Are Netbooks Finally Dead?

Last week, PCMag's Mark Hachman, wrote a great piece titled "." He points out that, while in 2010 netbooks accounted for eight percent of the company's PC sales, they only contributed about two percent to its PC sales last year, and the Windows 7 Starter Edition might be to blame.

Clearly, demand for netbooks is declining and many think this product category is all but dead. In order to understand what is really going on with netbooks, though, we need to understand their past and look at what perhaps may replace them.

In 2007, netbooks took the market by storm. These small, low-cost laptops hit the market at the beginning of the recession and were instant hits. Although initial versions with Linux were panned, once a low end of Windows was made available, they really took off. By 2010, about 30 million netbooks a year were being sold.

Demand for netbooks took a major hit in 2011. Many attribute this to the introduction of and other tablets. In truth, the real reason for the decline is that, once the vendors realized there was serious demand for low-powered, low-cost laptops, they went full bore in creating full-sized laptops in this price range. Last I checked, you could get a Toshiba 15.6-inch AMD Dual Core E-300 accelerated processor-based laptop for around $329. Although netbook customers liked the small sizes and low weight, they valued laptops that had extra power and full keyboards all the more.

Today, are all the rage but you can actually trace Ultrabooks back to netbooks. Indeed, at The Wall Street Journal's AllThingsD conference a few years back, when netbooks were starting to take off, the late Steve Jobs told Walt Mossberg that nobody really wanted a netbook. While he did not downplay demand for a tiny laptop, he felt that people wanted a full keyboard and the same power as their mainstream laptops. Three months later, Apple introduced its . Of course, this successful product is all the vendors are creating Ultrabooks now.

However, Ultrabooks have one big problem. On average, they fall in the $699 to $999 price range and well outside of the realm of what we call "value PC pricing," which ranges from $299 to $599. There is, however, still demand for an ultra-thin and low-cost laptop in this value price range. While they won't be as stunning as true Ultrabooks, these lower cost ultra-thins could still have nice designs and be thinner and lighter than many of today's value notebooks.

You can expect, in a way, the rebirth of the netbook in the form of value priced ultra-thins. These will not meet any of Intel's Ultrabooks specs, but instead, will have low-end mobile processors, perhaps the home version of Windows 7, and a low-density hard drive. They could be relatively thin and somewhat lightweight, just with lower end chips and low-cost screens. In many ways, these will speak to the same audience who wanted netbooks, those who desired a really low-cost laptop for basic computer usage. When Windows 8 comes out, the entry level version of Windows 8 for consumers will most likely be used for these types of machines.

This low-end category could get an interesting boost later in the year in the way of Windows 8 on ARM. ARM chips are already low cost, but with long battery life and some pretty good processing power. You can be sure the ARM-based laptop vendors will create value-based ultra-thins at some point.

Hachman's column, mentioned above, also recorded the comments of others who suggested that a product like the Asus Transformer might fill this bill. That is a possibility. The serious hybrids I see, though, seem more targeted at an upper-end crowd. In fact, most of these hybrids could be priced closer to $999 than the $499 mentioned in this column. I don't discount that some of them could break the $500 price barrier, but their functions may be too little to really meet the needs of those who want a more "netbook–like" replacement.

So, while netbooks as we know them are mostly dead, expect to see their resurrection in the form of ultra-thins (or some other moniker chosen by vendors) that target this low-end value segment of the market. I don't believe it will have a heavy impact on the more full-featured laptops in the value end today since these will sport much better processors, higher quality screens, etc. These low-end, thin laptops should, however, hit the nerve of a part of this value market and could actually become big hits on their own.

This year is shaping up to be one of the most interesting years we have ever had in mobile. Tablet sales are on the rise. A slew of new Ultrabooks for the mid- to high-end, ultra-thins for the low-end, and exciting hybrids will be coming out later in the year. In total, consumers will have much to choose from when it comes to next generation portable computers.