The Surprising Success of Netbooks
With smartphones getting smarter, e-readers on the upswing, and laptops growing ever-more powerful, can the market really support a device bigger than a PDA but smaller and less powerful than a typical notebook? The answer is yes, and display and PC makers alike have been happy to meet the growing demand for netbooks.
by Jenny Donelan
NETBOOKs: miniature marvels or watered-down lightweights? It all depends on how you look at them. With regard to netbooks, note-PCs, sub-notebooks, or mini-notes (they go by many names), opinions are divided. There is definitely an appeal to a sub-$300 computer that is so small and light (less than 3 pounds) that you can toss it into a briefcase or handbag and take it wherever you might be heading. Just about every netbook is WiFi-enabled (hence, the "net" in the name), and many also offer connectivity to broadband networks, so a netbook makes it convenient to carry on with remote e-mailing and Web browsing as well. At the same time, because a netbook looks like a laptop computer, albeit smaller, you might expect it to perform like a laptop computer, and that would be expecting too much. A netbook comes in a small size with a low price tag because it has been intentionally divested of many of the robust features that have enabled today's laptops to take the place of a desktop model. Because of their slower processors and smaller memories, netbooks are just not as fast or powerful as their larger counterparts.
One way in which netbooks have surpassed expectations, however, is in sales. Over the last year, netbook sales were a bright spot in an otherwise gloomy notebook market. According to a recent survey from market-research-firm DisplaySearch, mini-note market revenues were up for Q2 '09 both quarter to quarter (37%) and year to year (264%), whereas the portable PC market as a whole was down year to year by 5%, including mini-notes, and down 14% without them.1 So, obviously, netbooks, despite their lack of bells and whistles, have tapped an unsolved consumer need.
Fig. 1: The Inspiron Mini 9 from Dell is based on the Intel Atom processor and has an 8.9-in. display. Image courtesy Dell.
Anatomy of a Netbook
"Small notebooks have actually been around for a long time," says John Jacobs, Director of Notebook Market Research for DisplaySearch, adding that in Japan, tiny (5.6-in. displays) full-featured devices have been an option for several years, if you were willing to spend $1500–2000 for them. The netbook as we now know it is generally considered to have gotten its start in 2007 with the ASUS Eee PC, which was originally designed for emerging markets. It used the Linux OS and had 4 MB of flash memory. The Linux interface was not universally popular, however. "People did not know Linux; it did not look familiar, and there was a high return rate [on these devices]," says Jacobs, adding that within 6 months, Microsoft had "essentially gutted" a version of Windows XP for netbooks. When HP and Dell entered the market as well in mid to late 2008, the netbook market began to take off.
Many netbooks even today do not come with an internal optical drive, although external drives are usually available as options. These units generally rely on a solid-state drive instead; users upload and download files via the Internet or with a USB device. The processors most commonly used in current netbooks are the 1.6-GHz Intel Atom or the x86-compatible VIA Technologies C7 (1.5–2.0 GHz). Most of these devices run either Linux or some version of Windows XP and do not support x64 operating systems.
Another drawback for netbooks is the keyboard, which is fine for occasional e-mailing and Web surfing, but not for creating detailed spreadsheets or writing and formatting large documents. This is not any kind of design flaw – if manufacturers started making keyboards comfortably larger, then the netbook would no longer be small enough to be classified as a netbook. Still, companies are doing what they can to offset this particular disadvantage. Dell's mini 10 and mini10V units, for example, have keyboards that Dell advertises as "92% of the size of a standard keyboard." 2
Fig. 2: Mini-note PCs with displays smaller than 8 in. on the dagonal are forecast to exit the market in the next few years. 10.1–10.2-in. products are forecast to remain the dominant size in the mini-note market. Image courtesy DisplaySearch.
Display sizes for netbooks range from 7 in. to somewhere beyond 10 in. They are almost without exception LCDs with LED backlighting. For the most part, no special adjustments have been made to the composition of the displays themselves to make the overall devices smaller and lighter. In fact, according to Jacobs, many of the earliest netbooks used the same 800 x 480 displays that had been designed for portable DVD players. Although customizing the displays for netbooks in order to make the devices lighter and more energy efficient sounds like a good idea, any such efforts would push the price too far beyond that desirable sub-$350 price point. "We're not seeing the extra-brightness-enhancement films or the highest-performing LEDs on these units," says Jacobs. "There are technologies out there that would enable better power management, but because of the initial expense, [companies] are not doing it."
Still, 70–80% of any notebook's power is being used by the display, and the batteries in tiny notebooks cannot be large or expensive, so battery life is an issue. "This has been one of the big criticisms of mini-notes all along," says Jacobs. Many units come with a three-cell lithium-ion battery and an option for a six-cell version. For the time being, he observes, most users simply recognize the necessity of having to plug in the units on a frequent basis. At the present time, there is a certain acceptance on the part of consumers of the netbook's limitations, especially in light of the price.
According to a Dell spokesperson, however, manufacturers are indeed looking into optimizing the displays. "There is movement toward slimmer panels, which would help reduce the weight," she says. "And color-engine/dynamic-backlight-control technology that would help reduce power consumption while displaying multimedia programs is being evaluated." She believes it would be a good idea for display suppliers to continue to research such efforts. "LCD suppliers will need to continue focusing on technologies to reduce power consumption – efficient LEDs, for example," she says.
The Need for Netbooks
If netbooks are not as powerful as notebooks, and not as portable as PDAs, and not exactly free, why do they sell so well? Says Dell's spokesperson, "We believe they are so popular because of the combination of mobility, quality, and, of course, price point." Most companies that make computers do not envision the netbook as a replacement for a main computer, but more as an ancillary device, an accessory to your base computer, as it were. But plenty of users are compelled to buy them as their sole computers as well. College students represent one such user base and were sought after with "back to school" advertisements last fall featuring netbooks in a variety of colors.
Certainly, if an individual has never had any other computer, a netbook does not feel lesser by comparison. This is the case in developing economies, where mini-notes are now moving briskly. "In China, and in Latin America, they are selling well," says Jacobs. "In fact, in my mind, the mini-note is the free-market solution to One Laptop Per Child."
What's Next for Netbooks?
As is typical in the ever-expanding, ever-contracting world of mobile devices, netbooks began to grow back toward notebook size almost as soon as they were introduced as miniature versions of notebooks. As shown in Fig. 2, the 10.1- or 10.2-in. display size is projected to be the most popular, and PC makers are continuing to come out with larger screens. In the last few months, several companies have introduced 11.6-in. products in the $450 range that use a chipset (the CULV from Intel) somewhere in between the Atom and the regular Intel processor in terms of processing power. Jacobs believes, however, that the much larger display sizes will not do well in terms of sales. "Just because there is a market niche does not mean it has to be filled," he says.
Another possibility includes the addition of touch to netbooks, but this is another cost-incurring proposition that could add as much as 10% to the street price, according to Jacobs. He also suggests that the hinge on most netbooks would not withstand even the gentle force that a person would need to exert in order to activate touch. Touch-enabled netbooks could easily topple over backwards as a result.
The latest trend for netbooks, as seen in the last few months, is packaging with mobile services. Walk into any carrier storefront, for example, and you will see at least a couple for sale. Verizon was recently carrying a Dell and a Gateway model. Adding another device to a user plan is obviously a good way for carriers to grow income, and some broadband providers are also offering free netbooks as incentives for signing on to 2-year plans. It seems as if companies cannot stop coming up with ways to enhance and capitalize on netbooks – yet it may be that all that consumers want out of a netbook is an inexpensive PC. •
1"Q3 '09 Quarterly Advanced Notebook PC Shipment and Forecast Report," DisplaySearch, www.displaysearch.com