Are Tiny Netbook PCs a Threat to Big Manufacturers?

Anyone that has used a smart phone for browsing the internet knows that those little screens are just too small to be really comfortable to use. We also know that we don’t like to tote a notebook PC around on the chance that we need to use the internet for something.

The industry has known we needed something between a notebook PC and a smartphone sized device. It has taken several stabs at it, but nothing has quite stuck until a new breed of device has started to hit the market, called netbooks. These power sipping, devices are made primarily for checking email and surfing the internet at a low cost, some selling for $300. The PC industry is set to sell tens of millions of these devices. Good deal for the PC industry, right?

Maybe not. The NYTimes.com reports that industry analysts say that the emergence of this new class of low-cost, cloud-centric machines could threaten big market companies like Microsoft, Intel, HP, or Dell. “When I talk to PC vendors, the No. 1 question I get is, how do I compete with these netbooks when what we really want to do is sell PCs that cost a lot more money?” said J. P. Gownder, an analyst with Forrester Research.

Why are netbooks such a threat? Paul Moore, senior director of mobile product management for Fujitsu says, “We’re sitting on the sidelines not because we’re lazy. We’re sitting on the sidelines because even if this category takes off, and we get our piece of the pie, it doesn’t add up”. He adds, “It’s a product that essentially has no margin.” That makes the netbook category unpopular to large system builders. Netbooks often make use of open source software for it’s OS (although Microsoft Windows is available on many), which makes netbooks unpopular with Microsoft.

Marketing research firm, IDC is predicting that the category could grow from less than 500,000 units in 2007 to over nine million units by 2012.

While the big companies may not like this new category of PC, they can’t ignore it. Expect to see entries from Dell and HP soon, although they are likely to invest only small amounts of attention to a market with little margin for development.