netbooks use less horsepower than many other laptops. They ship with Windows XP (at least for now) instead of the more expensive Vista. That's why Intel and Microsoft are working hard to constrain the specifications of whatever's called a netbook. Of course, that won't work: technology moves at its own pace and no vendor can control it. That's why when I can get a nice 12-inch screen, with a full keyboard, a few hundred gigs of storage and a lot of RAM for $300-400 I won't care if it's called a netbook or a laptop. I'll just call it Moore's law in action.

Michael Gartenberg is vice president of strategy and analysis at Interpret, LLC. His weblog can be found at gartenblog.net. Contact him at Gartenberg@gmail.com Views expressed here are his own.