Is the Netbook a Bait and Switch Scheme?

April 9th, 2009

All right, you know that Apple has been urged repeatedly to jump into the burgeoning netbook market as quickly as it can. These trimmer, slimmer note-book-style computers are supposedly the only real profit center for PC makers during the economic downturn.

Unfortunately, when you charge a “mere” $300 or $400 for a note-book computer, regardless of what you call it, potential profits are slim. The only possible way to make decent money is to sell boatloads of them. Or, perhaps, add customization options to let you create the one you want with lots of add-ons, which, of course, means extra money for the PC makers to take to the bank.

Now there are several considerations about netbooks that aren’t getting so much coverage. It’s all mostly how well they are doing, which models and features are available, and whether Apple is ready to release their own entry into this relatively new market segment.

One thing not often mentioned is just what a netbook is good for. Now consider taking a low-powered chip, such as Intel’s new Atom processor, integrated graphics, a tiny hard drive along with a crowded keyboard and small screen and you get what is essentially a smaller version of a regular note-book. In fact, many of these models come across in exactly that way.

They are largely intended for email, Web surfing and perhaps light word processing. Indeed, to save money, many of the entrants into this market use Linux rather than Windows XP (Vista is just too bloated to work efficiently). While Linux may not seem so suitable for a desktop PC, actually it can work fairly well within a carefully controlled environment. Certainly a browser such as Firefox can be used successfully, since it has an interface very close to that of the Windows version. Email can be retrieved online from most ISPs, and Google Apps may be sufficient for light word processing. Or just use a free alternative to Microsoft’s suite, such as Open Office.

Indeed, as we previously reported, HP is considering whether Google’s open source smartphone operating system, Android, might be suitable for a netbook if given the appropriate modifications. Microsoft, in the meantime, is claiming (and no doubt hoping) that the forthcoming Windows 7 will be suitable as well. That remains to be seen.

In any case, as PC makers are gearing up their new generation netbooks, they are obviously trying to move these product upscale. You’ll be able to choose from larger screens and, by clicking off a few options in the customize pages, outfit them really close to a regular note-book. Indeed, the actual difference is apt to blur as the prices of the two get closer and closer.

That’s, of course, what the PC makers want. Indeed, you wonder if the netbook might to some extent be a placeholder product to grab sales during an economic downturn. Perhaps they are hoping against hope that, once people can afford something better, they’ll abandon netbooks like the plague and buy more profitable gear. Does that come close to bait and switch? Not necessarily, but you can see what I’m getting at.

On the other hand, just making more expensive netbooks would be more than sufficient, since whatever sells is just fine for any of these companies. Of course, Apple might be more demanding, but in the end, if netbooks continued to gain traction, you can bet they will get involved.

Understand, gentle reader, that the closest thing to a netbook that I’m apt to use is the iPhone. To me, the larger the screen the better for extended computing, and I don’t like restricted keyboards, at least physical ones, although I continue to tolerate the touch version on my iPhone 3G.

The real danger to the PC makers, however, is that large numbers of customers may decide they don’t need a full-sized note-book PC, now or ever. The more limited functions of the netbook are more than sufficient to satisfy their needs. I can tell you that I know a fair number of people that do fit into this category, and if there was a Mac netbook or a grown-up iPhone, they would be highly likely to acquire one to serve as their sole computing device.

This may be a reason why Apple won’t mix Macs and netbooks, and keep them totally separate. As you may recall, both Steve Jobs and Tim Cook have already stated on more than one occasion that they regard the iPhone line as Apple’s netbook, at least for now.

Regardless of where the netbook market takes us, it would be nice to see one that truly advances technology. Today’s netbooks are largely shrunken note-books, and little more. I suppose we’ll have to wait, yet again, for Apple to define the state of the art; that is, if it needs any defining, and that remains an open question.

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9 Responses to “Is the Netbook a Bait and Switch Scheme?”

  1. Ilgaz says:

    I know they are really unpopular in USA thanks to various reasons but Nokia is making true netbooks for years, I mean devices you can think of using instead of laptop on road and you can carry in your pocket.

    The latest one is E90

    My one, which still serves to me with uptime and stability no “netbook” can dream of is Nokia 9300. As they have VNC/SSH options and even DOS emulators, there is no limit what you can do with them. Multimedia was a bit issue but a really fast CPU and accelerator chips on E90 can let you watch a 30 FPS h264 movie. I mean, if someone really cares about watching things on small screen.

    They run Symbian OS which is build especially for that usage scenario.

    If I wanted a truly light and truly portable laptop, it would be Macbook Air without luxury options with lowest speed of CPU as possible. I would just maximise the memory while buying.

    I think Apple is right on insisting not to make a netbook. I don’t follow PC/x86 and even portable prices but last time I saw, Netbook can get a lot pricey compared to a low end PC laptop which you can enjoy a 12-14″ screen.

    Apple turned out to be right about Tablet PC, didn’t Steve Jobs say “The form is completely wrong” when asked to make one? He turned out to be right. Same company says there is no way to make a sub $500 netbook without completely breaking Apple’s quality standards. I guess people have to take it serious. Apple can’t act like some “put parts together, if it boots XP, ship it” company.

  2. gopher says:

    Netbooks will take off when OLED does. Once the decaying nature of OLED can be overcome, Netbooks will be much more practical. First off the screens are foldable, meaning you can have a 30″ screen in your pocket that needs no backlight. The battery life will be able to last longer with less surface area. And if you wonder how you can fit a keyboard in your pocket, infrared keyboards that sense when you tap your finger on any surface that is lit by an infrared light can make it practical to have the screen in front of you while you type on any surface.

  3. Snafu says:

    Jobs usually lies through his teeth when declaring things like that. Of course Apple can do a quality and nice sub$500 netbook! That its usual margins would suffer is another thing entirely, but take, say, a Samsung NC10 or one of those superhackintoshable Dells and tell me how much extra industrial design they need to become a genuine Mac, really (other than painting them white plus the usual “ruin it by getting most ports off and putting some Apple-exclusive miniThis or That ones”).

    TabletPCs “are wrong” because of the bulkyness of a fully-featured normal-sized Windows laptop with a turnable screen, and the problem has always been using a desktop OS and the resources it consumes. That Asus Eee PC Tablet prototype which has been shown around is mightily interesting because of size beginning to feel approachable, and netbooks deliberately being designed as low resource devices.

    Nowadays all the pieces of the puzzle are finally here: hardware components able to fit form factors such as thin A5 or A6 sizes, longlife batteries, lowpower processors and SoCs (x86 or other ISAs-based) able to do HD… and most important: OSes and UIs thought with tablets in mind, such as OS X (iPhone edition), Android, WebOS, etc. Actually, I always wondered why Palm didn’t produce an A5-sized PDA ages ago. Isn’t it silly that the Kindle and other eBook readers are being pioneers there, in a way?

    Apple could do the mythical MacTablet now. It’s only that it would be a big iPhone instead of a small Mac.

  4. @ Snafu: I agree. If Apple does a netbook or a similar device — even a tablet — it would probably be based on the iPhone.


  5. Russ says:

    I personally see two reasons why people purchase a netbook. The first is financial – a full size notebook is too expensive and they don’t really need all of that horsepower to surf the net and check email. Apple will never sell a product whose purpose is to be cheap. WHen Jobs says it isn’t in Apple’s DNA to make a cheap computer, this is what he is referring to.

    However, the second reason people purchase a netbook is to have the best in portability to supplement their regular computer. These are people who are either already buying an iPhone or would if the screen were larger and they could tie in an external keyboard. Yes, they want to get their email and surf the net, but they also want to run some of the applications that are in the App Store. If the screen were larger (about the size of a paperback book) they could use it as an electronic book, magazine, newspaper reader. With an external keyboard or even a soft keyboard that was larger, they could type more information for a longer time and respond to a real email. It could be used to show a presentation, particularly when connected to a projector. It won’t be used to edit a file in Photoshop, it won’t be used to edit movies, it won’t be used to create a massive spreadsheet and it won’t be used to play the latest and greatest first person shooter. Those sorts of things will be done on your full size computer. This is the product that Apple will develop. I am not sure what the right price point is, but it will be more than an unsubsidized iPhone and less than a MacBook. It will likely come with a subsidy from the carriers so that you can connect to WiFi and 3G networks.

    I have one other thought that would add to this product. It would be really cool if it could dock with your iPhone. In this way I could carry the netbook around for the day. When I have tasks that require the larger size, I have it with me. However, if I only need the phone portion of it, I can undock the iPhone and use it alone. The larger device has a second brain (so it works with or without the phone). I can make and receive calls using a bluetooth headset, or by removing the docked iPhone. I see this as coming in teh 3rd or 4th generation version of the product, but something like this would be nice.

  6. Snafu says:

    I’d add another reason for people purchasing a netbook: they are just incredibly cute! And I am serious about it: they are the nearest thing to an impulse buy there is in the personal computer space. Cute and cheap, who can resist that? I think this factor is escaping most analysts, and it is escaping Apple, too.

  7. Yacko says:

    I think everybody is coming at netbooks with a view to the past of computing, however, I think the cell companies (and others) are looking at these things as game changers. Given what has recently been been written in various channels on what may be a summer flood of cheap/subsidized/possibly free netbooks tied to a data plan and a non-traditional operating system, and with LTE coming, this is a very attractive proposition for wireless carriers. Netbooks are new and appeal to young people (teens to early 20s) and may appeal to very young people (pre-teens). I am not young, but I understand what an insidious proposition captive netbooks could be. Imagine, in the space of a single generation, wiping out the traditional notion of computing, of autonomous boxes with retail applications, configureable by the user, into some kind of limited computing (which is what the majority do – surf, mail, calendar) with only approved apps or web apps, and with an always on, always connected, moderately onerous and RIAA/MPAA friendly data plan. There are two kinds of computer companies, those that enable with tools (Twitter, Facebook, Google) and those that would like us to consume limited interactive content like happy droids (movie studios, record companies, TV networks, wireless companies and those they partner with like some cable companies). The average person would gladly cede this control for something simpler than a real computer. Cell companies have managed to do it with phones (and that’s in spite of some of the operating systems), the logical next step is to move up to a small computer. Sure they will lure you with cheap up front and a so-so installment (data) plan, but the agenda is to forget real computers with real power, that’s for the 1% of the population savvy enough to realize the potential of content creation. Desktops are already waning and powerful, large laptops are next on the hit list. To a large extent, I see this stratgem working, maybe in ten years 80-90% of computers “sold” will be netbooks tied to a carrier. Apple may sell what Apple wants to sell, but given the skew in the market, they have no choice but to participate. Speaking of another potential loser, Microsoft, you gotta figure they are praying that Windows mobile has traction and Android does not. Another possible loser, imagine how this impacts the OLPC program. People are subscibed to wireless carriers in most third world countries so now they are handed a netbook. Since Apple will probably not be able to sit this out and perhaps because the most appealing option is a Pyrrhic victory , the best thing Apple could do is come up with an insanely great design and give us all the Dynabook we so richly deserve.

  8. Richard says:

    Snafu has it mostly right. The biggest holdup is Apple’s proclivity for inefficient “industrial design” and their desire to charge twice the market price for something.

    The netbook really is not a replacement for a laptop in most circumstances because it is important that it be small and light and have very good battery life. I think of them as a travel companion when a full sized laptop is a burden to carry, both in terms of size and weight. If you are in an airport (or anywhere else for that matter), people are scrambling for an electrical outlet to plug a laptop into. You can check email, a little news or whatever and catch up on a TV show or movie that is a lot more enjoyable on a screen larger than 3 inches. If the Ion platform catches on even an HD show or a few games are reasonable.

    Although Gene dislikes the less-than-full-size keyboards, most of them are capable of being used for touch typing, although the actual key design is much more important than with a full-size keyboard. I found the touch keyboard on the iPhone to be a rather poor affair. The battery life on the iPhone I had sucked, too. (Yes, I had it checked out at the Apple Store before I gave it back for too many reasons to go into here.)

    Price is important too. I think that this is partly because most of the people buying them are buying them in addition to their other computer and they view it as a travel device…like a cell phone, but better.

    I have noted the difference in size and convenience of the 13.3 inch MacBook as compared to the MacBook Pro (or any other 15 inch or larger laptop and I think that it merely illustrates the convenience of going smaller/lighter for a “travel companion”. (I have also used a 13 inch Sony laptop and had the same conclusion.) The MacBook Air does not fit this need.

    Exactly how small is mostly a function of individual taste and need. I can see that there will probably be a continuing demand for the 9-10 inch size units which are “clutch” sized as HP markets them. For many other people, something in the 10 to 11.5 inch size would be more suitable. Keep in mind that these screen sizes are “widescreen” rather than the traditionally proportioned screens.

    With all the talk about netbooks, one should not forget the in between product, Mobile Internet Device (MID), which are coming on line somewhat more slowly which will offer additional choices for people on-the-go.

    I concur with the comment that Apple has a long history of denial and disinformation right up until the point where the product they condemned is put up for sale.

  9. Snafu says:

    (About sizes and tastes: there were fears of ASUS abandoning its seven-incher original Eee PC. There seems to be enough interest in that extremely small and pocketable PC for ASUS to keep that form factor around, even if everybody is about to test those 10″-11’5″ waters real soon now.)

    The reasons I’d believe Apple will do a mini-tablet or iPod Touch Pro 😀 are four:

    – Not only the OS and UI are mostly in place (they would need a few things more, like multitasking and some UI tweaks), but, most importantly, the software distribution channel (the App Store and iTMS) is there, too, Apple getting a percentage of each transaction.

    – The Kindle has shown there is another potential use and market for a small tablet form factor.

    – With the PA Semi people aboard, they can customize the ARM line of processors to fit just what they need such device to have.

    – That thing Apple said time ago about allocating money to some gamechanging kind of product could be refering to that.

    Of course, this is me playing armchair CEO: I’m sure Apple has done market research and things, but…

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