The Imminent Netbook Explosion

As netbook sales continue to grow, hardware and software vendors are battling to exploit this relatively new market.

Intel (Nasdaq: INTC) released a beta software development kit (SDK) in early December for developers who create applications for netbooks based on its Atom chip. These apps will run in the Microsoft (Nasdaq: MSFT) Windows and Moblin operating systems. Meanwhile, Google (Nasdaq: GOOG) has promised a new netbook operating system (OS) in time for holiday sales next year, while computer vendors such as Asus, Dell (Nasdaq: DELL) and Lenovo are jostling to get their slice of the networking pie.

Generally, vendors are positioning the netbook as a second computer -- not as powerful as one's main desktop or hefty notebook, but certainly less expensive and easier to tote around while on the go. Google is also positioning it as a gaming device. Will consumers accept a "less is often good enough" proposition, or will they demand more?

In what directions will the netbook category go over the next few years?

In Tough Times, Cheap Is Good

New features will be driven by consumer demand -- once a platform sells well, vendors will do what it takes to make it even more attractive, a cycle clearly seen in the smartphone market. Netbooks figured significantly in the 0.5 percent growth in computer shipments worldwide in the third quarter, according to Gartner (NYSE: IT). That doesn't seem like much until you find out that Gartner had expected sales to fall by 5.6 percent. Gartner expects netbook shipments to total 29 million for this year, and to hit 41 million in 2010.

More immediately, netbook sales on Black Friday last month showed a 240 percent month-over-month increase, Vipin Jain, CEO of online consumer electronics shopping site Retrevo, told TechNewsWorld. "We are seeing continued strength in netbook demand through December," Jain said. Sales of full-fledged laptops were comparatively weak, increasing by 40 percent month-over-month on Black Friday, Retrevo's figures show.

That strong demand for netbooks is fueled in part by low prices. "Consumers can find really attractive and highly functional netbooks for less than (US)$300 on a regular day and for less than $250 with a deal," Jain pointed out. He expects more of the same in 2010. "Expect this pricing and demand to continue in 2010 as Google raises the stakes with the launch of a number of netbook products using Chrome OS," Jain said.

The low prices charged for netbooks require a trade-off in features. "If you mostly just want to surf the Web, write emails, check your eBay (Nasdaq: EBAY) auctions and perform other simple tasks, netbooks are good tools and offer great value," Charles King, principal analyst at Pund-IT, told TechNewsWorld. "You don't get the power of a full-sized laptop for that price, but you get light weight and a long battery life."