The New Era of “Good Enough” Computing

by Tim Bajarin   |   March 29th, 2013

good enough phrase in wood typeA few weeks back I was one of the first to write about Windows Blue and in this column I discussed how Windows Blue could be used on tablets in the 7” to 10” range as well as in clamshell’s up to 11.6 inches.

We are now hearing that this particular version of Windows Blue will be priced aggressively to OEMs and could go to them for about $30 compared to the $75-$125 OEMs pay for Windows 8 on mainstream PCs.

But to use this low cost version of Windows Blue, we understand there are some important caveats that go with it. For this pricing, it can only be used on Intel’s Atom or AMD’s low-voltage processors. These chips were designed especially for use in tablets and as I pointed out in the article I mentioned above, this would give Microsoft a real opportunity to get Windows 8 tablets into the market that could go head-to-head with Apple’s iPad Mini and most mid level 7”-8” Android tablets as well.

Netbook 2.0?

As for clamshells, they too need to use these processors from Intel and AMD to get this pricing for Windows 8 (Blue). What’s interesting about these clamshells is that we understand that they will be fully touched based laptops with very aggressive pricing. In some ways, these clamshells with these lower end processors could be looked at as Netbook 2.0, but for all intent and purposes, these will be full Windows 8 touch laptops only with processors that are not as powerful as the ones using Intel’s core i3, i5 or i7 chips or similar ones from AMD. They will also be thin and light and could easily be categorized as Ultrabooks as well.

Windows 8 Blue is one way to get Windows 8 into more products and make it the defacto Windows OS standard across all types of devices, especially the 7” to 8” tablet segment that we predict will be as much as 65% of all tablets sold by 2014. We also hear that Windows Blue RT version will also take aim at 7”-8” tablets, which means that the ARM camp will have a play in this market as well. However, its use in an x86 clamshell could have a dramatic impact on the laptop market and have unintended consequences for OEMs and chip companies as well.

The ramifications could come from a major trend in which tablets are becoming the primary digital tool for most users. The smaller tablets are used more for consumption but the 10” versions can handle both consumption and productivity in many cases. This translates into the fact that tablets are now handling about 80% of the tasks people use to do on a laptop or PC. That means that traditional laptops or PCs now only handle only 20% of the needs of these users, which are mostly used now for media management, handling personal finances, writing long documents or long emails.

New Price Segments

When we ask consumers that have tablets about their future laptop or PC purchases we are told that for many, if the laptop is only used for 20% of their digital needs, then they will either keep what they have longer or if they do buy a new laptop or PC, it will be a relatively cheap one. Consumers, who are not interested in Macs, tell us that the top amount they want to spend on these products is $599. This suggests two key things for the PC industry that could be quite disruptive. The first is that there would be a bifurcation of the laptop and PC market into distinct sectors. One focused on the consumer where all PC products have to be under $599. The other is what we call the premium market for laptops and PCs which are willing to pay $999-$1499 for their computing tools because of more advanced computing needs. This premium segment is mostly tied to enterprise and the upper end of the SMB market. In fact, the price for PC products in this upper premium price range has proven to be quite resilient.

The second key thing means that the mid level priced laptops and PCs could end up in a no mans’ land. PC products in the $699-$899 could take a pretty big hit while demand for products $599 and under could skyrocket. We believe that this trend would usher in an era we call “Good Enough” computing; a term we became intimately acquainted with during the first Netbook phase. To some degree, the robust sales of Chromebooks already suggest this era has already started. But it would pick up if users could get full touch-based clamshells that look like Ultrabooks and are priced well under $599. We are actually hearing that when these come out in time for back to school they will be priced from $499-$549 and the target price would be to get them around $399 by early next year.

At Creative Strategies we are in the early stages of analyzing the potential impact of these Windows Blue low-cost clamshells but our early take is that they could be huge hits and have a serious impact on demand for laptops or PCs in the mid range, which has been a very important segment for the OEMs and CPU companies in the past. If this happens, the OEMs would need to bulk up on their premium products since these have solid margins and actually bring them significant profit. It also means they need to be creative and innovative in products under $599 and find ways to squeeze profit out of these types of laptops as well.

This does not mean that OEMs will stop offering value notebooks that are bulkier and in some cases use processors more powerful then Atom or low-volt chip from AMD. However, if their Netbook 2.0 like clamshells are thin, light and touch enabled, it could even cause demand for these low end bulkier laptops to dry up too. It will be very important to watch the development of this market over the next 6 months. If our assessment is correct, we could see a rather significant bifurcation of the PC market this fall, something that could have a real impact on all the players in the PC world.

Tim Bajarin

Tim Bajarin is the President of Creative Strategies, Inc. He is recognized as one of the leading industry consultants, analysts and futurists covering the field of personal computers and consumer technology. Mr. Bajarin has been with Creative Strategies since 1981 and has served as a consultant to most of the leading hardware and software vendors in the industry including IBM, Apple, Xerox, Compaq, Dell, AT&T, Microsoft, Polaroid, Lotus, Epson, Toshiba and numerous others.
  • Krabbie

    I believe that if it has a hinge it will be in the upper class of units, “good enough” is for slabs. Who will use a low end 7″ slab or net book for anything other than consumption? The more parts equals more price, or less quality in a given price point. AND, how is MS going to use this new OS? Legacy or Metro? It’s own hardware or farm it out will have to be at least “good enough” to last a while. Price point pressures are the death blow to quality and longevity. The price point to me is the “gift” point from Uncle Eddie to make him feel good.

  • pawhite524

    As usual I find your opinions to so well reasoned and expressed that I can come up with no responsible/reasonable counterpoint. Perhaps sharing my own experience may add another angle of view.

    As an early adopter of the netbook phenomenon several years ago I had a 2.2 pound, 7″ HP something or other with a 16gig hard drive. Needless to say it just proved way too frustrating- buggy, slow, tiny screen (for my needs), impossible keyboard. The form factor and weight were ideal but I still hated using it for more than 5″ so I gave it away and ate the $399 cost. Would having a touch screen have made it any better? I don’t think so. I have since bought an iPad 3 and consider this form factor- screen size/weight, better for me than a 7″ tablet or 10″ to 11″ laptop.

    Despite your analysis of movement in this direction I can’t see myself moving in that direction having “been there and done that” with disappointing results.

    • benbajarin

      I’m with you on the last Netbook phase. Tim and I were all too intimately involved in the midst of the first Netbook phase issues. The bottom line is that this new phase will be nothing like the last as these devices can be truly thin and light and performance will be drastically better than last time. We call it Netbook 2.0 but there really won’t be a comparison to these devices other than the screen size.

      What I think is interesting about this is what we will learn about clam shell form factors in regards to price. Will 11.6 super sleek and thin at low cost price points take volume away from 13 and above is an interesting question. To be honest we are going to learn a lot about how consumers feel and think about clamshell PCs with what I think is going to happen over the next 18 months.

      • pawhite524

        Thanks for taking the time to reply.

        Given techpinions history of knowing what’s going on and presenting information in a sane and, to me, unbiased manner, I will await this new wave of hardware in an “agnostic” rather than an “atheistic” frame of mind.

        • benbajarin

          The only other point I’ll make that is of interest and to watch is how Chromebooks may rain on MSFT’s parade in respect to the lower cost clamshell machines. Stay tuned for that one :)

      • Glaurung-Quena

        Even if the new line of Atom-class CPUs are dramatically better, I still don’t see a renaissance of the netbook form factor. Basically, if you have a task that you can’t do on a tablet, then it’s probably going to benefit from a screen that you don’t have to squint at and a full size keyboard. Netbooks were about small and inexpensive. They delivered those two things by also being cheaply made and underpowered. Ultrabooks have delivered a much superior solution to the small half of the equation, and tablets have done so for the inexpensive half. I’m not sure there’s really that many people who need ultra-small who also can only afford inexpensive.

        If the new Atoms really do deliver acceptable performance and amazing battery life, then I can see them going into a new, cheaper, lighter generation of full size notebooks (not ultrabooks because that’s basically paying a premium for extreme miniaturization, and if you’re paying a premium anyway, you may as well get a premium CPU as well). I can’t see them going into a new line of 10″ notebooks — I think the Ultrabooks (for those who must type) and the tablets (for those who don’t have to type) have that corner of the market sewn up.

  • Glaurung-Quena

    So, Microsoft appears to have forgotten that there were very good reasons why netbooks failed once there was a highly portable, low cost alternative that didn’t suck.

    Here’s the thing: Because they only run apps designed to run on their hardware, Android and IOS tablets are kind of guaranteed to deliver on their promises. It’s hard to overload them with software that’s not going to run well. Pretty much always, the device’s hardware will be adequate to the ~80% of your computing needs that tablets are good for.

    But… if you have tablet-level hardware in an x86 notebook, then it’s totally possible to download software to it that it will choke on. That last 20% of your computing needs might mostly be, as the article says, “media management, handling personal finances, writing long documents or long emails” — things that require a keyboard, access to a big hard drive, and the like — but one time out of 100, it’s going to be something that requires CPU power, and then suddenly that tablet-level CPU ceases to be “good enough” and becomes woefully inadequate.

    In a world without the Ipad or Android tablets, Atom-based netbooks were a cheap way to get a highly portable second computer for the 99% of one’s computing tasks that don’t require a fast CPU. In a world with the Ipad, there’s no reason for them to exist — because for the 1% of one’s computing needs that DO require a fast CPU, they are going to be woefully inadequate, and you’re going to need an i3/5/7 class CPU.

    Unless they simply cannot afford a more expensive computer, people aren’t going to remember all those times the cheap netbook was perfectly adequate, they’re going to remember that one time it failed them utterly, and they’ll spring for a more expensive notebook with better specs. In other words, that $500-900 market segment that Tim speculates is going away, I think will continue.

    I guess it could be time to see if Atom CPUs have gotten good enough to not deliver an utterly horrible notebook experience yet. Especially if MS can reign in OEM’s habit of loading down systems with crapware. But I am doubtful.

    • steve_wildstrom

      If would help if each of these new notebooks came with one of those Men in Black memory-erasing thingies to wipe out any recollection of the first generation of netbooks.

      • pawhite524

        Now you are talking! Thanks for the grins!

  • http://twitter.com/M_Gauche James King

    “In a world without the Ipad or Android tablets, Atom-based netbooks were
    a cheap way to get a highly portable second computer for the 99% of
    one’s computing tasks that don’t require a fast CPU. In a world with
    the Ipad, there’s no reason for them to exist…” – Glaureng-Quena

    This seems to be the prevailing wisdom for the so-called “death” of PCs at the hands of tablets. There are probably many people in the world who can exist without Microsoft Windows … but none of them live in my household. Even my daughter needs a PC for school, an iPad or Android tablet won’t cut it. Apple and Google may have popularized the “ecosystem” term but, in the tech world, Microsoft practically invented it. Windows also made another phrase pretty popular as well … “barrier to entry.” The Windows ecosystem is still a linchpin of the modern computing world, so much so that the Windows franchise is still a money-printing machine for Microsoft even in the face of its growing irrelevance.

    Even now, there are programs for Windows for which there simply are no real substitutes. When it comes to “good enough,” that really only applies to hardware. With software, the more feature-rich and ubiquitous, the better. Even the most elegant, intuitive solution can’t substitute for a missing feature you may need, which is why Office is still practically a necessity.

    As long as there is no viable substitute for Windows, PCs will be necessary. And as long as PCs are necessary, “netbooks” and their ilk will not only have a place in the tech landscape but will be the volume movers.

    • Glaurung-Quena

      You didn’t understand what I said. Tablets have eliminated netbooks. Like netbooks, tablets are second computers, supplemental to your first computer, the one with a keyboard and full fledged office software. And in a world with tablet computers, a low-powered netbook computer is useless — too weak to do that 1% of what you need a computer for that requires CPU gruntwork, too bulky compared to a tablet to become the thing you take everywhere with you when you want to be connected but don’t need a full PC.

      • http://twitter.com/M_Gauche James King

        I understood what you stated, I just didn’t agree. As I stated to Ben Bajarin, there was nothing so wrong with netbooks that Moore’s Law couldn’t fix it. Their progress was stunted by Intel so that they could not cannibalize sales of its more expensive parts. So, in essence, they never became “good enough” because they had the potential to severely undercut Intel’s profit margins so Intel “crippled” the Atom processor. With Atom sucking so hard, running decent apps on Windows on a netbook became a chore.

        Is there demand for an ultra-portable, inexpensive laptop that can run Windows and most popular applications decently? Absolutely. As long as there is no substitute for Windows, people will demand the most performance for the least amount of money from laptops. In other words, the PC market is always moving toward “netbooks.” It’s an inevitability. So as long as PCs are a necessity (and they are) the market will demand “netbooks” or the closest thing to them.

        Bottom line: as good as iOS and Android may be, there are some essential applications that can only be found on the Windows platform. The world has not outgrown Windows. Until it does, PCs will continue to be relevant and, as long as they are, people will want ultra-portable, decently performing laptops at great prices, be they netbooks, ultrabooks, or whatever the marketing du jour is.

        • jfutral

          Other than I don’t think you two disagree all that much, “Bottom line: as good as iOS and Android may be, there are some essential applications that can only be found on the Windows platform. The world has not outgrown Windows.”

          That iOS and Android have have taken a large portion of what PCs have traditionally been used for, in as much as the world has outgrown the PC as its primary computing tool, the world has outgrown Windows. That’s why MS is having such a tough go of it in mobile.

          Regarding netbooks only needing to give Moore’s Law time to catch up, Moore’s Law doesn’t just work for netbooks. As long as the desktop PC is still more powerful than even the most powerful “netbook” or even laptop, for those people that need power, power will always trump portability. I know many video editors and techs who would rather tote around their desktop than deal with waiting for even the most powerful laptop to render. Only for the smallest jobs do they take their laptop, and even that is the most laptop that can be found.

          The netbook didn’t just lose to iPad from lack of power. It also lost because it was a piece of crap—crappy materials and electronics meant they would never have become anything other than a disposable device. No one who needs that Windows only software wants to waste their time/money on a netbook, especially if it is so mission critical as to tie them to Windows.

          My point is, and I do have one, don’t conflate the market that needs some piece of Windows-only software with the netbook market or even just the portability market in general. PCs will continue to be relevant, even if less so than before; as Jobs said people will always needs trucks. But that is not the primary market the netbook served and it doesn’t mean the PC’s, and by extension Windows’, relevance is not waning.

          Just because there is a subset of software that can only run on Windows does not mean that the netbook is the obvious choice of computing. The netbook lost to iPad for many reasons, and being able to run Windows did nothing to help it.

          Joe

          • http://twitter.com/M_Gauche James King

            “My point is, and I do have one, don’t conflate the market that needs
            some piece of Windows-only software with the netbook market or even just
            the portability market in general.” – jfutral

            Your points are almost entirely semantical.

            The netbook “lost” in the market for two reasons:

            1. Tablets have better margins;

            2. Intel stifled innovation re: the Atom processor to prevent cannibalization of its higher end parts.

            That pretty much sums it up. It was an “inside” job. The decline in netbook sales corresponded not with a lack of demand but a drying up of supply.

            The netbook is simply an ultraportable computing device with a clamshell form factor, screen and keyboard. It was market demand that made Windows an essential component. Once Windows runs on it, it is a PC.

            Your response is full of inaccuracies and contradictions. Bottom line:

            1. PCs are still relevant. Do not conflate being less relevant than tablets or mobile phones with being irrelevant;

            2. As long as PCs, and Windows in particular, are relevant, the market will gravitate to the netbook form factor. They sell briskly regardless of iteration. Market dynamics and ergonomics inherently support the form factor. The problem is that they are not profitable for the companies that produce them. Microsoft wants to address that with Windows Blue. Intel wants to bring the price of ultrabooks down enough so that only those who truly desire a netbook will buy them, everyone else will simply pay a little extra to get a much better computer.

          • Glaurung-Quena

            May I remind you that, aside from their underpowered CPUs, netbooks had a lot of other hits against them:

            -tiny, low res, low quality screens
            -very cheaply made
            -crappy undersized keyboards

            They had two and only two things going for them: very low price, and very lightweight. Today, if you want very low price, you can get a $200 tablet that’s much smaller and more portable than any netbook, and perfectly suited for everything you’d use a netbook for except typing. And if you want an ultralightweight notebook (for typing), you can get an ultrabook with a full size keyboard, a high res screen that is big enough to use without squinting, and build quality that isn’t going to break before it’s time to upgrade. Meanwhile, full size (non-ultra) notebooks have been getting lighter and lighter, and have become more affordable than they were when netbooks were popular.

            I really very much doubt that the number of people who MUST have an ultra-tiny notebook and who CANNOT afford an ultrabook is large enough to support a new netbook market segment.

          • http://twitter.com/M_Gauche James King

            “May I remind you that, aside from their underpowered CPUs, netbooks had a lot of other hits against them:

            -tiny, low res, low quality screens
            -very cheaply made
            -crappy undersized keyboards” – Glaurang-Quena

            If you view being “cheaply made” as an inherent characteristic of netbooks, then I can’t refute you. But that is the equivalent of setting up a straw man. Netbooks are simply a form factor: a smaller clamshell formed computing device with a moderately sized screen and a keyboard that offers moderate performance and high mobility. As I stated before, the market demanded that Windows be installed on them. So, in the end, they are simply highly portable PCs.

            Of the issues you mentioned, one was solved, one would have been solved with time and industry support, and one is a universal issue with portable PCs in general. The keyboards issue was largely solved before netbooks went out of vogue. The screens had increased in size from 7 to 10 inches and resolution likely would have followed. For that matter, NVIDIA-powered netbooks had 1366×768 screens generally in the 11″ range, comparable to many ultrabooks today. I know because I bought one for my daughter. As for the crappy build, that has been a prevalent issue as the race to the bottom for OEMs has reached a fever pitched. Within the last five years, I’ve had at least 3 brand name laptops crap out before a full year of ownership. None would have been classified as a netbook. I’ve had an equal number of netbooks crap out. It’s a universal issue.

            “Today, if you want very low price, you can get a $200 tablet that’s much smaller and more portable than any netbook, and perfectly suited for everything you’d use a netbook for except typing.” – Glaurang-Quena

            There is not a tablet on the market that can outperform even a reasonably effective PC. The processors are not powerful enough and the software is not full-featured enough. To claim otherwise flies in the face of facts. You can make the claim that most people don’t need the power of a full PC. You can’t make a credible claim that tablets are reasonable replacements for PCs.

            “And if you want an ultralightweight notebook (for typing), you can get
            an ultrabook with a full size keyboard, a high res screen that is big
            enough to use without squinting, and build quality that isn’t going to
            break before it’s time to upgrade.” – Glaurang-Quena

            As I’ve already pointed out, your criticisms of netbooks are based on subjective criteria which was already being corrected. As for the quality issue, that is a persistent problem even with today’s laptops.

            “I really very much doubt that the number of people who MUST have an
            ultra-tiny notebook and who CANNOT afford an ultrabook is large enough to support a new netbook market segment.”

            In the end, “netbook” and “ultrabook” are semantical distinctions. Ultrabooks are pretty much netbooks with the economics more in favor of Intel and Microsoft.

          • jfutral

            “If you view being “cheaply made” as an inherent characteristic of netbooks, then I can’t refute you.”

            Exactly. Cheaply made was inherent because “cheap” was a very real definition of “netbook”.

            I know you want to conflate “netbook” and “ultrabook/macbook air” but there is a very real philosophic underpinning here that even Apple advocates which is why Apple and especially Jobs would never allow Macbook Air to be considered a “netbook”.

            The “netbook” is about reductionism, which is what your definition advocates and why netbooks were able to justifiably be so cheaply made. Reductionism is what drives the race to the bottom. Not just “good enough” in terms of power to accomplish certain tasks, but good enough in terms of materials used and manufacturing processes employed. The product only need to accomplish certain tasks. How well made or the materials from which it is made becomes irrelevant to the task.

            This is what a lot of people mean when they say “function over form”, or more typically and derisively accuse Apple of favouring “form over function”. Reductionism is about reducing complex tasks, objects, or systems to its simplest forms or attributes. Quality materials and processes only contribute to the complexity trying to be avoided.

            Of course that’s poppy cock. Apple operates under a philosophy of minimalism which is similar to, but opposed to reductionism. Minimalism is about form _following_ function. There is no point in making a product to accomplish a task if it isn’t well made. Minimalism is about eliminating the unnecessary, but not reducing to the least materials necessary.

            Minimalism is more about focus of purpose. Reductionism is more about reducing needs. Apple says the body needs to be strong and light—aluminum. Netbook maker says it doesn’t _need_ to be aluminum. (cheap) Plastic serves the purpose well enough. Good vs good enough. Hardly “semantical”.

            So you can redefine netbooks to include Macbook Airs if you want, but understand you are doing this not just in opposition to the market, but also in opposition to even Apple.

            Not sure I explained that well, but hopefully it helps, although I doubt it helped at all.

            Joe

            P.S. Not to belabour the point, but maybe to put it more succinctly understandable, it is about details. Minimalism, as best practices, wants to understand what details are necessary and which ones superfluous to eliminate the unnecessary details. Focus of purpose defines the parameters of what details are necessary and which ones aren’t.

            Reductionism, as exemplified by your definition of netbooks, prefers to gloss over the details, details just get in the way of understanding. It’s a great way to get that bigger picture. It is a lousy way to approach implementing the details that comprise the big picture. Reductionism has no intrinsic quality control.

            JF

          • http://twitter.com/M_Gauche James King

            “Exactly. Cheaply made was inherent because “cheap” was a very real definition of “netbook”.” – jfutral

            This is utter nonsense. A netbook is a form factor, nothing more. To state that it is cheap by definition is to rig the argument. If you are going to claim that netbooks are “reductionism,” then, by definition, any PC that doesn’t use the very best components and manufacturing processes falls into the same category. If you apply that standard to netbooks, then you have to apply the same philosophy unilaterally. I have no problem with that as it is easy to show that “cheaply made” is a universal issue, not just one with netbooks. You want to cherry-pick characteristics to further your argument.

            For that matter even your definition of “reductionism” is arbitrarily applied:

            “Quality materials and processes only contribute to the complexity trying to be avoided.” – jfutral

            Really? Samsung uses plastic to create high-end smartphones while Apple uses metal. Is Samsung using some particularly high-end plastic? No. You can make great products out of cheap materials and simple processes and poor ones out of great materials and complex processes. By this point, your “reductionism vs minimalism” argument is moot.

            By categorizing netbooks as “cheaply made,” you are rigging the argument. Netbooks are not “cheaply made” by definition. Indeed, Apple made a great one.

          • jfutral

            “Netbooks are not ‘cheaply made’ by definition”

            They were cheaply made in practice thus defining themselves.

            “Being irrelevant in certain markets is…”

            …exactly the parameter I couched my opinion.

            It is not difficult, however, as John Kirk has done here already, to conclude that if MS can’t find relevance for Windows in one of the most important computing markets today and find it soon, they have little chance of maintaining any substantial relevance going forward. I think he overstates it, but it is an understandable position, whether you agree or not.

            Joe

            P.S. To quote you in the responses to John Kirk’s article on MS:

            “…Microsoft’s near absence in nascent markets makes its desktop/laptop franchise vulnerable too. With traditional PCs becoming less important, one of the key factors in Windows’ barrier to entry diminishes. The less important Windows becomes in the overall tech landscape then the less important it becomes on PCs.”
            JF

          • http://twitter.com/M_Gauche James King

            “They were cheaply made in practice thus defining themselves.” – jfutral

            The race to the bottom has made “cheaply made” a universal characteristic of the portable laptop market. To apply it to netbooks for the purpose of painting the form factor with a wide brush is disingenuous.

            To quote you:

            “When it comes to doing what was once PC centric tasks now primarily on tablets, yes Windows and PCs are irrelevant.”

            Either this is a semantical statement or completely inaccurate depending on context. Have many people decided to use tablets instead of PCs for their general computing tasks? Yes. However, that doesn’t make PCs or Windows irrelevant. You are conflating the two. Millions of Windows PCs are sold every year and their presence in the enterprise is unchallenged.

            As for my comment to John Kirk, it is clear. Microsoft is an empire in decline. But that doesn’t mean it is irrelevant, it is just headed in that direction. It’s easy to state that Microsoft is losing relevance but the real threat to Microsoft is the growing likelihood that another platform will be able to directly compete in the areas in which Microsoft is traditionally strong. Neither iOS nor Android can do that at this point. But the risk of it happening is growing as the realization that Microsoft is not the unbeatable juggernaut it once was starts to set it. As Microsoft shows a persistent inability to establish a presence in nascent markets, some hungry upstart may actually decide to create a new general purpose OS to directly challenge MSFT. That would have been unthinkable 10 years ago but is at least possible now.

            I do want to clarify an important point: my initial response was to address what I view as a flawed line of thinking: “Netbooks are crap.” Netbooks are simply a form factor. If you want to claim they are “cheap” or “cheaply made,” that is an arbitrary distinction. The same characteristics can be applied to non-netbook laptops. In the end, ASUS attempted to address a market demand, a small, highly portable, computing device that could perform the bulk of tasks that could be performed on more powerful PCs. You know, like a tablet. The reality is that there is still a tremendous demand for the netbook form factor. Like some people prefer smartphones with QWERTY keyboards to ones without. Some people want a PC-like device with a keyboard vs. a slab of glass. It doesn’t make sense to bash a form factor. But bashing the form factor has ensured that getting your hands on a decent laptop in the $500 has become a lot more difficult. These lines of thinking crop up to make the case for OEMs, Intel and Microsoft, not the consumer. If netbooks “suck,” I want to see them made better, not go extinct because OEMs, Intel and Microsoft can’t make a ton of money off of them.

            If Chromebooks are any indication, I’m correct in my assessment. Time and Moore’s Law has allowed for a much better “netbook” experience. The problem is the software, not the hardware. There is not an OS that offers a platform as feature-rich as the Windows ecosystem. That’s why Google created Chrome OS.

            Netbooks are maligned but that thinking only serves Intel, it has no practical value for consumers. Innovating and improving the “netbook” experience serves consumers more. It’s inaccurate and semantical to bash what is essentially a form factor and ensures that companies like Intel can continue to serve its own bottom line without having to meet the demand of consumers.

          • jfutral

            The reductionist says “It’s just semantics. Details have no meaning”.

            The minimalists says “The details are everything.”

            Joe

          • jfutral

            “Your points are almost entirely semantical [sic].”

            “Do not conflate being less relevant than tablets or mobile phones with being irrelevant;”

            When it comes to doing what was once PC centric tasks now primarily on tablets, yes Windows and PCs are irrelevant. If it were not so, the iPad would not have changed a thing and Android would be no where. Yet, here we are.

            “As long as PCs, and Windows in particular, are relevant, the market will gravitate to the netbook form factor.”

            And how has that gone for the last 3 or so years? Or do you still think Apple HAS to release a netbook to remain innovative and relevant?

            Joe

          • http://twitter.com/M_Gauche James King

            “When it comes to doing what was once PC centric tasks now primarily on tablets, yes Windows and PCs are irrelevant. If it were not so, the iPad would not have changed a thing and Android would be no where. Yet, here we are.” – jfutral

            And where would that be? Last time I checked, Microsoft still made billions in revenue from Windows. Enterprises and businesses all over the world still rely almost entirely on the Windows ecosystem. You haven’t made a point.

            “And how has that gone for the last 3 or so years? Or do you still think
            Apple HAS to release a netbook to remain innovative and relevant?”

            The problem with this point is that Apple DID release a “netbook.” In fact, Apple released what many consider the ULTIMATE netbook… the MacBook Air. If Apple had to sell it at the razor-thin margins that PC OEMs have to sell their hardware as a result of the fierce competition in the Windows hardware ecosystem, it could reasonably sell it for traditional “netbook” prices. But the product’s quality and Apple’s brand make it possible to do otherwise.

            To hit the netbook’s price point without sacrificing margins, Apple introduced the iPad. Apple, particularly Jobs, knew better than to jump into the shark tank of competing on price with PC OEMs. It guarantees mutual destruction. Jobs’ answer was always to change the rules and economics of the tech hardware business, which he was able to do because he also owned a very valuable software stack, unlike PC OEMs who are essentially slaves to Microsoft (and now Google).

          • jfutral

            “And where would that be? Last time I checked, Microsoft still made billions in revenue from Windows.”

            Sure, just not in mobile—tablets and smartphones—where they are, so far, irrelevant. That could change, but so far signs are not in their favour.

            Joe

          • http://twitter.com/M_Gauche James King

            Being irrelevant in certain markets is not the same as being irrelevant. Microsoft is still essential to the tech landscape today, just less so.

          • jfutral

            “1. Tablets have better margins;”

            Except for Kindle Fire, et. al., and Google Nexus.

            And actually it looks like only Apple has better margins. Surface is trying.

            Joe

          • http://twitter.com/M_Gauche James King

            Samsung sells their tablets for a healthy profit, as do most of the OEMs. But what you are not taking into account is that, by not controlling the software stack and using a common one, market dynamics come into play. The reason why Apple can charge a premium is because it also controls the software stack. The OEMs can only compete on price because a common software stack makes it almost impossible to truly differentiate. As for Amazon and Google, they don’t care if they commoditize the tablet market because they make no profit from hardware sales anyway. It benefits both to have as much hardware out that can offer their services, so it benefits both to race to the bottom.

            In other words, your argument is, once again, semantical.

  • jfutral

    “When we ask consumers that have tablets about their future laptop or PC purchases we are told that for many, if the laptop is only used for 20% of their digital needs, then they will either keep what they have longer or if they do buy a new laptop or PC, it will be a relatively cheap one.”

    I would be curious regarding the consumer as to what the 20% figures represents for software and how much longer would it be before that is also taken over by the tablet? Tablet capability is advancing at a tremendous rate. It should advance quickly enough that the “good enough” bar is raised yet again.

    “This suggests two key things for the PC industry that could be quite disruptive. The first is that there would be a bifurcation of the laptop and PC market into distinct sectors. One focused on the consumer where all PC products have to be under $599. The other is what we call the premium market for laptops and PCs which are willing to pay $999-$1499 for their computing tools because of more advanced computing needs. This premium segment is mostly tied to enterprise and the upper end of the SMB market. In fact, the price for PC products in this upper premium price range has proven to be quite resilient.”

    My only question here is, when was this ever NOT the case? The actual price points have adjusted, but this segmentation was always around as far as I can remember.

    “We believe that this trend would usher in an era we call ‘Good Enough’ computing; a term we became intimately acquainted with during the first Netbook phase.”

    Again, I’m not sure when this era did not exist. It may have been exaggerated or highlighted (depending on your point of view) during netbooks, but it certainly was an issue Apple faced with its Mac products from the beginning. Mac may have been arguably a better environment, but Windows was always _at least_ “good enough” (if not better). And I remember many days flipping through Computer Shopper and finding computers across an entire line of price points. I can only imagine this was because for some people that low end computer was good enough.

    So maybe the influential dynamics and the related hardware have changed, I don’t see consumer response having changed all that much. The possible exception being that with the immediate rise of iPad as the tablet market defining device, Apple is in the driver’s seat for defining what “good enough” means rather than always coming from behind as it was with Mac. I mean, I know you are focusing on non-Mac markets, but these days I’m not sure such clean delineations are as possible with everything pretty much affecting everything.

    Joe

    • Glaurung-Quena

      “I would be curious regarding the consumer as to what the 20% figures
      represents for software and how much longer would it be before that is
      also taken over by the tablet? Tablet capability is advancing at a
      tremendous rate. It should advance quickly enough that the “good enough”
      bar is raised yet again.”

      Tablet software is getting better and better, but the nature of the form factor gives tablets certain limitations. Off the top of my head, I can think of four types of work that is never going to be as effortless on a tablet as on a desktop or sometimes a laptop machine: 1) typing intensive tasks (writing, spreadsheets, etc), 2) data-intensive tasks (where you need a terabyte hard drive to hold all your stuff), 3) screen intensive tasks (where you need a 20″ or bigger monitor to see what you’re doing properly) and 4) CPU/GPU intensive tasks (anything from doing climate modeling to transcoding video).

      All except the last item *can* be done on a tablet, but it’s going to involve compromises and work-arounds and limitations. At a certain point, trying to do something on a tablet that it’s not designed to be good at just gets silly — either make the horrible sacrifice of carrying an extra 4 pounds around and get a notebook, or else just wait until you get home and do it on your desktop.

      Typing tasks are the low-hanging fruit: any tablet with a decent bluetooth keyboard can become a reasonable substitute for an ultrabook. Some people don’t mind typing novels on a notebook keyboard; others religiously vow that laptop keyboards are markedly inferior and you’ll have to take their clicky desktop keyboard away from their cold dead fingers. So that’s going to vary from person to person.

      For data intensive tasks, you can get a battery powered external drive with wifi and tether it to your tablet, but it’s never going to be as seamless or as fast as a notebook or desktop internal drive. For screen intensive tasks, you can hook a tablet’s video out to an external display, but it’s an obvious kludge – most work that requires a huge display requires a mouse and a keyboard anyway, so even if the tablet supported that many things hooked up to it at the same time, it’s again kind of silly.

      • jfutral

        Sure, but I don’t consider most of those tasks as completely falling under the “consumer” monicker. Maybe Mr. Bajarin does. But even now a lot of things that once required a dedicated desktop to even hope to have the power to accomplish certain tasks are now regularly being done on a tablet. I can record music more easily on my tablet than I could way back in the day on a Mac with Protools. People are editing video on iPads. These are things people once wouldn’t have even dreamed of doing on laptops.

        I am not saying _all tasks_ can be done on a tablet. But I am saying, those of us who come from that PC centric background are a bit handicapped by what we expect of a computing device versus what the next generation of users are expecting. We expect a keyboard because we can’t imagine another way. The younger crowd, they see a physical keyboard a only one way of dealing with a computer.

        And as has been pointed out on this blog, as the rest of the world is introduced with computer first through smartphones and tablets and THEN PCs, the computing world in 5-10 years won’t even look familiar to us now.

        Joe

  • thorntondw

    “This translates into the fact that tablets are now handling about 80% of the tasks people use to do on a laptop or PC.”

    I am a consultant who wouldn’t want to work on anything other than a desktop computer (with two 24″ monitors, keyboard and mouse) in my job. “Touch” has no place in what I do as a consultant. However, for my personal use I find that my iPhone and iPad handle 100% of everything I do. I think, for the vast majority of those who use computing devices for personal use, 90% – 100% is the more accurate figure.

    • Nex

      I won’t use anything than work on a desktop but the fact is these days PCs pretty much die of hardware failure long before it got slow for most people. Even 2007 era Core 2 PCs are plenty fast for most provided everything still holds together.