Netbook Is Nothing But a Cheap PC

59 Comments

You know that saying –- if it walks like a duck and quacks like a duck, then it must be a duck. Same goes for portable personal computers — whether you call them netbooks or laptops. Jen-Hsun Huang, CEO of Nvidia (s NVDA) agrees. “Netbooks are not a new category, instead they are just cheap PCs,” he said at a dinner last night with a handful of technology journalists. “It has [an] Intel (x86) processor and runs Windows XP, and to me that is a PC.”

He predicted that these low-cost machines will get more and more powerful in coming years, thanks to the rise of chipsets such as Nvidia’s Ion platform, which marries a powerful (but low-cost) CPU like Intel’s atom with a GPU and other related silicon. Huang compared the rise of netbooks to the introduction of the $999 PC back in 1997. That low-cost machine changed the economics of the computer industry, and now netbooks are driving prices down even further.

“The $399 PC is here to stay and it will get better and better,” predicted Huang. And that is not good news for Intel, which has gotten rich beyond belief because they have sold expensive CPUs with margins that could be envy of certain folks in Bogota. (Related Post: Netbooks & the Death of X86 Computing.)

Intel’s partner in crime, Microsoft Corp. (s MSFT), has been pretty vocal about the impact of netbooks on its business. They experienced an 8 percent decline in their client revenues because of lower-priced netbooks that used the cheaper (and older) Windows XP operating systems. As I have noted previously, Intel isn’t going to be able to escape this price squeeze and cannibalization.

Excess capacities in the storage, memory and LCD screen business are going to force the prices of full-fledged laptops down as they struggle to compete with cheap netbooks.

Even though today’s depressed economy forced Nvidia to recently cut its sales estimates in half, Huang says he will continue investing more in R&D around his three core initiatives – GPU computing, mobile computing and visual computing.

“Sure people may not buy in recessions, but recessions don’t last forever,” he said. “I am going to invest more in technology and R&D this year than anytime before,” he said. And he is going to keep hacking away at the operational expenses of his company. “At the end of this PC recession, I want to be prepared for any kind of change.”

59 Comments

johhny

“Netbook is Nothing But a Cheap PC.” That’s a rather simple minded explanation… Jen-Hsun Huang is missing the point here. What buyers see in a netbook is an ultra-portable laptop on the cheap, in fact 4-7 times cheaper than many ultraportables, and yes there’s tradeoffs here we get cheaper hardware, weak performance, but longer battery life. I think it would be more accurate if he called the netbook nothing but a cheap ultraportable pc with extraordinary battery life.. also Nvidia’s ion platform will likely fail with it’s current price point. A better bet is the cheaper, and more energy-efficient ARM-based netbooks that will soon be here to compete with the current atom-based variety.

Q dub

Finally, some common sense. The prominence of netbooks is not a hot new trend, but the acceleration price decline of notebooks. A truly new trend would be something like a MID product that the folks at TechCrunch are trying to piece together.

The easy explanation is that price compression during a recession is driving down prices, but the seeds of the netbooks trend were in place long before: its that consumers have long been *oversold* on computing power as applications simplify and move online. Most of the value a consumer derives from a computer is not in computationally intensive tasks. How much of a machine does it really take to check your email, facebook, and IM?

Thomas Whitney

I’m all for size and efficiency coupled with low cost. Notebooks for everyone! But for me the question really isn’t size. I have different sized “pc’s” for different things. Home computer, laptop, notebook, iphone…what does it matter if there isn’t a standard level of digital security installed. That’s my real issue.

Nate

If you are talking about them separately from a ‘normal’ laptop they are by definition a different category. What is a laptop but a more expensive desktop with a battery ? : )

Dave Winer

Now both of you are forcing me to write yet another post, which means — more suffering through my words for you guys anyway.

Is that Indian humor? If so, I’m ROTFL. :-)

Marco

Seems like the real question is, what does a $2500 notebook do that you can’t do on a netbook? Can rip a DVD in 40 minutes – don’t need it, use Hulu/Netflix. Can play 720p h.264 or fly smoothly in Google Earth – once netbooks get better GPUs they can too. They’ve already got SSDs and may outperform notebooks on some tasks. Their SSDs are only a little faster than hard drives so far but that will change quickly.

My notebook is 5 years old, and it doesn’t seem slow for anything but 720p video playback. A new netbook with nVidia chip and SSD might actually be a faster computer. I’ll probably get a new notebook once i7 and Windows 7 ship together, but only because I can afford it. I can’t think of anything I do that would begin to tax a new Thinkpad T500 or the like. Sure it would be fun to boot in 8 seconds but for most people that’s not worth $2000.

svideo with audio cables

I just bought a brand new HP laptop loaded for $608, free shipping. Direct from shopping.hp.com. Best Buy sucks. Circuit City sucks. Cut out the middleman and get a lot more machine for the money.

ronald

What’s you definition of PC?
PC = Personal Computer ? Which makes my iPhone a PC

But if you go with the common assumption PC = Wintel, you suddenly have included a Software stack. A very specific one that is. I think that’s why Acer made the distinction of Netbook, which was originally not the Wintel definition.

Now Netbooks might actually go a different way then Wintel is pushing. I for one use a cheap Notebook, so old it’s came out before the Netbooks, but if I want to run for example my accounting SW. I do so over an ssh-X connection somewhere on one of my servers, more secure (encrypted partitions, SELinux, adoptable firewall and …). And haven’t noticed a slow down over a wireless G network with 4 machines being used normally, so I would say good enough.
Point is, if Apple wanted to build a Netbook and use VNC or whatever they have and let users run heavy applications on their Mac’s there is no need for more powerful machines. And for normal email and web browsing they are good enough.
It’s all about Software, which Intel doesn’t get and Microsoft doesn’t like (licenses ).

Mark Sigal

Call me a simpleton but it sounds like the argument here is cost and form factor as the “SO WHAT’S,” with the lion’s share of the market pull around CHEAP. To me, it’s like putting a truck body on a car and calling it a different vehicle, to which I would argue it’s neither a great car nor a compelling truck.

Obviously, there’s the crowd that believes that the market needs only a browser and the cloud and everything else is fluff/overkill and for them this is a “good enough” solution.

But I am with you, Om. I look to Apple’s success, which comes from taking a unified approach across products, hardware, software, service, developer tools and marketplace functions, and see that type of platform/ecosystem play as where the differentiation/sizzle lies going forward (i.e., Sony, MS, RIM, Google will try to emulate that approach versus remaining horizontally organized).

In other words, “netbook” starts to mean something when vendors take a holistic, differentiated approach to hardware/software/service layers. Until then, IMHO, it’s cheap PC and folks looking for a different form factor type of device, largely ingredients without a clear sense of recipe.

ssm

H/W Companies like Nvidia never get it. They just sell cheap commodity stuff for the mainstream. And souped up rigs for adrenaline junkies. And they think they are on the edge of innovation. Look at the graphics console war – PS3 vs. Nintendo Wii. You get the picture, what makes a product successful.

ppatel

Netbooks are good alternative if you want to get cheap pc. this technology will keep getting better and better.

gp

ever heard vicious of wintel cycle ? windows artificially or gradually inflating windows requirements so that intel can sell its latest chips …………… why on earth Vista needs core 2 duo and 1 gb of ram to check mails ………look at linux where hardware demands remains constant with each release and mac os x is runs well ………all we need a decent cpu and good gpu and RAM for good computing experiences

Greg Glockner

I think part of the problem is that there are few mainstream applications – besides games and audio/video/photo editing – that really tax the latest crop of desktop computers. For example, take a look at disk space. Not counting the operating system and audio/video/photo files, I’m sure that virtually no one is using more than 5GB of storage space, if that much.

I don’t see netbooks becoming a replacement for regular computers, but I do imagine that many people will buy a netbook as a second computer. For example, you could buy a cheap desktop plus a netbook and wind up with a main system that is more powerful than nearly any laptop plus a portable computer that is lighter than nearly any laptop.

Now, if someone invents a must-have application that really taxes the computer, then all bets are off. But since the current fad is “the cloud”, I see that as an unlikely scenario.

Francis Simisim

Great insight, thanks. I was just about to consider getting one of those, but after reading this post, I’d wait for more powerful netbooks.

lowbar

I think you miss the point with the netbook. The price is an added bonus. The real value is the size / weight / portability.

Om Malik

@Dave @Curtis

You might be right about these guys not quite getting the software-perspective. I think they never did and that is why you have a Wintel industry that is well not that exciting and you have Mac ecosystem which is quite different. I do agree that as the world switches from pure desktop to a cloud environment, things change drastically.

Now both of you are forcing me to write yet another post, which means — more suffering through my words for you guys anyway.

Dave Winer

Curtis nailed it — the hardware companies — even Intel and Nvidea, who make essential components for netbooks miss the perspective of software guys and users. Finally, by accident, they’re making the systems we’ve always wanted. Intel made the mistake of thinking these were going to be first computers for poor folk rather than replacing laptops for their mainstay customers who they had been soaking for years apparently.

Jack I’ve done the Apple Store trip and the ooohs and ahhhhs were remarkable. Even the Apple store personnel thought it must be an Apple product. Everyone who sees one thinks the same (mine runs XP Home).

Curtis

@Om,

I agree somewhat with your assessment, but I think you’re looking at netbook value somewhat incorrectly. I think most hardware companies see netbooks as cheap PCs, however software companies see the differences between netbooks, laptops/notebooks, and desktops based on user computing needs. Netbooks fit mobile usability needs whereas laptops/notebooks and desktops have bloated functionality when measured against the needs of mobile users.

My $.02.

Best,

Curtis

Om Malik

@Dave Winer and Netbook Fan

I think you and I are in agreement. I think what Jen-Hsun (and by extension me) are saying is that it might be a netbook but in the end it is a PC and it is going to get more powerful. Sure it will be rugged and be different in size, but over time netbooks will have the same capabilities of a laptop with a lower power profile.

Dave, you know I have one of these netbooks and well I rather carry my Macbook Air where ever I go. I will go with you to the Apple store anytime – you know that is fun.

Netbook Fan — by putting any OS on it and using it do what you do and paying $399 for it, didn’t you just make it into a very cheap PC>

jack

“Another idea — walk over to the Apple store on Market with me and my white 7 inch Asus and I’ll take it out annd watch the crowd form.”

I’m having trouble coming up with a worse test of a products value.

Yes, you’d get attention. Netbooks aren’t near as prolific as normal laptops. When the iPhone first came out a crowd formed around anyone who pulled one out.

Things is, they’d look at it and go, “ahh, a cheap, tiny pc”.

Justin

Every time I pull out my Lenovo S10, loaded up with OSX, I *ALWAYS* draw a crowd. Its not because ‘its a cheap pc’, its because people look at it and at first think its a new Apple product. Once they realize its not, the real fascination starts..

WorkatHome Rich

Cheap pc’s are almost a dime a dozen these days. I suppose the practicality is mainly going to be determined by the application of the box. For me, a cheap pc works due to the fact that I would use it as my backup machine, media server, or whatnot. For me its better than having to crawl across craigslist for a sidewalk junker. :)

Weldon Dodd

Something here reminds me of the mid-Nineties battle to establish the PDA market. The Palm Pilot was not as advanced as the Newton MessagePad in some respects, but it was successful because it hit the right combination of usability, features, power, and price. Netbooks strike me as a new class of device because they hit this interesting combination of usability (8-10″ screens wide enough for the web, good-enough keyboard size, easily portable), features (wifi, flash support, longer battery life), power (Intel’s Atom CPU, enough RAM, enough local storage), with a compelling price point.

The other obvious influence is the rise of the “cloud” to the point where many are convinced that the most important quality of a computer is the ability to connect to the web and access all the content available online (YouTube included) .

Tsahi Levent-Levi

Om,
The difference I see is a technical one – for developers, especially those who need to go deep in the OS (gaming, video compression, etc), netbooks are different beasts as they have different CPUs than laptops and PCs.
I tend to think of netbooks as embedded devices, while laptops are more “desktop” devices that are mobile.
Tsahi

Justin

Statements like this qualify people as never having touched an Atom-based system before. Try actually sitting down behind one in a real world situation, or knowing the real story behind the chips, before making that evaluation. Netbook = Small laptop. I dare you to find the desktop application that doesn’t run on a netbook.

Scarhawk

Five years from now the battle will be smartphones vs. cheap PCs. If you put a DisplayPort jack on a next-gen smartphone with nViidia Tegra, you’ve got a pocketable device that, when plugged onto an external monitor, acts as computer, internet video set-top, game console, and car dashboard. Subsidize the hardware with a wireless data plan and AT&T/Verizon/Clearwire just turned the entire PC business into a feature of mobile phones.

At the low end anyway. If OpenCL gets used to build something consumers want, local hardware will come back with a vengeance. Just because everyone can afford a supercomputer doesn’t mean everyone has a use for one though.

Scarhawk

So long as Intel, Microsoft, HP etc. can make nonzero profit on $399 PCs, what’s the problem? They have less margin at the low end, so what? This is how you get to ubiquity, lots of product sold at 3% margin with enough high-margin products sold to bring total returns up to a respectable 9-12%. Nobody makes 60% forever.

Take a look at the price and margin on voice minutes over 20 years (or 120 years), and yet voice minutes per year are at an all-time high and rising. AT&T isn’t going anywhere and neither is the PC industry. If anything, PCs are just a nice piece of software away from taking over the market for set-top boxes, game consoles, BluRay disc players, car dashboards, etc. The box that can do it all will win over the box that does one thing, in the long run.

Cheap hardware is a good thing, it enables everyone (except Intel) to move up the stack a layer and tackle solving actual problems rather than dumping a general-purpose tool in a clueless user’s lap.

Netbook Fan

I’m with Dave on this. My netbook runs the Mac OSX and Windows 7.

And then there’s the battery life that lets me go most of the day without AC power. From meeting to meeting.
With Office, hard disk storage, Wi-Fi, etc, etc.

So it’s much more than an inexpensive PC !

Dave Winer

Om I love you but I gotta agree and disagree.

It is an inexpensive PC, but it also is: rugged, very small, has long battery life and is free of DRM.

http://www.scripting.com/stories/2008/12/17/whatIsANetbook.html

It’s got some new stuff not seen on laptops before *that matter* — you should get one to take with you to the next press event. I use Macs, like you — but I don’t travel with a Mac anymore.

Another idea — walk over to the Apple store on Market with me and my white 7 inch Asus and I’ll take it out annd watch the crowd form.

Manish J.

I believe we are seeing a compression in margins in almost every product category around the world. Cars, computers, gadgets…you name it we are seeing a downward price spiral.

Recessions don’t last forever. However, has the consumer mindset changed that is the million dollar question. Do $399 computers or cheaper allow a consumer to do what is necessary for them?

toya

Netbooks are not laptops. Netbooks are for internet browsing and e-mailing purposes, if you want something with other applications such as Microsoft Office then you’d get a laptop.

Justin

Ahh, spoken like someone who has never utilized one themselves! Let me tell you, netbooks run anything you throw at em as desktop apps — and even a decent portion of older games. Microsoft Office needs to be run on a full-fledged desktop? You’re completely missing the points of A) Extreme portability coupled with B) MORE than adequate power. I’ve watched 720p with no problems on a netbook, as well as run multiple browsers, chat clients, Office apps, among other tools, all at once. Yes, it multitasks.

Netbooks are indeed laptops, simply with a typically 1024×600 screen. If you can comfortably do your daily tasks on a 1024×600 screen, you can comfortably live all day behind a netbook. Both my wife and I already do, and after using a 10″ ‘Mac’ for half a year, I can’t look at a full size laptop the same — so excessively large.

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