Ultra-cheap netbooks won't go away when the economy recovers

by Cody Kitaura

As the global financial crisis worsens, people are cutting back wherever they can – cheaper food, less driving, and, apparently, smaller, cheaper computers.

Meet the netbook – an emerging type of ultra-small, ultra-cheap and underpowered laptop computer that's gaining popularity all around the world. They're great for surfing the web, and that's about it.

Analysts say amid the shrinking paychecks and tightening credit being felt around the world, consumers are being drawn to netbooks.

The UK's Telegraph newspaper writes that netbook sales are “helping the sector remain buoyant despite (a) global financial crisis.”

While it seems logical to assume that economically pained consumers would be drawn to these ultra-cheap machines for their basic surfing needs, some say it's unclear whether people actually want computers like this, or if they just happen to have the right price tag.

CNET writer Erica Ogg says it's too early to tell:

“Perhaps because of consumers' economic worries, a lot of sub-$500 computers sold in the third quarter. Whether it's a new worldwide netbook market that's being created, or they're cannibalizing cheap laptops, isn't quite clear yet, according to Gartner PC analyst Mika Kitagawa.”

But history says the U.S. economy will eventually recover. When it does and we all have a little more money to spend on our computers, will these tiny surfing machines still sell?

In a word, yes. In the short time netbooks have been around, they've already stormed onto the market and filled several key niches that will ensure their longevity.

Like with any new technology, as soon as netbooks began to appear, there was a frantic race to see who could be the first to crack open his or her cutesy, underpowered rig and beef it up with extra features.

The current crop of modded netbooks boast increased storage space, custom touchscreens, bluetooth and GPS. Some of these have already turned into standard features on some netbooks, but for now, the challenge of cramming the guts of a USB GPS dongle into the already-crowded innards of an ASUS netbook is more about the thrill of the hack than a practical way to add features.

This level of tinkering is inherent in the very definition of a netbook: cheap and underpowered. If they were expensive and well-equipped, there would be nothing left to cram inside, and they might be too expensive to risk frying on the operating table.

But experienced hackers and modders aren't the only ones buying netbooks.

Netbooks also represent an affordable, practical way to spread technology to the developing nations of the world. In fact, one of the original catalysts for the netbook movement was One Laptop Per Child, a non-profit organization dedicated to creating a sub-$100, durable laptop for educating children in the world's poorest nations.

Brad Linder, of netbook-portal Liliputer.com, writes:

“While adoption of the (One Laptop Per Child's) XO Laptop has been a bit slower than expectations, and the price has risen well above $100 (but still below $200), (founder Nicholas) Negroponte and his group demonstrated that you could make a low-cost laptop that is capable of performing many of the most common computing tasks. It could be portable, lightweight, durable, and low-power, yet still surf the web, handle Office documents, and even let you write your own programs.”

Now that the race to develop the best ultra-cheap, ultra-small laptop is between multi-national corporations with deep pockets and not just charities, developments should come faster. Charitable organizations will be able to piggyback off the companies' innovation and succeed in spreading technology to the world's developing nations.

These purchases will only fuel the netbook market more, as companies battle to have a hand in netbooks that will be sold to entire nations at once.

Even if the current exploding netbook market is the result of the crumbling economy, sales of netbooks will not fall when the economy recovers. When American consumers eventually regain their purchasing power, netbooks will still make sense – but for different reasons.

[photo courtesy Flickr user whurley]

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FAQ

What is a netbook?

A netbook is like a mini laptop computer. Its screen is 10 inches or smaller, it has no disc drive, its processor speed is much slower than most laptops, and many include solid-state, flash-based storage instead of conventional hard disc drives (although netbooks with conventional hard drives up to 160 GB are available).

Why would anyone want such a slow computer?

Netbooks aren't made for activities that require beefy processors and huge amounts of RAM. They're made for light-duty functions like surfing the web or maybe some typing.

The benefits of the underpowered specs include:

• increased battery life (sometimes up to 7 or 8 hours on a single charge)
  
• lower weight, portability (most netbooks weigh in around 2 pounds)
• increased durability (solid-state drives are more resistant to drops and shakes)

How much do they cost?

Most netbooks are around $400, although some are more expensive.

Who makes them?

Right now, the most popular netbooks are made by ASUS and Acer, the two pioneers in the market. Dell and HP also offer netbooks, as do tons of smaller companies none of us have probably ever heard of.