Netbooks Hurting Notebooks; Will They Also Kill the MID Market?

moblin-logoIt’s already safe to say that netbooks are taking a bite out of notebooks. Windows XP is on the majority of netbooks and Microsoft has already seen a decline in OS revenues because they can’t sell a $300 operating system on a $300 device. Add in the worldwide economic crisis and you’re seeing some people opt for cheaper computers that can handle most everyday tasks.

What about the MID or Mobile Internet Device market? I’m of the general opinion that the main difference between the MID and smartphone market is that one offers traditional voice calling and one doesn’t. Neither device runs a fully-scaled desktop OS and frankly, neither should. Yet both handheld devices are highly portable, offer web browsing and are in the same general price range as netbooks. So could the netbook start eating into the MID market which got off to a relatively slow start before netbooks even arrived?

There’s already some evidence that priorities have shifted away from MIDs and towards netbooks. Intel creates not only the small CPUs targeted for MIDs, but they’re a large backer of the software side too. The Moblin project that they help represents “Mobile Linux” and aims to be the OS of choice for MIDs. UMPC Portal is taking the latest Moblin version for a spin, but it’s not the version they hoped for. It’s for netbooks, not MIDs.

Digging deeper shows a project update from the Moblin folks earlier this month and here’s the kicker:

“Moblin Netbook is a fully featured complete distribution for NetBook like hardware built on Moblin Foundations with a complete modern user interface and applications. It is currently in the design and prototyping stage with expected beta releases slated for April 2009.

Moblin MID is a fully featured platform for next generation smart phone devices built on Moblin Foundations. It is expected for release in 2010.”

This is a complete reverse shift in priorities. How much? The Moblin.org project launched in July of 2007, which is months before the first netbook hit the market. MIDs were the focus then and even more so when the Intel Atom was announced in early 2008. Put another way: Moblin was initially envisioned for MIDs and smartphones and now that vision has taken a back seat to netbooks.

What’s interesting here is how Intel is indirectly making their own problem worse. They’ve experienced a decline in revenues as devices with lower-cost Atom processors are eating into traditional notebooks sales that have higher CPU profit margins. Yet, they’re feeding fuel to the low-profit margin netbook market by backing initiatives that could expand that same market. It’s interesting to watch.

Actually, you don’t have to watch. You can participate as well. The alpha (as in not fully featured, not likely to be stable) version of Moblin for Netbooks can be downloaded here. You can run it as a Live CD, so there’s no risk to wiping your existing OS.

Back to the original question then: Will netbooks kill MIDs? They alone won’t kill non-voice MIDs, but when combined with more capable smartphones, the one-two punch is a hefty blow that will keep this market niche at best. Of course, it all depends on your definition of a MID. I’ve often said that my iPhone is a great MID. Personally, any smartphone with a decent browser is a MID in my book, so I think the term needs to go away.

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