The Rise (and Possible Fall) of Ultraportable Laptops

Success or Failure?

As might be expected, vendors insist that these small laptops are a success. "So far, Asus has shipped over 2 million Eee PCs, and demand is still strong," says Asus's Huang.

That figure, which represents worldwide sales, does not impress Stephen Baker, an analyst at NPD Group Inc., which monitors sales of a variety of products, including laptops.

"Two million units isn't a big chunk when the worldwide market is 160 million," Baker says. He adds that only about 200,000 ultra-portables have been sold in the U.S. since January, and many of those were returned, likely because they lack the power and display size that people expect in a laptop.

"The only ones who seem to be keeping it [after buying such a device] are early-adopter tinkerers who want Linux boxes," Baker says.

Like Greengart, Baker questions the long-term viability of the entire category, particularly with vendors increasing display sizes and prices. The newest generation of small devices from vendors such as Asustek and MSI Computer Corp. have 10.2-in. displays and prices in the $600-to-$800 range. The recently released Eee 1000, for instance, costs about $700.

"If you put one of these on the shelf in a store, it won't look so good compared to a 15-in. laptop with more power that sells for the same price or maybe just $100 more," Baker says.

But even the skeptics agree that the market is still in flux. For one thing, more tiny laptops are on the way. For example, Lenovo Group Ltd. is said to have models in the wings. And proponents of this class of devices say they will get cheaper over time.

"Right now, the prices range from $300 to $800," says Via's Brown. "In the next year, $200 to $700 will be the range."

But the biggest changes -- and what may cause tiny laptops to lose momentum or even disappear entirely -- may be in the size and shape of upcoming mobile devices. Intel says that a variant of its Atom processor is aimed at so-called mobile Internet devices, or MIDs, which are roughly the size of PDAs and have built-in Internet connectivity. So far, the best-known MID is Nokia Corp.'s N800 series of Internet tablets, but Intel claims more vendors are developing such devices. Research firm Allied Business Intelligence Inc. recently predicted sales of 50 million MIDs per year by 2013, largely using Linux as their operating system.

Also expect more connectivity. Some ultraportable laptop vendors are said to be building 3G connectivity into the devices -- one such device, the G10IIL, is already available from Taipei-based Elitegroup Computer Systems Co. According to Brown, at least one cellular carrier in the U.S. -- Sprint Nextel Corp. -- is seriously considering not just offering 3G-ready ultraportables but also subsidizing their price to make them affordable. The carriers like the idea because it will help sell their 3G data services, Brown says.

In other words, whether or not the current generation of ultraportable laptops is a success, we're just seeing the beginning of the move to smaller, more connective devices that will come even closer to the road warrior's Holy Grail.