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Netbook? MID? Is This PC Category for Real?

netbooks
A portable computer priced way lower than the competition makes headlines with its small screen and bundled applications for instant productivity.

Sounds like a great marketing plan for the latest generation of Netbook and Mobile Internet Devices (MIDs). But if it seems familiar to long-time techies, it should; it's the same plan that worked in the early 1980s when Osborne and KayPro launched the first portable computers (albeit "portable" in those days meant 20-plus pounds).

There is a whole new set of factors driving interest in this latest generation of portable devices. For one, prices are lower than ever. Also, more ubiquitous Internet and Wi-Fi connectivity makes these portables more usable right out of the box. And ironically, the design philosophy of the late Adam Osborne, "adequacy is sufficient", remains in play.

In other words, there's always going to be a segment of the market looking to pay less for "good enough" technology.

"All of these new notebooks are characterized by limited functionality," Roger Kay, president of market research firm Endpoint Technologies Associates, told InternetNews.com. "Intel and the other players are looking to expand the market with lower-cost parts."

Analysts say the expansion began as an effort to reach emerging markets and education with more affordable computers. But the success of the Asus Eee PC has computer makers thinking about a broader target.

"What's thrown computer vendors for a loop is that the Asus gained consumer interest in U.S.," Tim Bajarin, president of Creative Strategies, told InternetNews.com.

The first Asus Eee PC was released last fall priced at $399. The two-pound notebook included a 7-inch screen, 4GB of solid-state storage, Wi-Fi connectivity and an Intel mobile processor.

Tuesday, Asus announced new models of the Eee PC that expand its line with bigger keyboards and screens. The Eee PC 901, due out next month, is based on Intel's latest Atom processor.

The new 901 features an 8.9-inch screen, Windows XP, a gigabyte of memory, a 12GB solid-state drive and Wi-Fi connectivity. Two other models, the Eee PC 1000 and 1000H, feature slightly larger storage and memory capacity, and 10-inch displays.

The 901 will be priced between $550 and $600, according to Asus spokesman Charlton Ho. That range overlaps with standard "value" notebook computers, but Ho insists Asus is targeting a different market.

"We're providing a totally different value," Ho told InternetNews.com. "You don't need [Microsoft] Vista on these devices," he said, which means less-demanding hardware requirements.

Also, the 901 weighs only 2.3 pounds and offers a longer battery life typical for low-end notebooks running Vista, he said.

Ultra-low cost notebooks a niche?

Research firm IDC is forecasting the market for what it calls "ultra-low cost notebooks" will grow to between 9 million and 10 million units a year worldwide by 2012, a small fraction of the overall market for notebook PCs.

[cob:In_Focus]While IDC analyst Richard Shim thinks the Eee PC and other devices like it will have some mainstream appeal outside the education and emerging markets, he believes most U.S. consumers will opt for "true" notebooks from bigger-name vendors.

"The average selling price for notebooks is coming down," Shim said. If you have to sacrifice screen size and performance to get a $400 device or pay $550 for a name-brand notebook that's more functional with a 15-inch display, where will most people go?"

Mobile Internet Devices, another closely watched aspect of the low-cost portable push, may similarly suffer from a real lack of purpose.

These products, also known as Ultra-Mobile PCs, are tinier but more expensive than Netbooks. They're more specialized, being lightweight and designed for anytime, anywhere access to the Web. The category includes devices like Samsung's Q1 and the Asus R2H.

"MIDs are a new usage model that hasn't been justified yet as a real thing," Kay said. "A MID is really a different beast than a Netbook or low-cost notebook alternative."

Kay said this segmentation is a sign the portable computing market is maturing, much like the auto industry did years back.

"The hot market for computer vendors is the multi-PC household, because the majority of homes now only have one," Kay said. "There was a time most families only had one car, but now it's common to have two or more."

Despite the space's infancy, the increasing popularity of models like the Netbook may still signal growing consumer readiness to embrace models offering fewer of the features they're used to in PCs.

And if notebooks continue to morph into UMPCs, Netbooks and MIDs -- looking less and less like traditional PCs -- perhaps another Adam Osborne maxim will come to pass:

"The future lies in designing and selling computers that people don't realize are computers at all."