Switched On: A netbook Apple could love

Ross Rubin contributes Switched On, a column about consumer technology.

Last month, rumors swirled that Apple had purchased a large quantity of 10" touch panel displays, leading many to believe that Apple is creating a netbook to compete with small, inexpensive Windows PCs later this year. Netbooks -- which have been driving most of the PC sales growth the past few months -- have proven a delicate balancing act for manufacturers that want to portray them as a second or even third computer. However, nearly all consumers have opted for netbooks with Windows, which makes them compatible with the same software programs being run on more expensive notebooks or desktops.

So far, Apple has abstained from the netbook trend to the benefit of its profit margins and the detriment of its market share, but the company has a unique set of assets and design philosophy that could lead to a netbook that better embraces the concept than those of its competitors. Among these assets are its own operating system available for both PC and mobile configurations and computing requirements, its own fast and modern browser and productivity suite, and local (via iTunes) and WAN-based (via MobileMe) synchronization.

In the mobile space, it has a thriving developer community excited by, if occasionally frustrated by, its application store that has spawned responses from Microsoft, RIM and Nokia. Apple is also strong in the education market, and students have been among the best target markets for netbooks. What, then, would Apple bring to the table?

Consider Apple design hallmarks -- a penchant for thinness, which is difficult to achieve in today's netbooks, particularly if one is to include legacy ports and significant battery life, a commitment to videoconferencing via iChat and integrated webcams, and an aversion to memory card slots and legacy ports. Finally, let's consider some challenges that many of today's netbooks face -- short battery life, cramped user interfaces, middling performance, small trackpads with compromised buttons, thick profiles, and (for manufacturers) encroachment on more expensive computers.

Most netbooks have been designed and marketed as steps down from the laptop, but Apple is well-positioned to build a computing companion that starts from the smartphone up. A productivity device that's a closer cousin to the iPhone is not so far-fetched as the iPhone allegedly started life as a plan for a tablet computer. Indeed, the touch screen purchase rumor, if true, would lend credence to this direction as Apple does not yet support touch gestures in Mac OS X and would be unlikely to do so before a major release. Using a touch screen would also enable navigation of the screen without the compromised trackpads that many netbooks have. Even without the touchscreen angle, if Apple wanted to build a Mac notebook with a 10" screen, it could have done so long ago.

Apple has also tended toward imbuing its portable products with large amounts of flash memory and embedded batteries, two features that could lead to long battery life and a slim profile. iPhone OS is designed to provide all-day battery life and would not get bogged down the way a desktop operating system would. And in comparison with a desktop operating system, which is a bit cramped on a netbook screen, an operating system designed to live in a 3.5" box would find a a 10" screen, if anything, too big Apple, which is beefing up iPhone OS to include such features as universal search, would benefit from multiple revenue streams in creating such a device. It would own application distribution via the App Store, and it would be a strong candidate for use with MobileMe. The need to synchronize files between the would-be second computer and a primary one is not addressed by the vanilla netbook.

The picture is painted of a large-screen, landscape-oriented iPod touch, perhaps crowned by a webcam, and preferably serving as the top half of a clamshell device (although Apple could build in support for Bluetooth input). Hopefully, Apple would beef up some of its included applications, such as mail, for the new system. And such a computer would be constrained by the iPhone's single-application architecture, but this would allay Apple concerns about cannibalization. Apple could create a version of iWork for the product, or just let consumers take advantage of the productivity applications offered in the App Store, such as the recently announced QuickOffice. And with its ultramobile design, such a product could also be differentiated from the MacBooks by being the only non-phone device from Apple to include wireless WAN capabilities.

It all works on the electronic paper substitute on which you are likely reading this but, despite all the talk of Android (which is the iPhone OS's competition) showing up on netbook devices, consumers' embrace of Windows on netbooks may indicate more than just familiarity. It may indicate a demand for the same kind of experience offered on larger PCs. Some devoted but trailing-edge Mac users expecting a MacBook experience from a clamshell device might just be confused or frustrated by an iPhone OS-based netbook.

Also, such a device might require less than a full-size keyboard, something Apple has been reluctant to implement for some time. Indeed, clamshell devices running embedded operating systems have a marginal sales track record overall. And then there's the question of price. Consumers would probably want to see it at $399 or $499 but Apple may be loath to sell it at prices below ad-bait for future Laurens and Giampaolos. The company should recognize, though, that -- just like with the iPod touch -- an iPhone OS-based netbook would expand the market for Mac OS developers and would offer media and application sale lock-in.

With the iPhone OS in a larger clamshell device, Apple could differentiate from the competition, differentiate from its more expensive Macs, and produce a functional on-the-go computing device that offers slimness, stamina and synchronization with a rich user experience that caters to netbook pricing and usage. Tempting as it might be to drag the iBook trademark out of retirement, it may be better for expectation-setting to call it the iPod pro.

Ross Rubin is director of industry analysis for consumer technology at market research and analysis firm The NPD Group. Views expressed in Switched On are his own.