In his article "Why netbooks will soon cost $99" Computerworld's Mike Elgan predicts "the era when subnotebooks are subsidized like cell phones is here -- almost." Well, as Elgan clarifies, subnotebooks have actually already been subsidized by mobile telcos in other countries such as Taiwan, U.K, to name a few. So the idea is not exactly new - it is only new in the context of the U.S. which has long resisted the subsidy model but which might open up because of recent trends. Elgan listed these as the economic situation, crashing mobile phone sales, increasing notebook sales, and the overcrowded netbook market.
He also cited two factors - subnotebooks being marketed as netbooks, implicitly tying them to Internet access via mobile broadband; and the magic price of $99.
I agree the semantical shift to the term netbook has significant implications. It obviously implies the new breed of subnotebooks will be used primarily as Internet devices (email, surfing, IM, etc.). It also implies something Elgan failed to touch on. As Internet devices, the newer and increasingly more expensive netbooks are over-spec'd. If you don't download pron or pirated movies/songs, you don't need a big hard drive. Neither do you need an extremely fast processor - just one good enough to play Youtube videos.
Fact is, Asus had the right idea with its original Asus Eee PC 701. As an Internet device, it was close to being the perfect model - small and light enough to be carried around, big enough to have a QWERTY keyboard that is good enough (for a lot of people). The original announced price was $199 - the holy grail price for PDAs and mobile phones. Of course we all know Asus failed to deliver on the price but even when they released the Eee PC at half the original specs and double the original price, sales were phenomenal.
But instead of further lowering the price, Asus joined its competitors in introducing more powerful and more expensive netbook models. While Asus may be faulted for missing its first mover advantage, it was merely following established industry trends of not crossing the perceived resistance price level, notwithstanding the fact that it has broken the resistance level for subnotebooks with its Eee PC in the first place.
The fact is that prices in the PC industry tend not to fall. Rather specs for a certain price point tend to increase periodically. That is until a maverick company comes in and shakes things up, as Asus has done for subnotebook.
So reasonably we can't expect prices for netbooks to drop substantially below $200, especially since margins are quite thin to be begin with. So, as Elan indicated, one way for netbooks to go below $200 is for mobile telcos to subsidize them.
But what if netbooks do fall below the $200 price? If the products exhibited at recent trade shows in Hong Kong and China are any indication, a new breed of "netbooks" will soon become available.
These "netbooks" are not computers in the way ordinary consumers have come to expect in terms of specs but rather more akin to PDAs but with large-enough QWERTY keyboards and 7" screens to take on the netbook form factor. And if the uptake on Internet-enabled mobile phones/PDAs (and current netbook models) can be used a baseline, then these new "netbooks" should make for an attractive alternative to the current netbook models - especially if they are offered at a substantially lower price.
And guess what? They will be. At around $99.
For that price, you will have Wifi-based Internet access that will allow you to surf, to do your email, to chat - and even occasionally download a song or video, using a device with an almost full-sized keyboard and a minimum 7" screen. Without the need for a contract.
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