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The Imminent Netbook Boom and Why Apple Should Get Involved

According to analysts at ABI research, a myriad of social and technical facets has created a prime circumstance for a netbook explosion over the next couple of years. Can Apple keep ignoring these numbers and pawning off the iPhone as a netbook competitor?

The Imminent Netbook Boom

netbookosxThere is no denying the fact that the netbook market has seen a recent surge in popularity. In difficult economic times, it can be tough to allocate a higher budget for tech devices, that many would feel to be luxury items. So, in comes the netbook, boasting cheaper price tags and subdued power, providing many with a sound option more attuned to their needs. While there is undoubtedly a large population of people that require higher performance equipment, there may just be an even larger audience that doesn’t. ABI Research analysts forecast the shipment of 35 million netbooks in 2009, rising to an astonishing estimate of 139 million by 2013.

Practice director, Kevin Burden, assesses this evolution as, “PDA’s began our reliance on instant accessible data while traveling. When PDA functionality converged with cellular voice, smartphones became the new darling of mobile professional technology that many expected to evolve into the hub for all data and communication needs for travelling professionals. Today, with a better understanding for what a smartphone is, is not, and may never be, along with a reality check on the usefulness of UMPCs, the market remains open for new device types.”

Apple’s iPhone had more than just a hand in raising the bar of the smartphone market, so why do they still appear so hesitant to enter into the netbook market? As many are aware, Steve Jobs & Co. have maintained their disinterest in stepping foot in what they believe to be a bargain-bin market. Even as recently as last week, at Apple’s Q1 financial earnings call, COO Tim Cook expressed their views on the subject noting, “We are watching the space,” Cook explained. But currently Apple does not think that the hardware and software offerings in this space are something their customers would appreciate. “Smaller screens, cramped keyboard.”

Moreover, Steve Jobs has remained adamant about the Cupertino-based company’s stance on the matter, claiming the iPhone to be the device that they offer in this space. In performing any simple search of common netbook prices, one can determine that there are several, well equipped devices that fall into the $300-$500 range. This margin compared to Apple’s most inexpensive model MacBook remains quite high, where the price is more readily comparable to the iPhone itself. This would presumably lead to a conflicting product line that could become a problem should Apple begin work on a comparably priced netbook.

What Can Apple Do?

So how can Apple effectively enter into this space? After repeated assurance that the company has no interest in what they believe to be a niche market, it wouldn’t seem plausible to expect anything like this in the near future. Yet how much are they missing out on here? Even if ABI’s figure’s may be a bit bloated, there is still no reason to believe that the netbook market is necessarily “niche”. Burden further argues that despite the appearance of low-cost, power stingy x86 and ARM processors, which were the technical keys to netbooks, industry and consumer expectations need to further evolve in order to meet market acceptance. Burden states, “In recent years, the industry still expected the smartphones to be more than they turned out to be, and most recently, MIDs were thought to be the next big mobile devices segment, but an unclear usage model continues to confuse the market. So today, netbooks’ time has come, and ABI research expects them to enjoy very strong market growth.”

If Apple were to change their attitude that they simply cannot find a way to fit in this market, and instead attempt to revolutionize it as they did with the smartphone market, who knows where the possibilities could lie. And with over $25 billion in cash, there doesn’t seem to be much impeding the way of R&D. It is to the understanding of many that Apple has no interest in “tarnishing” the brand, by putting out junk, but just because the price points and capabilities of netbooks are lower, that does not make them junk. In fact they can be very useful to a large populous of people that would otherwise not have been turned on to Apple. Many could argue that selling the iPhone at Walmart would have a negative effect on the brand’s image, yet the company has chosen to pursue the partnership. Bottom line, Apple will probably not attempt to enter this market and instead opt to beef up their already existent touch devices, yet the netbook market is nothing to scoff at, and may just be an area that Apple needs to take a closer look at.

With netbook sales estimates such as these, Apple needs to lose their phobia of small keyboards and less adequate processing power to create a device that can lend itself to this demographic. Forget about the Intel Atom, it’s too slow, and forget about ARM Cortex. Isn’t this why they bought PA Semi?

The Actual Device

netbookosxSo maybe Apple could offer a netbook-like device that would sit perfectly in their product lineup after all. Imagine this: The device has NAND flash storage palettes slightly higher than the iPhone and iPod touch. If customers are looking for storage options higher than the iPhone, they will be pointed to the netbook. This device wouldn’t be married to the AT&T network, however if you own an iPhone, it’s an added perk and a SIM card slot would let you utilize your AT&T connection at any time. Take it another step further and make the iPhone a mouse that recognizes all of the swipe and touch gestures that users have become used to over the last few years.

Integrate a custom designed chip that isn’t as slow as the Intel Atom, and doesn’t need as much processing power as ARM. This way Apple would finally be making use of their P.A. Semi acquisition. The device could be priced anywhere between $399-$650. Obviously, the feature sets will vary with lower priced models housing less storage and slower processors. And the higher priced models having more options, superior features, processors and more memory. The iPhone and netbook don’t need to be clumped together. The two separate devices can be married and coexist in Apple’s ecosystem nicely by playing features off of each other. There is absolutely no reason why Apple can’t offer devices at this level, keep up their brand reputation with high-end devices and tap into the netbook boom that is happening right in front of their face. Even though the device wouldn’t be in place for extended periods of productivity, at a certain point, the masses determine the truth, and netbooks don’t seem too small for everyone.

Image credit: Flickr

Comments [5]

5 Comments to “The Imminent Netbook Boom and Why Apple Should Get Involved”

L. Becton @ January 29th, 2009 at 9:46 am
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I am sure apple will eventually eat their words and offer some form of an netbook. Sony has a high quality netbook with a starting price of $899. A high quality 10- 11 inch chassis with a 95% keyboard priced between $500 & $600 running some form of osx, I would gladly purchase. I don’t need a large fully featured notebook when I go on long weekends away or 2 day business trips, I simply want to stay in my communication loop. The virtual keyboard on the ipod touch isn’t comfortable for typing addresses let alone two sentences. I will purchase a linux 10.9 inch netbook, only because apple isn’t in the space. Also, I must have a RJ-45 ethernet connection. The biggest threat to apples sales( 25% drop in desktops last quarter) is it being a year behind pc’s chipsets and not having adequate nvidia graphics in its entire line. Apple needs to work harder to stay up to date. Mac mini and imac are due upgrades and any decent consumer can see this and would likely wait a few months to have a better machine. And to save the petty cost of upgrading to new versions of software. Apple is slowly becoming a bit of a bother and customers are beginning to feel fleeced with being charged for software updates on machines purchased weeks prior. Apple, The sun shines out no one’s backside!

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Dave @ January 29th, 2009 at 11:07 am
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I absolutely agree with you and feel that there are a lot of people out there in your same position (myself included) that would gladly welcome some sort of Apple device in this market at the $500-600 range. There are definitely times when the iPhone/iPod touch simply won’t cut it.

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Aviv @ January 29th, 2009 at 11:21 am
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Yup… 1)copy and paste – I still can’t properly get things done like I need to get done without this. 2) Video support is a big deal for me. 3) Push notifications are equally important.

I could go without MMS as long as they continue or bring the “wireless caching” into existence for iPhone users. As long as we don’t have to go through the debacle of entering passwords like we do now.

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Keith @ January 31st, 2009 at 7:53 pm
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This makes no sense. You ask for an Apple netbook in the 399 to 650 range? They sell the iphone for that much or MORE. They can’t offer something bigger and better for the same price. Then the other commenter wants an 899 notebook? You can get the white macbook all day for that price – just not directly from Apple. Apple will not enter this segment because they are already selling the pants off of everybody else in the segments that they already have covered. They really don’t have a gap to fill like Sony and their Windows ilk. There is a small jump from the iphone to the entry macbook and there is NO reason for them to try to shoe-horn a product into that tiny gap. I do agree that if they did it, it would rock- but they aren’t going to do it…..

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L. Becton @ February 1st, 2009 at 12:31 am
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Keith,

Which reader wants a $899 notebook? I certainly don’t. Apple says netbooks are crap and cheap, I mentioned Sony’s model starting at $899 to show that netbooks don’t have to be poorly made or cost under $300. Apple understandably doesn’t want to cannibalize its laptop sales, and a good quality surfing and text editing netbook should not do this. Iphone and Ipod touch don’t have keyboards and are not practical if you have to create a full page or two of text. Apple will create something netbook like eventually. This year over 30 million units are expected to ship, rising to around 139 million a year by 2013. Apple will not watch from the sideline. Apple’s shareholders looking to increase their wealth will not allow apple to ignore this market. Further, it is normal these days for people to have at least one home computer, a laptop, a mobile phone and a mp3 player. Is also having a more portable basic netbook so unimaginable? Or frivolous? As with all things. everything is not for everybody.

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