Flush with their initial successes, however, manufacturers have responded to these complaints with variations on the original theme. Asus, arguably the creator of the netbook category, now lists no fewer than 14 models of its Eee PC portables on its Web site, including some with 10-inch screens and nearly full-size keyboards. Both Asus and Acer plan to ship netbooks with 11.6-inch screens in the near future. But as netbooks' capabilities have inched closer to those of traditional laptops, so too have their prices. Some models list for $700 or more, leaving many customers wondering where the netbook category ends and where laptops begin.
Apple, which so far has stayed out of the netbook market, thinks the distinction is clear. "It's a stretch to call [a netbook] a personal computer," Apple COO Tim Cook said at a recent earnings conference, citing low build quality, inadequate software, and poor usability.
But in the Windows world, few PC manufacturers seem to share Apple's pessimism. On the contrary, there is every indication that the battle for the low end is only just beginning. As the netbook market heats up, the pressure is on to drive prices even lower.
New processors could boost netbooks -- and lead to new devices
So far, the big winner in the netbook stakes has been Intel, whose low-voltage Atom processor now powers most netbook models. Rival microprocessor vendors, such as Via, have enjoyed only limited success. But as the netbook market matures, other chipmakers are expected to piggyback on Intel's good fortune. For example, Nvidia's Ion platform combines an Atom processor with Nvidia's GeForce 9400M GPU, a combination that Nvidia claims offers better performance than Intel's own integrated graphics.
Perhaps the most anticipated development, however, is the impending release of new netbooks based on ARM processors. ARM is a low-cost, low-voltage chip design that has enjoyed widespread use in consumer electronics devices such as MP3 players, PDAs, and mobile phones. If ARM chips can be adapted to deliver adequate performance for mainstream computing tasks, some analysts believe they could drive the cost of netbooks down to $250 and below.
The advent of ARM is also expected to bring new devices that offer similar capabilities to current netbooks, but in very different form factors. Qualcomm, for example, is working an ARM-based chip platform called SnapDragon, which it says is intended for ultramobile PCs and "pocketable" Internet devices -- form factors where the current Atom chips could prove too power-hungry. But Intel isn't resting on its laurels, either. It's readying a new generation of the Atom called the Intel Z Series, intended for palmtop Internet tablets, rather than laptop-style netbooks.
So far, demand for such devices has been limited. Early examples, including Nokia's Internet tablet line, have seen only modest uptake. But Apple's successes with the iPhone and iPod Touch show there could be promise in this category, especially if cheap chips and increased competition drive prices down to more affordable levels.