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?
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