Netbooks, Smartphones & MIDs, Oh My!

We're living in a very interesting time (for many reasons). But the confluence of several factors may be set to reshape computing:

  1. The cloud and web-based services
  2. The recession
  3. Inexpensive, UMPCs/netbooks 
  4. Pervasive Internet access

Witness the success of netbooks, which appeal mostly because of their low cost but also because they provide a more mobile Internet experience than a conventional laptop. Remarkably, as of this hour, among the top 10 bestselling computers on the US Amazon site, only one computer (a Mac) is not a netbook. All of them are priced under $500.

The NY Times writes about how the PC industry may not recover its margins given the economy and new popularity of these small laptops. I'm less interested in the computer industry's margins than the birth of this new class of devices -- or classes I should say. 

If we arrayed Internet devices on a spectrum you'd have the desktop computer on one end and smartphones such as the iPhone on the other. Between them would be netbooks and the even more nascent category of MIDs, mobile Internet devices

From a desktop or laptop perspective netbooks don't offer a great experience; their screens are quite small and keyboards often cramped. Many also feel like toys. However, if you compare the Internet on a netbook vs. a conventional smartphone it's great. And if you think about how easy they are to transport you're also pretty happy. 

Netbooks have full physical keyboards whereas MIDs (or Internet tablets) rely mostly on virtual keyboards. But they're also potentially more versatile than netbooks and offer a much broader range of use cases (Acer and Intel are making their respective moves in this area but so are Samsung and others). Microsoft may or may not be able to equip all these devices with a version of Windows; they open the door for more Web-based/cloud computing. 

Apple, for its part, has clearly said that it's not entering the netbook segment. COO Tim Cook (acting CEO) put those rumors to rest (for now at least) on last week's Apple's earning's call. Here's what Cook said about netbooks:

We're watching that space. But, right now from our point of view the products in there are principally based on hardware that's much less powerful than we think customers want. Software technology that is not good, cramped keyboards small displays... And so, we don't think that people are going to be pleased with those types of products. But we'll see.

We are watching the space, as you know about 3% of the industry or the PC industry last year was in this netbook kind of category. And so, it's a category we watch. We've got some ideas here. But, right now we think the products there are inferior and will not provide an experience to customers that they're happy with.

Even if it won't offer a netbook, Apple may eventually come out with a touch-screen tablet -- it may be a larger version of the iPod Touch, without the iPod -- that sits between the current iPhone/Touch and a Macbook. The right price point for Apple here is sub-$500. (Someone else has already created a Mac OS tablet. Recall the Apple Newton, which was ahead of its time and died; will a retooled "Newton 2.0" rise again?)

It will be very interesting to see the many IP-connected devices (MIDs) released over the next couple of years. The Amazon Kindle is, of course, one of these. Manufacturers will be experimenting with form factor, memory, software, pricing and so on. We're in a "Darwinian" period right now with all sorts of new computer species trying to establish a foothold.

The final issue or challenge with all these devices is connectivity. Will they require a wireless card or similar subscription or will they be like the Kindle with the network built in? Or will the hardware be free or almost free as a lure to pay for the connection service, as in the case of the recent AT&T-Acer-Radio Shack deal or the forthcoming AT&T-Dell deal.

Regardless, connectivity is an integral part of the proposition of these MIDs/netbooks. They are thus potential substitutes for smartphones in one sense. And the Internet on a netbook or connected MID is truly the Internet. 

It's not a forgone conclusion that these new categories of devices will capture the imagination and forever change computing but one gets that sense. Some of them will likely take hold and take off. But before that happens they will need to find the right mix of price, hardware/software and overall user experience.