Apple Netbook Makes More Sense than iTablet—For Now

| Hidden Dimensions

"I notice increasing reluctance on the part of marketing executives to use judgment; they are coming to rely too much on research, and they use it as a drunkard uses a lamp post for support, rather than for illumination."

-- David Ogilvy

There is a known market for notebook computers, and that market had been soaring until the economy went bonkers. There is a known and growing market for netbooks, and Apple can, if it wishes, carve out a piece of that market as well. But what is the market for an iTablet?

When I think about a new product, I start to think about current markets and who would buy the new product. In some cases, there is a nascent market that hasn't been properly exploited. Some company comes along and seizes the market with a combination of timing, technology, and marketing. The original iPod is an example.

Original Apple iPod

Original Apple iPod

However, when I think about an Apple iPod super touch ... or iTablet ... I can't help thinking about the Ultra Mobile PC (UMPC) catastrophe of a few years ago. That was a case of the industry (and Bill Gates) trying to force something down the throats of people who didn't need an UMPC, but it looked cool. Among the UMPC's many problems were an overzealous design, terrible UI, complex OS requiring a fast, power hungry processor, high price and limited battery life. In fact, the poor battery life became a standing joke that characterized the technology, just like the handwriting recognition snafus doomed the Apple Newton. An excellent analysis of the UMPC failure has been presented by DeviceGuru. A less technical, more light hearted explanation for the success of the netbook was posted at gadgetell.

Even though Bill Gates thought the UMPC was perfect for his kids to watch movies in the back seat of the car, the market place didn't accept the device, and the UMPC is now relegated to the dustbin of technology failures.

By the way, battery technology has come a long way in the last few years. Combined with Apple's expertise in low power designs, thanks to the acquisition of PA Semi, I don't believe battery issues are the show stopper now for an iTablet that they were for UMPCs in 2006. The defining issue is different in 2009.

Samsung UMPC

An early UMPC

The Staging Issue

The UMPC failed for a key reason. Recall the Apollo lunar landing technology of the 1970s. While the Command Module stayed in Lunar orbit, a Lunar Module (LM) descended to the surface. It made no sense to take the Apollo Command Module, with its heat shield designed to re-enter the Earth's atmosphere, down to the moon's surface. In addition, the LM was designed so that the rocket engine that managed the descent stayed on the surface when the LM took off for Lunar orbit rendezvous. No sense lifting a used engine and fuel tanks back into Lunar orbit.

Orion and Lunar Module

Next Generation: Orion and LM will work the same way

Many business and even average consumers work in the same mode. There may be a desktop computer or server at home with terabytes of storage, a printer, and a big screen. When on travel, one takes, say, a MacBook. But at the destination, there are times when lugging the MacBook around doesn't make sense. So it stays in the office or host's house, and one takes the iPhone to lunch or the amusement park. There is a clear-cut sequence of lightening the load based on the environment and needs. Call it sequential staging, like a rocket booster.

So the question is: where does an iTablet with a six or seven inch screen fit into the above staging process? It doesn't -- unless one is just a collector of gadgets. And that, above all, may explain why Apple hasn't released such a device.

The Apple Netbook

Apple has proven, however, that there is a clear cut market for classy and small notebooks, like the MacBook and MacBook Air. Also, according to a recent Gartner report, standard PC sales have been slumping, but the sales of netbooks is on the rise. Not a lot of money may be made in the PC industry, but a growing market in a recession is nothing to sneeze at.

MacNetBook

Concept: MacNetBook (Credit: The CustomMac)

Recently, we heard rumors about Apple ordering 10-inch screens for a new product. When I think about it, a MacNetBook with a 10-inch screen that looks exactly like the big brother MacBook is a perfect way to lure cost conscious customers who want a Mac, but can't afford $1,100, to join the Apple fold. A 2 lb (787 g) MacNetBook sans optical drive, with a modest 128 GB SSD, and an 80 percent standard size keyboard could sell for US$699. Just low enough to attract people who are reluctant to spend $500 for "a piece of crap" as Steve Jobs has explained.

In the case of the MacNetBook, there is no puzzling over the intended market. It already exists in spades. A MacNetBook with a 10-inch screen wouldn't cannibalize the 13-inch MacBook. It would have a friendly, physical keyboard and no one would be at a loss as to what it could be used for in business, education, or casual video watching and iPhone-like gaming. Students with educational discounts would snap them up as fast as Apple could make them.

The MacNetBook would be a winner out of the box and nicely supplement Apple's line of products in size, computational power, and pricing.

Recently, I pondered the possibility of an Apple iPod super touch, basically an overgrown iPod touch. I still believe that Apple is working on such a product for certain markets: medicine, inventory, gaming, remote system management -- to name a few.

But that market has to be driven by fundamental needs combined with new, compelling technology. That's why I now think the MacNetBook will come first, in 2009, and as the needs of mobile users gets sorted out, Apple will unexpectedly seize a new, emerging market that doesn't mimic the Lunar Lander scenario. It will be wholly unexpected and ground breaking. But that market won't emerge until we're out of the recession in 2010.

Finally, the consensus of the blogsphere and twitterverse is that Apple will release an iTablet soon. I take that as the necessary and sufficient condition that Apple will do something much smarter. Build a MacNetBook that isn't crap, flesh out the product line, and make money.

Comments

CP

Here is where the iTablet fits into the lightening of the load.

When I wake up in the morning, my usual routine consists of check email, read the news online, check out some forum posts, listen to music. I do this while I make breakfast, get washed, get dressed, attend to my infant son. The same type of process repeats when I come home from work. I like to read/communicate on my porch, in bed, while watching my son, on the couch in front of the TV, while cooking in the kitchen, etc.

I want to lighten my load. I would love to have something easier to carry around the house than my MacBook or a slightly smaller MacBook. The netbook/notebook form factor just isn’t that portable. This includes the Air. The iPod Touch and iPhone are too small for extended sessions.

I would buy a Kindle, but I want more functions. I would gladly pay much more than what they want for a Kindle if the machine had just the functionality of an iPod Touch. That’s where the opportunity for Apple-like profit margins come in. Besides bringing more people into the Apple fold, I don’t see many benefits of a low-margin, lesser-quality version of a MacBook. A portable, large, fully-equipped tablet would have a lot more potential to bring in cash.

John Martellaro

CP:  I agree, and that’s exactly why many of us want one.  The question is, what is the size of that market compared to notebooks/netbooks? That market may be still evolving.
-JM

FlipFriddle

Is there any data to show that Netbooks have increased sales on their own or are they just cannibalizing Windows/Linux laptop sales? Apple’s notebooks keep selling well, even now, so the cheap minimal-function laptop seems a bit pointless. I agree with CP that the time is ripe for Apple to change the game again; lighten the load is a good term. The netbook seems to be just a manifestation of the PC manufacturers race to the bottom strategy.

azarkon

There is currently a bunch of apple users who want a netbook, and either buy an acer and hackintosh it or suffer through windows, or cling to their powerbook 12 inch.  Because netbooks don’t serve as primary computers, I’m not sure if they’d be a great asset for switchers.  However, because of it’s keyboard, the netbook brings productivity to a mobile platform that a touchscreen-keyboard or kindle/blackberry keyboard cannot match—consider the business traveler or college student. Existing netbooks are still a lot more portable than the thirteen inch macBook or Air, and are also a lot more purse friendly.  The girth of the air makes it more unwieldy than even a much thicker 10 inch netbook. 
I agree, there are a lot of apple users who would be well serverd by an apple netbook who are not appeased by tim cook’s “an iPod Touch is as useful as a netbook.”  Right now, apple is loosing these potential sales, and is likely to still lose many of them if they release an iTablet.

But there’s no reason apple can’t make both.

rezonate

There is a -ahem- friend of mine who saw the rumor from earlier this week, saying Apple’s netbook/iTablet was now projected for 2010. He’d been looking at a Dell Mini 9 with Ubuntu before that, with a delivery date of 6/4. After the rumor hit, he ordered the Mini 9, only to find the revised delivery date was now 6/16.  Going from one week availability to three week availability for Dell seems like a huge backlog was created overnight. Apparently, the rumor was the trigger for those planning to Hackintosh the Mini 9, and a whole lot of them jumped ship to Dell (or Dell did something on their end). Apple has missed this batch. What I want is a tablet mac the size of a DVD case. If I need a physical keyboard, I’ll use bluetooth.

zewazir

The main problem I see with this analysis is Apple - under Jobs - has never been one to simply join in a market for their share.  When Apple decides to enter a market, they do so with a device that takes that market to the next level.  Look at what they did with portable music and with smart phones.  They did portable music so well iPod has become the standardized name for MP3 players, like Kleenex is to facial tissue.

As such, I do not se Apple coming out with a MacBook Mini or any such thing to simply offer a super portable laptop.  This is where going the tablet route makes more sense.  While others are putting out miniature laptops, with hinged displays and all that goes with it, imagine Apple putting out a device that is the approximate size of just the display. Using touch technology, the tablet can do everything the iPod can do, with additional features, like a built in WP via a virtual keyboard. Being on a much larger surface, it would not have the drawbacks of the iPhone/iPod Touch virtual keyboards.

As has been pointed out repeatedly, people looking to ultra-portability are most often not looking for a tiny but fully functional computer with full office applications.  They want their email, web, the ability to write simple documents, music, and maybe a movie. This can all be done in tablet format. Add a USB port and blue tooth for those who want to hook in their camera, are simply cannot stand a virtual keyboard. Voila! The Apple answer to the netbook.

Dan Neesley

The feature EVERY netbook promoter is missing is sharibility. 

No matter how light, it is very awkward to pass a laptop/netbook to another person to show them what you’ve found.

Not so with a single surface tablet device.

Rudy

And what if the itablet was really a screen, that you can use as such (combined with a bluetooth keyboard and mouse) and then pick up, walk out with it, and use the touchscreen? In the screen could be the hart of the computer (iMacwise) or part of it could be in a bevel of some sort. All is possible, I think.

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