The Netbook Revolution: A Whole New Niche in Computing

"Free" Netbooks Sold in Cell Phone-like Plans Could Appeal to Business

In keeping with the theme of netbooks as Internet-enabled communications devices, vendors have begun experimenting with new pricing models that could turn the PC market on its head. Because data communications requires data connectivity, netbook manufacturers and mobile data carriers have been exploring partnerships that could see the consumer cost of netbooks effectively drop to zero. The carriers would subsidize all or much of the netbooks' cost through monthly connectivity charges, as they do with cell phones. With netbook prices approaching the $200 range, it's easy to envision them doing the same for this new class of devices.

These kinds of subsidies are sure to broaden the appeal of netbooks among students and low-income customers, for whom cost is a major concern. But it could also make them more attractive to business customers, who may prefer to buy netbooks under a subscription-based sales model that requires no up-front capital expenditures. And by emphasizing netbooks as cheap, secondary mobile computing devices, managed in partnership with a mobile carrier, manufacturers may be hoping to win sales over the objections of enterprise IT departments, who may be reluctant to provide first-line support for what they perceive to be low-quality hardware.

The leader in this area is AT&T, which already offers subsidized Acer netbooks through RadioShack stores for $99 with the purchase of a two-year service contract. More recently it has announced plans to offer similar deals for Dell and LG netbooks, and it has begun testing even lower price points. Verizon is expected to follow suit.

The Mobile Computing Market Reborn

One thing is certain: With the advent of netbooks, the mobile computing market will never be the same. Where once customers paid a premium for ultralight laptops, manufacturers have now shown that it's possible to build a PC that is compact, lightweight, and powerful enough for casual use, all at a price point that's but a fraction of what the cheapest notebook cost just a few years ago.

There will always be demand in the market for premium notebook hardware. Apple's cheapest MacBook sells for $999, yet Apple's reputation for high quality ensures that it will continue to gain loyal customers for years to come. For many applications -- at home and in business -- many people will accept nothing less than this level of quality.

But some people have already demonstrated that they're more than willing to trade build quality, performance, and even ease-of-use if it will save them money. Still others can probably get by with a device that offers even less power than today's netbooks, as long as it offers more capabilities than the current generation of smartphones.

In the near term, expect netbook manufacturers to cater to both these markets. Low-powered, ARM-based notebooks will fill a need for devices that can perform basic Web surfing, e-mail, and document-editing tasks where a full, Windows-based PC is not necessary. Those customers who are still cost-conscious but require a more traditional experience, on the other hand, will be able to choose from netbooks based on Intel's Atom processors, running Windows XP or Windows 7.

Outside these categories, new form factors -- including "pocketable" Internet tablets based on Qualcomm's SnapDragon or Intel's Z-Series chips -- are poised to blaze new territory. Falling somewhere in between today's netbooks and smartphones, these devices could carve a new niche in mobile computing. Given this wealth of new options, for cost-conscious computer users on the go, the road ahead has never looked better.

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