Joe Wilcox’s War: Apple vs the Netbook Fools

Joe Wilcox doesn’t like Netbooks. Never did. Never will. He thinks they are  the root cause of problems in the WinTel segment of the tech industry. Netbooks eat into profit margins and, heaven forbid, let customers buy things on the cheap. After Apple’s product announcements today, coming on the heels of the the positive financial news from Cupertino, Wilcox is saying that Apple has launched a war on the entire PC industry and doing so from a position of strength.

In reality, the war has been going on for quite some time, but that’s beside the point. Wilcox, while a bit too jaded in his view of Netbooks IMHO, has some valid points. (I’m not sure I buy the scorched earth analogy though.) Yes, Netbooks have eroded profit margins and changed the way consumers view PCs running on Windows (or Linux, or Android, etc…). And yes, Apple has defied the logic of quite a few folks when it comes to its numbers over the last year given its love for the high end.

The real story and the real opening that Apple took advantage of isn’t the opening that Netbooks created. Instead its the opening that the failure of Vista created for the rise of Netbooks. The delay and the disaster that was Vista created so many openings for Apple, Asus, and anyone else that I’m surprised we didn’t see more disruptions in the bigger picture. It was pretty apparent to anyone following the tech industry that companies like Asus were looking for any way they could to run away from Redmond and still move forward at the time. Remember it wasn’t until the second generation of WinTel hardware got released with Vista that things began to sort themselves out, and by then it was too late. Early “Windows Capable” hardware failed miserably. And instead of the launch of a new generation, we had a resurgence of the old sparked by familiarity with Windows XP that bordered on nostalgia. It was like car buyers turned down the latest models and all opted for used car purchases. And keep in mind, the early Netbook push wasn’t geared around XP, it was Linux.

Don’t get me wrong when I say this, but all Apple really needed to do to gain market share was not screw up during those days. And, basically, they didn’t. In fact they advanced a few balls down the field. Things were so tumultuous that a steady ship looked very promising. Especially one that could muster some marketing savvy.

There is no question that Netbooks have created a problem for the WinTel folks. But the real problems began before Netbooks took hold.

The picture is much more complex than either Joe or I are making it, and now that we are on the eve of the Windows 7 launch, and after Apple’s two big newsdays, I’m just surprised that we never saw more reporting on the problems that occurred as they were being played out.

6 Comments

  1. Dodot

    10/20/2009 at 6:25 pm

    I don’t really know the ins and outs of the computer industry enough, but I do know that there’s a difference between profits on sales and profits on investment. (Netbooks’ profit margins may on the surface seem thin if just considering the difference between retail price and cost per unit, but if the inventory turnover is quick enough then its profits on investment may prove to be at least on the level with those of the more expensive alternatives – or may even exceed them.) And considering the large volume of netbook sales from a variety of brands/manufacturers, there must be a rational economic reason for that. Definitely on the demand side there seems to be considerable interest as well as willingness to pay for netbooks – so it certainly makes sense for producers to sell to this set of consumers. And from the supply side, surely if the likes of HP, Dell, Acer, Asus, etc. continue to come out with new netbooks every so often then by their accounting (as well as experience – since the netbook market already has a couple of years under its belt) the gains are likely to outweigh the costs.

    Besides, nobody is coercing consumers to buy netbooks in the first place – for those who decide to buy (at least for those who made an informed decision when they make the purchase) netbooks are ultimately their revealed preference. Simply put, given the options available to them, netbooks present the best possible mix of characteristics – for instance, performance, portability, connectivity, etc. – at a given level of cost and quantity. Yes, more powerful and expensive notebooks may be available, but is it not possible that consumers in the market for netbooks may not need something so powerful and expensive?

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  2. GoodThings2Life

    10/20/2009 at 7:24 pm

    Nobody would ever confuse me as a netbook “fan” by any stretch of the imagination. I’ve been critical of them from the beginning. But that said, I’ve accepted a great use for them in a corporate setting… low-cost data-entry/terminal service devices.

    In our business office, we have about 20 computer users that do nothing but basic data entry all day, so they don’t need a LOT of performance power, but they do need connectivity and small profile to save on desk space. An HP Mini attached to the user’s existing LCD monitors achieves that, which in our hospital is very important. It also allows me to use them in pre-op registration areas and post-op consultation rooms for record keeping. Not as sophisticated as the new Mac Minis, mind you, but it will get the job done for less money. In fact, it cuts my hardware costs in half which makes my accountants happy.

    The point is, Joe Wilcox can hate them all he wants (though I gave up on caring what he thinks about 5 years ago), and so can I, but it doesn’t change the fact that they’re very popular and very useful in a lot of situations… and even I’m accepting that fact.

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  3. arekieh

    10/20/2009 at 8:47 pm

    Netbooks suck, to be honest, other than for the occasional search on google theyre terrible. super slow, screen is too small, cant even render youtube w/o lagging, keyboards are all too small except the asus 1008ha and 1005ha, which is still a bit too small. Netbooks are an excuse for an ultraportable, that you really cant do anything on.I can do just about everything that i can on a netbook on my blackberry, and around the same speed too lol.

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  4. Netbook Downloads

    10/20/2009 at 9:35 pm

    The world is accepting this new technology and I just feel that its going to get bigger and bigger.

    Wait and see how the Netbook dominates the world.

    Reply

  5. arekieh

    10/20/2009 at 10:18 pm

    lol, its not new technology, its current technology dumbed down and stuffed into a small plastic case.

    Reply

  6. turn.self.off

    10/21/2009 at 1:10 am

    i find myself wondering if not we geeks and pro(sumer) users cant see the appeal of these things as we need something that we can touch type (or the equivalent) on, and probably multitask to hell, with multiple large files…

    the average users of these may well be hunt and peck style writers, and may at best have 2-3 web pages going.

    take for instance some relatives of mine, that wants to use one as a photo dump for their point and snap camera. The appeal is not editing, but rather that it has storage, and a screen that they can gather around to show of the shots right there, without it being big and bulky to bring with them.

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