Jag Venugopal's Blog

May 18, 2009

Why Netbooks are the next big thing

Filed under: Information Technology — Jag @ 7:19 pm
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I was in the market for a cheap laptop recently, and settled on the ASUS Eee PC 1000HA. This is a 10 inch screen laptop, with a megapixel digital camera built into the bezel, Wi-fi, 1GB of RAM and 160MB HD. It is built around the Intel Atom processor, known for its frugality with power and its unremarkable performance. The operating system is an eight year old one: Windows XP. I love the machine. It is fast, the UI is clean, and the overall machine is incredibly portable. Battery life is reputed to be 7 hours. My limited use so far has given me at least five on one charge.

I’ve fallen in love with my netbook, and prefer it to my Compaq laptop. The size is perfect Goldilocks… not too small, not too big. Not too heavy, not too tiny. The operating system is fast and easy to use. I can envision taking this little thing everywhere… on vacations, trips on the train, and even on the couch, when deciding which movie to watch.

Given the current buzz about netbooks, a number of people also have had the same opinions as I have. One estimate calls for 39 million netbooks to be sold in 2009, a year in which every other electronics category will get hammered. For sure, some of these purchasers will be buying their first portable computer. However, I suspect a lot many will be replacing their laptops with these devices as the laptops reach the end of their life. These are sales that are lost to Microsoft and Intel for at least one product cycle. For this second group of customers, Microsoft will be forced to sell Windows XP at a significant discount, and Intel will be forced to sell the Atom chip instead of the latest, most powerful offering. The discounting of XP licenses for netbooks (euphemistically referred to as ultra low-cost pc’s) has shown up on Microsoft’s bottom line. Microsoft is in a catch-22 here: selling discounted XP’s costs it revenue, and is injurious to the Microsoftian ego. Not selling, however, will give Linux the space in which to establish itself and potentially emerge as a greater threat down the road.

In summary, the netbook phenomenon reveals the following attitudes among the computer buying public:

  • People don’t want to pay more for functionality that they might never use (e.g. DVD authoring on a laptop, the latest version of MS Office)
  • The web has replaced much functionality that was desktop oriented (e.g. even Quicken is now on the web).
  • Cheaper alternatives to desktop software are available that are less resource intensive (e.g. OpenOffice or Google docs instead of MS Office).
  • Portability and long battery life appear to be more important to users rather than raw processor speed, or visual gimmicks (a la Vista).

Over the coming year, I would expect netbook prices to go below the $200 barrier (I got mine for $340 from Amazon). At this price point, there will be netbooks for every conceivable purpose, from school and college kids, through seniors and outdoorsy types. Given the cost of a Windows license, many of these netbooks will be running some version of Linux, and be powered by a variety of (not necessarily X86) CPUs. This will truly start off a revolution in Internet usage, especially within the developing world. At such price points, there will be enough demand in places like India to keep the factories humming, long after America’s infatuation with netbooks has ended.

This being a project management blog, the question is: how does this affect software developers? I see the impact being in three areas:

  1. Hardware limitations: Getting software to look good and work on a machine with a smaller screen, lower resolution, lesser RAM, and a slower processor. This affects producers of both web and desktop software. Can your web site support Linux based users? Can much of the processing be offloaded to servers via the Internet?
  2. Ubiquity: How will your software design change if netbooks become ubiquitous and people start using them everywhere — on trains, in classrooms, around the house, etc? If large numbers of users in the developing world now find netbooks affordable and start using them, what can you do to monetize at least some of those eyeballs?
  3. Portability: If people start carrying netbooks around everywhere, what sorts of services can you provide that will take advantage of this portability?

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