Mad Dog 21/21: Sometimes You Eat the Bear, Sometimes Its Porridge
May 18, 2009 Hesh Wiener
The computer industry is desperately in need of Goldilocks goods and services in these bearish times, things that are not too big and not too small, things that are just right. Can there actually be such offerings when there’s not just one kind of customer, and when industry folk and pundits alike say business conditions are bad and getting worse? Some people think the answer is yes. These are the hardware, software, and services vendors behind those little computers called netbooks. In addition, there is another constituency: People who are buying these things by the millions.
Once upon a time, Taiwan’s Asustek invented the netbook, which it called its Eee, in response to an effort at MIT called One Laptop Per Child. OLPC, among other things, developed a cheap, portable computer that would serve school kids in both the developing world and advanced economies. The OLPC machine, the $200 XO-1, is a very impressive device, but Asus thought it could do better and built a couple of small machines that took advantage of ideas from inside Asus as well as some low-end computer technology developed by Intel.
But the Asus Eee, which started as a candidate for classroom use, quickly developed into a product line that apparently has much broader appeal. The transformation resembles the evolution of story now known as Goldilocks and the Three Bears, which originally featured a crone antagonist along with its male ursine protagonists but, after a series of restatements, ended up with a pretty girl and a family of bears.
The Eee story begins in 2007 with a couple of barebones portable computers. That was when Asus, a top notch manufacturer of computers and computer components, motherboards, laptops and related products, announced two compact portable machines at the Computek trade show in Taipei. The Eee 701 had a 7-inch screen and became commercial product in the fourth quarter of that year. The Eee 1001 had a 10-inch screen and never made it out the door as a production model, although Asus eventually added 10-inch units to its Eee line.
An Eee 701 was pretty basic. Its Intel Celeron processor ran with a half gig of main memory, 2 GB or 4 GB of flash memory instead of a hard drive, WiFi connectivity, Ethernet, a (small) full keyboard, an SD card reader and, to support external devices, a couple USB ports and a VGA video socket. The original Eee came with the Xandros Linux distro; later, Asus offered models that ran Windows XP.
There are several Eee models these days, most of them more richly featured than the first 701, including models with hard drives, larger solid state drives, Bluetooth, wireless N connectivity, screens with 7-inch, 9-inch, or 10-inch diagonal sizes, and a choice of batteries. The Eee will also support Windows 7, and possibly a few different weights of that operating system, which will be made available in a number of lightweight, middleweight, and heavyweight versions.
Moreover, Asus is no longer alone and, market researches say, Asus may have been overtaken in the market it invented by another (and much bigger) Taiwanese company, Acer, which now sells Aspire One line of netbooks. Asus also has other competitors nipping at its heels, among them Hewlett-Packard, MSI, Dell, and Lenovo. (If you click those vendor links, they go to their netbook products.) Apple isn’t in this segment yet, but that could change at any time. The same goes for Google, which is widely expected to port its Android operating system, the one used in the Google phones, to a netbook platform or, possibly, to several. Google’s software seems to be tied to Android hardware that uses Freescale chips but this is computing, where loyalty is not always in the players’ vocabularies.
Whoever gets into the race, and whoever gets out, these days it looks like the netbook concept has taken off the way the story that become Goldilocks did.
Unlike most fairy tales whose definitive version appeared in one of the volumes published by the Grimm Brothers of Germany or Hans Christian Andersen of Denmark, the story of the three bears seems to be English. There are both prose and poetry versions dating from 1837 and some evidence that the story, or a variation, was well known before that time. In the original story, the house of three bears of small, medium and large size is invaded by a crone who is a bit destructive. Ultimately, the old lady is discovered, asleep in the bed of the smallest bear, and run off. In 1849, the story was picked up by a different editor for use in a new collection of children’s tales, and by that time the crone had turned into a girl with beautiful hair but no more manners.
The same cannot be said of the netbook, unless you happen to be involved in software. Every month it seems there are new models, machines that pack more power and functionality into a tiny case. Intel is feeding its Atom chips into the trade and has entered an alliance with Taiwan Semiconductor Manufacturing to boost the availability and customization of these chips as well as to reduce their street prices. Intel wants this segment under its control, which basically means keeping AMD out and hoping Google, if it gets into the game, doesn’t field a killer product that uses a Freescale chip. But it may be impossible for Intel to keep a lid on the netbook game. All the key platform makers, from Asus down, are bound to create Android models, although there’s no certainty the machines ever become commercial products.
It’s hard to overestimate the importance of netbooks to the computer industry. Gartner says the PC business is going to have a terrible year, with unit sales falling 11 percent . . . but that figure includes 22 million netbooks, twice the number sold in 2008. There’s no reason netbook sales won’t double again in 2010, possibly to the detriment of more costly entry level full-size notebooks that don’t offer better features than netbooks, except for a larger display.
The veteran commentator Jack Schofield, of the Guardian, thinks the market is so hot that Apple could quickly build a 10 million unit business if it entered with a system that make good use of the ingenuity evident in Mac laptops and the iPhone.
All this must make Microsoft edgy. Netbook users in the United States might strongly favor XP, but Linux remains a serious contender elsewhere, Android might be able to draw some interest. And a netbook with Mac OS, if it’s not radically expensive, could be the killer product that brings Apple software to the masses or at least the computer using masses. More killer than the iPhone, even.
Concern about the netbook market is forcing Microsoft to talk more about the compact versions of Windows 7 that it might otherwise prefer. It could also force Microsoft to deploy less costly productivity applications and to substantially improve its Web browser technology.
As it now stands the software that could be found on a netbook running Linux–Open Office, the Firefox browser, Thunderbird email–is free and very well regarded in technical circles. While there is no question OpenOffice is not yet the equal of Microsoft Office (and may never be), both suites can do all the things most users of small, inexpensive netbooks are likely to do on the small machines.
If the computer market starts thinking Microsoft Office is mainly for larger and more expensive machines but alternatives are the programs to use on systems smaller than a notebook, Microsoft stands to lose more than sales. It could lose mindshare in the only part of the PC business that is defying the Jupiter class gravity of the current economic crisis.
By the end of this year, netbooks will be making affecting the corporate computing world in at least two ways. First, the large and growing population of the small machines will force companies that reach their customers via the Web to adjust their sites to work nicely on screens with 1000 x 600 pixels. Amazon ought to get there first . . . particularly if it realizes that the netbook market is one place it can easily reach using its experience with Kindle e-books. But IBM, SAP, Oracle, Google, Yahoo, eBay, and all the other giants will have to start thinking about netbooks, too.
(Okay, IBM might, in its wisdom, spend more time and money fooling around in Second Life than it does serving the netbook market, but nobody has yet accused Big Blue of actually understanding the end of the wire farthest from the glass house. Its scientists will very likely make some excellent technical contributions to the netbook universe even as its managers stick to things they understand, such as finding a way to persuade the U.S. government to pay IBM to run the Tennessee Valley Authority from Bangalore.)
The second big reason corporate computing teams will have to become netbook savvy is that these are the machines that could easily replace notebooks used by employees who need to take computers to the outside world. Today, those users tote notebooks that are larger, heavier, and more costly than netbooks. Some of these users need the larger screens or other features only notebooks can provide. But quite a few, and I suspect it’s the majority, would be happier with a $300 netbook than a $1,000 notebook. So, too, would the corporate bean counters who know just how expensive it is to deploy notebook computers. For them, netbooks may be the machines that can help them cope with tighter budgets, and if this is the case, then they will live happily ever after.