Thoughts on Netbooks

A confession: I get jazzed when the tech industry shakes things up with innovation and new products. For geeks like me, these are interesting times indeed. Who’s not curious about the creative response of handset manufacturers to the challenge of the iPhone, for example? Bring it on!

I’m especially fascinated lately by the emergence of a new category of PCs we’re calling Netbooks. It started with a trickle and could soon turn into a flood. So what’s a Netbook?

They are small laptops that are designed for wireless communication and access to the Internet. And they cost about $250, making Netbooks a potentially disruptive and high volume market segment. Even though Netbooks won’t be confused with full-featured laptops, my hunch is that tons of people around the world will be attracted to a low-cost machine that plugs them in. The Netbook will expand the global PC market. By how much is a matter of conjecture.

In the past, when the PC industry breached certain price thresholds, it had a market-expansive effect. Remember the first sub-$1,000 PCs? They did not expand the market overnight, but grow the market they did. What will happen with Netbooks?

I’m encouraged by the success of the eeePC from Asustek, which sold 300,000 units in a very short time. The outlines of the Netbook category were apparent even earlier with calls for $100 laptops, which clearly had a galvanizing effect on the industry. From Intel Classmate PCs to the XO from the OLPC organization, we’re seeing major players in the global PC industry announce Netbook plans. Now that the combined might of the global PC ecosystem is getting behind low-cost laptops, there should be a strong impact in 2008 and a lasting one beyond that.

I see two distinct market opportunities for the Netbook. In the developing world, Netbooks will attract first-time buyers. They will exist alongside cell phones as a means for people to connect to the Internet and communicate. The low price and practical functionality will bring millions of new people into the global web – I believe this is driving a giant new wave of digital inclusion and enfranchisement. At least I hope so.

In more mature markets, I see a second major usage model for Netbooks. They will become supplemental PCs and ready access points into the cloud of Internet services, media and information. I imagine an extra PC for traveling, an extra PC for school work for the kids, a PC set up in the kitchen by the telephone to look up directions to the little league field or select items from a restaurant’s takeout menu. Is it crazy to imagine a profusion of these things in mature markets? Maybe not when the price of a Netbook is well below what it costs to take a family to a major sporting event. Maybe Netbooks can help more people of all ages dive into computing for their first time…even in the mature markets?

Will the PC industry really deliver on Netbooks?

How can a PC manufacturer possibly make money when the product sells for $250?

It will really help that Intel is buttressing the Netbook with new, purpose-built silicon. Our engineers designed the new Intel Atom processor family from the ground up to address the needs of the Netbook segment as well as handheld mobile Internet devices. These new products won’t have an expensive chip that was force-fed into a low-cost category – thereby depressing margins for the product manufacturers. Nor will these new products be powered by chips designed for other uses that compromise functionality. These new Intel chips are smaller, cheaper and very low power, but they are new building blocks sitting squarely within the Intel architecture – making them fully compatible with the Internet and tons of software. This will help device makers create products that bring us closer to having that no-compromise Internet experience on the go. Because Intel will use its latest 45 nm technology to drive these new energy-sipping puppies in high volume, and price them very aggressively, most analysts believe the PC makers will be able to make a decent return on Netbooks.

I don’t pretend that Netbooks will solve everything. To make these things as simple to use as an iPod, for example, we’ll need some work on user interfaces, as Rob Enderle has pointed out. And in much of the world, the broadband infrastructure is lacking to make Netbooks very practical. In parts of the world where a monthly subscription to high-speed Internet access costs $200, or where basic needs of clean water, food, access to health care and education are persistent challenges, the Netbook will not be nirvana.

I’d like to know what you think. Will this be an industry tipping point that helps bring many, many more people into the global web?

35 Responses to Thoughts on Netbooks

  1. As a computer science student and an ardent technology enthusiast from India, I see immense potentials for Netbooks in my country. With large sections of the society deprived of information, the hunger and need for it is immense. It is not just a market need but more of a social revolution in the making. The burgeoning cell phone market is proof enough. India might have few early adopters but I believe Netbooks can bring the second communication revolution in India

  2. @ Rachit. Your comment is very uplifting. I agree that creating new modes of access to information will transform the world for the better. There is so much human potential to unleash, as your thoughtful post makes clear. Thank you.

  3. Andy Russell says:

    Hi Paul: The Netbook line sounds exciting. I’m wondering how Intel will differentiate it from the discontinued Psion NetBook and NetBook Pro sub-notebook-size hardware and operating system and if there is a naming conflict?

  4. Paul Bergevin says:

    @Andy Thanks for your comments. In using the word netbook, we are describing that we think is an emerging new category, a different class of computer, as it were. Our Atom processors will help enable this category. Just as people use the word laptop or desktop very generically, we are using netbook. I am interested in how you see the Psion products positioned, Andy, but as we are not offering a branded line of computers here, I see no naming conflict.

  5. Yair Blustein says:

    Wonderfull idea, win-win to all. Success will be dependant on massive spread of free wireless networks. How about a ‘Laptop On a Chip’ configuration? High R&D cost, Higher profits in the long run (New ‘Round’ for Intel’s abanoned ‘Total Solution’ discipline).
    What percentage of laptop users ‘upgrade’ their laptop’s hardware anyway? By the time upgrade is needed, it usually makes more sense to replace the laptop to one with newer technology.
    Really nice product design, a bit too feminine perhaps- in current color scheme. the product may be attractive to more people by offering it with different color schemes to choose from.

  6. I agree that creating new modes of access to information will transform the world for the better. There is so much human potential to unleash, as your thoughtful post makes clear. Thank you.

  7. Nicholas says:

    I am a 16 year old high-school student. Our school gives all the students Mac-book laptops to take home during the year. the problem is that most students use these laptops as giant word processing iPods (that also brows the web). Then because we are a public school they can’t afford a proper IT staff. So if you have a problem with your laptop then you have to wait. It may mean that you have no computer for the rest of the year or you miss a writing assignment and then the thing is fixed and life goes on. The teachers don’t care if a person is carrying a laptop by the display, but they get mad if your listening to music. Considering that these things are locked down and monitored with no one looking through the records. I like the concept of a netbook maybe running Ubuntu so with a user friendly interface. And maybe 4 gigs of storage so that students can only have some documents and bookmarks maybe a picture or two. I would also love one of these things because then I would be able to walk around downtown Phoenix and not be weighed down by a full size laptop.

  8. Aung says:

    Out of curiosity, what is the difference between a UMPC and a netbook? I’ve researched a couple of websites and i’m still somewhat lost.
    For example Hp2133, Asus Eee PC, Fujitsu U1010 (or U810 depending on where you’re living) are all considered UMPCs. All the mentioned above are light, low cost, and portabable hence ultra mobile. So do all these UMPCs fall under the category of a netbook?

  9. Bryan Betts says:

    @Paul:
    Netbook is (or was) a trademark of Psion. The Netbook was a development of the Psion Series 7 and is very similar in concept to the Eee and its ilk – ie. a sub-A4 clamshell with VGA screen and a small but decent Qwerty keyboard.
    I believe it was designed as a PC companion, but with a big advantage over most Wintel laptops – the OS is in RAM so it’s instant-on, like a PDA.
    Sadly, the hardware and software look really dated now. Its main lack compared to today’s ultraportables is it wasn’t updated to support modern comms such as Bluetooth and WiFi.

  10. white niggo says:

    It’s a great idea done computer only for internet. It’s help me in my study in univesity, i live in Ukraine, and I want that those Netbook come to us very fast. Sorry for my bad English

  11. mkeating says:

    Sounds like a great idea and at that price would see good demand IMO. I can see myself investing in several units – one in the kitchen, living room, by the fireplace, each vehicle, etc. I’ve just discovered the utility and convenience of google apps; I see applications such as this as the wave of the future and the netbook would facilitate this transition very well.
    M

  12. Diploma says:

    I think that nowadays IT sphere is still developing, and the more offers we have the more people will be involved in the world of the Internet.

  13. daniel says:

    hi im very interested in these famous netbooks, i would like to know where i can find them to buy one of it, i think its a great option for any person and even more because its price, if any one knows were i can find them and read more of it as a product that is sold, please post a comment, thanks
    Daniel, CCS-Venezuela

  14. Brian P says:

    Though I consider myself a nerd and a geek, I honestly believe these items only appeal to that same niche group.
    As items get larger, the convenience factor goes significantly down. As that convenience factor goes down, there has to be an exponentially increasing reason to want to carry it around – what extra benefits does a netbook give me that I can’t get from a Nokia E-series cell phone?
    With that being said – what makes up the bulk of the area for these netbooks? A power hungry display that really isn’t big, per se, but larger than a phone screen. QWERTY keyboard to perform typing while it’s sitting on your lap or any other flat surface. Touchpad for cursor placement. These are all human interfaces which make up the majority of size and area, but do they really give me an exponential increase in functionality to offset the decreasing convenience factor? I’d argue that they do not. The convenience of the netbook is lost because I am forced to always carry around the large and bulky input and output accessories, which might only add worthwhile functionality less than half the time.

  15. @Aung: UMPC’s are typically more of a handheld device, and not a clamshell design. The Asus EeePC is not a UMPC by that definition, although the terms and devices are sometimes misconstrued. But in general, netbooks are consumer-oriented and simple, affordable, internet centric clamshell design. UMPC are typically more expensive, not clamshell, business-oriented mobile device more similar to MIDs. In fact, while we have sometimes interchanged those two, MID is consumer (in your pocket) UMPC is business (in your pocket and slightly larger).

  16. @mkeating: You describe a usage model in mature markets very well. I think of netbooks as a supplemental PC, an extra gadget geared for the Web. There will be other usage models in developing market economies as well, as some of the other posts suggest. Thank you for your comments

  17. @Daniel: Quite a number of computer makers have announced designs for netbooks, which will start hitting the market in late May, early June and beyond. Asus and Acer, for example, have netbooks in final stages of development. Thanks for your interest.

  18. ike sonoy says:

    So when can you see a mobile internet device powered by an Intel Atom that also has quad band communications technology? Have one? I’ll get one. ike

  19. RANDY S says:

    I think if you extend the potential, the Netbook will supplant both Laptops & PCs. NEC is already selling in Japan Thin Client Laptops & PCs so can the USA be far behind?
    Cloud Computing & Hosted Web Services, the logical final destination for all we do on computers today, will make the Netbook, with a minimal OS but good graphics, the device will all will be using in just a few years.

  20. I bought the Asus Eee PC 900 as soon as it was announced somewhere in the realm of 1-2 weeks ago. I love the size of it – not too small (except for getting used to the mini keyboard) and not too large to stick into my purse. I have a 17″ Dell laptop Inspiron 1720 I’d just purchased. But I was looking for something I could easily slip into my purse when traveling or commuting; with the Asus, I found that, plus affordability.
    Yes, this market is very exciting for me. I remember seeing the Sony line of UMPCs in the store about 2 years ago and wanting one so badly. I just wasn’t into shelling out the amount of money for those that I could buy a new MacBook with instead. Thank goodness prices have come down, and yet w/out sacrificing durability.
    I was excited to read about how this could open up a greater expanse of information to those in developing countries. Wonderful!

  21. jexf says:

    From a users point of view. The way forward with the developing world in mind, and also users who do not to subscribe is to make pay as you go widely available for lap/nets. Millions of people will buy and use if they know they don’t need a bank account and direct debit in place first.Just buy a credit USB type stick and plug and go. The size of the device market will follow. Personaly I am not keen on subscribing to a web service on any type of device. The winners will be those who win the plug in and go market ( as like mobiles )which I’m sure will out-strip the subscription market by miles for the everyday joe. Remember that great British invention ? The clockwork radio. No batteries and accessable by all !

  22. Mark Greer says:

    Given the Netbook category, where does the REDFLY Mobile Companion (www.celiocorp.com) fit in — is it an offshoot, micro-category, of the smartphone? Is the smartphone a UMPC? – Mark

  23. Ken Kaplan says:

    Wow, this is a cool flow of comments. It’s helping me think about the possibilities and challenges for Netbooks. Interesting how people are showing how Netbooks might or might not work for them. For me, I have a collection of old laptops that I figured might help my elementary school kids learn how to use a computer. But for a few hundred dollars, I might consider buying a new netbook so my kids can have something smaller, lighter, more up to date and maybe easier for me to manage.
    Even after reading CNET’s blog post on Netbooks
    http://news.cnet.com/8301-13924_3-9958979-64.html I still think there’s a place for at least one Netbook in my family life. But first and foremost for me is a lean and mean MuscleTop that saves me time editing videos and enhancing my photos — especially since I’m collecting more of both every week!

  24. Paul says:

    I’m keenly awaiting the usable ultra lightweight browser/phone. It needs to have bluetooth, high-speed wifi, a usable keyboard, a viewable display, and good battery life. I’ll continue to do my power computing on a heavy desktop/laptop.

  25. TimMc says:

    > What will happen with Netbooks?
    They’ll probably be accepted by the consumer with open hands as another accessory, at the right price. There are a few things marketers will have to steer the consumer’s away from: low performance, limited functionality, unfriendly user-interface etc. E.g. the idea of writing a large essay or editing photos on location with them seems ridiculous. The consumer will soon realize how limited their web experience is and may opt for a more expensive small-high-performance-laptop.
    The idea of having a small affordable laptop is probably enough in itself for early adopters to get it. If you consider the functionality that they offer and your needs in certain situations, then you may find that you’ve little to no use for the device. On the other hand, if you can’t afford a decent laptop or don’t mind paying for Wireless Access on the go then this may be for you. Then again, you’ve to question yourself when you’re willing to pay for wireless access but find that forking out another grand for a better laptop is unviable.
    > Maybe Netbooks can help more people of all ages dive into computing for their first time…even in the mature markets?
    The netbooks on the market don’t appear to be very user friendly at the moment. This will probably change over time when more and more competitors appear but in the mean time I can’t imagine a 70 year-old or a 5 year-old having much fun with them.
    > Will the PC industry really deliver on Netbooks?
    Assuming teenagers are being targeted by the industry here, I’d have to say that we’ll be seeing a lot of colorful “cases” from the likes of ASUS, HP, MSI, Sony etc. If Linux developers take a liking to netbooks then the user interfaces might be a lot more user-friendly. Who knows, it may promote the use of Linux.
    > How can a PC manufacturer possibly make money when the product sells for $250?
    Probably the same way retailers/wholesale-suppliers boost the price on Intel CPUs. Care to shed some light? :-)
    > Will this be an industry tipping point that helps bring many, many more people into the global web?
    I doubt it’ll be a tipping point. I’m guessing the majority of early netbook adopters already have other computers with internet access. Given the amount of computers connected to the internet, this number would be fairly insignificant.
    Personally, I’d like to get a netbook in the near future. The prospect of having a cheap device to tinker around with is extremely appealing to me. I’d also like to see the line between netbooks and small-high-performance-laptops merge so that the later isn’t so blatantly overpriced.
    Tim
    Computer Science Student
    RMIT University

  26. Arjen Lentz says:

    If these gizmos are intended to run Linux, it might be better to fit them out with a PowerPC rather than Intel, regardless of the new Atom. PPC delivers better battery life and less heat.
    It also, at least for now, makes them not run Windows.

  27. Richard Murdey says:

    It’s fortunate that Intel stepped up to the bat with Atom, with a CPU designed on current technology for both low cost and low power.
    Some work is clearly left to be done on the chipset side. The 945GSE has a TDP over twice as high as the CPU. Marginal video acceleration, no hardware T&L, marginal graphics and no native DVI/HDMI support round out the feature set.
    Its also disheartening to hear stories that Intel are restricting the use of Atom CPUs to limited hardware functionality on the mini-ITX platform for example (no PCI-E slot allowed) for fear of losing sales of the more expensive processors.

  28. Mary Groves says:

    I am a senior with limited computer knowledge using a desktop only. I am not interested in all of the features that cell phones, iphones, blackberries, etc have, as I do not like being that connected. I am very excited about the Netbooks. When I travel to foreign countries I have never wanted the added problems of a laptop becasue of the added size/weight. I personally think the Netbook will be the answer for me…