The Netbook Effect: How Cheap Little Laptops Hit the Big Time

A bit old but still interesting read from Wired by Clive Thompason on the origins of the netbook as well as the twists and turns it has taken as it carves its niche in the market.

He takes you starting from OLPC's initial efforts and Asus' arguably preemptive (or probably reactionary) move with the Asus Eee PC. Both were conceptualized with the so-called 2nd billion market in mind - primarily consumers in 3rd world countries who can't afford a full $1,000 model, and seniors and kids who do not need full-featured units.

However, Asus' first batch of 350,000 Eee PCs were bought up not by the target market but by consumers in western Europe and US who wanted a second laptop to carry around for accessing the net. All major PC brands, as well as lesser-known makes, soon followed with their me-too models, albeit a tad more expensive. This market turn effectively rewrote the model.

Instead of new features trickling down from the high end to entry level models after some period, the minimalist approach trickled upward. After all, the timing couldn't be better. With cloud computing, where you do most of the work (and storing) online, fast gaining popularity, the small and light configuration was perfect.

Netbooks, considerably aided by cloud computing, effectively ended the more-is-better mentality. Netbooks made people realize that for most of us, we can do with a minimal configuration. And it basically took the (practically) anonymous OEMS like Asus and MSI to force the paradigm shift. After all, it does not make sense for Dell et al to offer a $400 model and cannibalize sales on its own $1,000 plus models. But the OEMs has no such far margins to protect. Moreover, they are used to surviving on excruciatingly tiny margins.

But even as netbooks have proven to such a disruptive innovation, their full impact has yet to be felt. With cloud computing becoming more ubiquitous and powerful - you can now edit your photos online; you don't need Photoshop anymore - netbooks can be further reduced down. Sub-$100 netbooks are not a pipe dream. They will soon be available everywhere. And they will likely have a non-Intel processor and a non-Microsoft operating system. And because they will be commodity items, the brandname will often make no difference to the end-user. Sure, some buyers will always insist on a brand name, and will be willing pay more. But more will gladly buy a generic one the way they buy no-name MP3/MP4 players instead of an iPod.