What All This Fuss About Netbooks Is Really About

frankenstein The law of unintended consequences comes home to roost.

Intel created a monster with the Netbook. The Netbook is like a Frankenstein’s monster terrifying the locals. Now Intel, with VP of Sales and Marketing Stu Pann as the point person,   is leading the pack of villagers carrying torches and pitchforks to storm the castle where the monster they created resides. Others, like Michael Arrington, are looking at why Netbooks are not up to snuff. Let’s take a look at both of these recent kerfluffles in the Netbook-scape.

First up, Mr. Pann says that Netbooks are really only good for an hour or so of use due to their small size, screen, lack of power. (Maybe that’s why these things have such poor battery life.) What Mr. Pann is really doing here is trying to stake out a position so that Intel can back off a bit from the Netbook craze, before it eats away at its larger strategies. Why? Profit margins are at risk as consumers opt for these devices that can only offer good returns if volume is high. Intel thought these would be handy companion devices and also a boon for emerging markets. Little did they realize that the American economy (and others) would quickly go south and that most of the countries in the world would find themselves qualifying as an emerging market. Intel may have viewed Netbooks as ‘incremental’ to their overall strategy, but they somehow overlooked two huge factors here. The first is that computing habits are changing and changing fast as more and more users need applications less than they need a browser to access cloud apps. Second, they opened a Pandora’s box when Netbooks came out with low prices that threatened their existing lines. Somehow, and this is speculation on my part, Intel thought that most users would see these as a toy and that the weaker performance of Netbooks wouldn’t appeal to users. But price, even before the economy took its plunge, has always been a key factor, and the explosion of Netbooks is due more to price point than it is to anything else. Maybe Microsoft was correct when they called the category Ultra-Low Cost PCs (ULCPC).

Michael Arrington picked up on this in an off hand way by listing three reasons why Netbooks don’t cut the mustard at the moment.   He lists the keyboard, the small screen, and the lack of horsepower. Aside from the fact that their isn’t a device out there with at least three reasons why it doesn’t measure up, Arrington, like Pann, misses the point. It is tough to argue with his logic, but he forgot the context. Price and convenience are the driving factors that are making consumers look at these devices as handy alternatives to the status quo. Arrington says developed markets don’t care about price. I don’t think that’s true anymore. In fact, I don’t think it has ever been true. Consumers bought computers at the higher price points because that is what was available. The exception there was the discounters market, which proved to be popular at various points. The difference now is that the Internet can offer users more options that make what just a short time ago look like crippled and underperforming devices into machines good enough to accomplish a variety of tasks. Of course, it might be that Arrington is just trying to lay some smoke before the TechCrunch tablet makes its debut, if in fact it ever will.

The law of unintended consequences has changed the landscape at a time when price points are becoming even more key decision points on every purchase every human makes these days. And like Frankenstein’s monster, this new creation threatens to disrupt and destroy the world it was brought into. But unlike the finale to that tale, this monster is eschewing all of the old norms in a way that looks promising to the villagers who toil each day, no matter what the village elders say.

I’m betting on the monster in this case.

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Comments

  1. davidm says

    I think there is another element, past price. Consumers want smaller, lighter devices they can take with them or use more comfortably than sitting at a desk. Speaking as a nerd who was once a complete outsider for using a computer, I'm just blown away by the number of variety of people using computers everywhere I go, in particular in cafes but also in the subway, restaurants, everywhere.

    In this case, smaller and lighter is definitely better, and it doesn't hurt that they are less expensive and have fewer moving parts since they're carried everywhere. They are used for passive browsing, communications (email, IM and facebook) and sharing information in person. There's a convergence going on, as portable walkman, gps, game system, cell phone and computer converge.

    There is however an unresolved question of what that ubiquitous carry-everywhere computing communicator entertainment device will look like, since we still must rely on a good keyboard. Netbooks are an unimaginative step in the right direction, but I'd really like to see something reasonably priced, lightweight, robust, good quality and style without an exaggerated tacky consumer or business emphasis, and with a drawing surface (a convertible tablet). The company that comes out with that device will clean up, but I'm not holding my breath for the PC manufacturers, with their astounding lack of vision or carry-through, to get their act together, unfortunately the only company who seems capable of that likes building garden paths more than computers for all of us.

  2. Tim says

    I think there are a few more factors that are being overlooked. Number one is the “Wow” factor. I’ve walked through numerous stores with others who don’t follow the technology scene and as soon as they pass an Eee, the immediate reaction is “What is that?” Netbooks simply look different than laptops. Even with all the designs that companies like HP are putting into their products, a laptop looks essentially the same as the laptop next to it. The form factor of the netbook catches a customer’s eye and gets them interested.
    Second is the fact that most users of the netbook are not looking for performance. They are using the netbook for essentially what it was designed to do: Internet, word processing, email. The problem for Intel lies in the fact that they were selling full-scale laptops for the same purpose, so instead of selling a laptop with a mid-high cost CPU in it for basic functionally, they sell a low-cost CPU for basic functionality.
    What surprises me is that manufacturers have not taken the hardware of the netbook (ie the Atom, low end motherboard, etc) and put them into a full size 15.4” or 17" shell. I think this would provide a viable setup for your typical older user. Working at Office Depot in a town populated by senior citizens, I see a lot of customers come in looking for a notebook that can do email, internet browsing, and word-processing. The most demanding most of these users ever look for is photo albums or video chat. This is the netbook setup. However, many of these customers are looking for bigger screens and systems because they are not trying to be mobile with them, but rather need the visibility much more.
    By putting the netbook hardware into a system with a larger battery and screen, PC manufacturers would provide a machine that gives great visibility and a long battery life for less than what mainstream laptops cost. These laptops would not have the same performance, but that extra performance is being wasted on users who do not need it.

  3. davidm says

    Tim, they do have a wow factor, but they are really just small notebooks, I don't find anything different about the form factor. Only the recent models accommodate for a decent sized keyboard.
    I agree with your second point, the problem is, the larger the screen, the more the slower processor becomes evident, especially with the effects people expect in their computer front end these days (which is why a change in OS front end is necessary). An atom with its integrated graphics can power an 1024×600 screen with little lag, but a larger screen will show slow down. I do agree with your basic premise though. Something the size of a magazine with a clear, bright screen would be ideal in my books, which is why I find the Air, TX2 and 2730P disappointing, squish them together in a streamlined, well priced, solid state computer with adequate ports, and you've got a winner for most people's needs. The current e-book are decent in that regard, but there's no reason to have a separate device for reading and computing.

  4. davidm says

    I think there is another element, past price. Consumers want smaller, lighter devices they can take with them or use more comfortably than sitting at a desk. Speaking as a nerd who was once a complete outsider for using a computer, I'm just blown away by the number of variety of people using computers everywhere I go, in particular in cafes but also in the subway, restaurants, everywhere.

    In this case, smaller and lighter is definitely better, and it doesn't hurt that they are less expensive and have fewer moving parts since they're carried everywhere. They are used for passive browsing, communications (email, IM and facebook) and sharing information in person. There's a convergence going on, as portable walkman, gps, game system, cell phone and computer converge.

    There is however an unresolved question of what that ubiquitous carry-everywhere computing communicator entertainment device will look like, since we still must rely on a good keyboard. Netbooks are an unimaginative step in the right direction (let's make a smaller version of what we were building before! never mind the keyboard and screens suck), but I'd really like to see something reasonably priced, lightweight, robust, good quality and style without an exaggerated tacky consumer or business emphasis (HP TX2 and 2730P respectively, with the Macbook Air winning points for pushing a concept too far), and with a drawing surface (a convertible tablet). The company that comes out with that device will clean up, but I'm not holding my breath for the PC manufacturers, with their astounding lack of vision or carry-through, to get their act together, unfortunately the only company who seems capable of that likes building garden paths more than computers for all of us.

    I'd also propose that the "modern" front end of operating systems – Windows, Mac and the common front ends of Linux – are all outdated. WIMP is dead, we just haven't figured out what's next. I'm waiting for a network based, resolution-free desktop, with excellent fully considered touch support, completely ignoring the installed base and concepts. Perhaps Android will lead the way there with iPhone promptings.

  5. Lawrence says

    I'm not quite sure that Intel should be blamed for creating the netbook. It was Asus that came up with the concept, sold the ideal to Intel and got them to start making ol' processors again, and brought the Eee pc to the market. If I'm not mistaken, that is.

    I agree that price and convenience are the main factors. I also agree with what singraham is saying about the 'clouds' that are forming out there. With websites becoming more like applications (see Google Docs) there is less need for power and storage on one's laptop.

    I think desktop replacements will be the victims as people opt for powerful desktops + netbook combination.

  6. singraham says

    With Netbooks Intel was aiming for what they considered a potential "adjacent market"…a unfilled niche in educational and developing country computing. They missed, but in doing so they discovered, or uncovered, an unsuspected niche…which is apparently the true potential adjacent market…the inexpensive mobile connected keyboard computing device market. That's IMCKCD and I am, right here, copyrighting the term. "Inexpensive mobile connected keyboard computing device"© Stephen Ingraham or "IMCKCD"© Stephen Ingraham. There. That leaves room, of course for the IMCCD which is the same thing without the keyboard. The iPod Touch in other words. Either works as a "cloud terminal"®™ :) and both are needed by the ultra mobile computer (person, not machine). You are not going to run spreadsheets or Adobe Lightroom or create powerpoints on an IMCCD. For that the highly mobile computer needs a netbook (and netbooks do the job just fine). On the other hand you are not going to play much music or watch video on an airplane with a Netbook. For that a IMCCD (iPhone or iPod Touch) is what you need. You can certainly check email and twitter and facebook on which every one is in your hand at the time. And that is as it should be. The ultra mobile can carry both, and with a lot less hassle than a laptop and pda. Besides it is just more fun!
    Check out further thoughts on this subject: Cloudy Days and Netbook Nights: iPod Touch, my "cloud terminal". <a href=”http://cdnn.wordpress.com/2008/11/29/ipo… ” target=”_blank”>http://cdnn.wordpress.com/2008/11/29/ipod-touch-m

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