Are Netbooks Poised for a Comeback?

The answer to this is no, and yes. Let me explain.

In 2007, Netbooks took the market by storm. These small low-cost laptops hit the market at the beginning of the recession and were instant hits. Although first versions with Linux were panned once a low-end of Windows was made available they really took off. By 2010, we were selling about 30 million a year.

But in 2011, demand for Netbooks took a major hit. Many attributed this to the intro of Apple’s iPad and other tablets but in truth, the real reason for the decline is that once the vendors realized there was serious demand for low powered, low-cost laptops, they went full-bore in creating full-sized laptops in this price range. Last I checked you could get a 15.6 inch AMD Dual Core E-300 accelerated processor based laptop for around $329. Although Netbook customers liked their small sizes and low weight, they valued even more laptops that had extra power and full keyboards.

But if you try hard, you can actually trace Ultrabooks back to Netbooks. Indeed, at the WSJ D conference a few years back, when Netbooks were all the rage, the late Steve Jobs told Walt Mossberg that nobody really wants a Netbook. While he did not downplay demand for a smallish type laptop, he felt that people wanted a small laptop with a full keyboard and the same power as their mainstream laptops. Three months later, he and Apple introduced their first MacBook Air and of course, this successful product is the reason all the vendors are creating Ultrabooks now.

But Ultrabooks have one big problem. On average, they will be mostly in the $699-$999 price range and well outside of the realm of what we call value PC pricing. That range is from $299-$599. But to say there is still demand for an ultra-thin and low-cost laptop in this value price range would be an understatement.

What you can expect to happen is, in a way, the rebirth of the Netbook in the form of value priced ultra-thin PCs. These will not meet any of Intel’s Ultrabooks specs, but instead, will have low-end mobile processors, perhaps the home version of Windows 7 and a low-density hard drive. But they could be relatively thin and really cool, just with lower end chips and low-cost screens. In many ways, these will speak to the same audience who wanted a Netbook, namely those who desired a really low-cost laptop for basic computer usage.

This low-end category could get an interesting boost later in the year in the way of Windows on ARM. Arm chips are already low-cost, but with long battery life and some pretty good processing power. You can believe they will shoot for use in ultras-lims as well.

So while Netbooks as we know them are mostly dead, expect to see them return in the form of ultra-slims, ultra-thins, or some type of name the vendors will give them that targets this low-end value segment of the market. While I don’t believe it will have a heavy impact on the more full featured laptops in the value end today since these will sport much better processors, higher quality screens, etc. these low end thin laptops will hit the nerve of a part of this value market and could actually become big hits on their own.

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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.

5 thoughts on “Are Netbooks Poised for a Comeback?”

  1. Tim,

    I believe your insights are mostly spot on… but the comeback of an ultrathin netbook will not be with ARM it will be with Intel – who will match price points with ARM to keep them out (e.g. nVidia). When Intel announced the Lenovo deal at CES… I imagined it is all inclusive. Meaning in return for marketing $$$ or lower ASPs on the i5 and i7 in the pricey ultrabooks, Lenovo agrees not to use ARM in any Windows 8 or Android clamshell or netbook. Intel wants to use 2012 as the year they own the entire mobile PC ultrabook and smaller markets.

  2. Tim. You’re predicting something that has already happened. See HP DM1 and Lenovo S205 with AMD inside.
    Yes, the trend will continue but don’t underestimate how cheap the Ultrabook design, build, ship and support process will be. Expect them to squeeze right down into the category you’re talking about during 2013. ‘Intel sealed inside’ is going to be a game changer, not an MBA copy.

    1. I think we’ll see two things: 1) the rise of laptop/tablet hybrid machines (similar to the Acer W500), especially after Windows 8 is released, and 2) Netbooks at some point will fall as far as they can, and meanwhile manufacturers will change their netbook specs to better match what customers want (perhaps the value-priced ultra-slim devices the article refers to), and then we’ll see a small resurgence of netbooks. I don’t think they’ll ever be quite where they were previously, mainly because of the “pure” tablets and the hybrid devices.

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