So, who's still buying Netbooks?

The Netbook craze flamed out faster than most people anticipated, thanks partly to the emergence of touch-screen tablets earlier this year.

Erica Ogg Former Staff writer, CNET News
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur.
Erica Ogg
4 min read
Netbooks have lost much of their shine since the introduction of the iPad. Sarah Tew/CNET

While PC makers are running full-speed to chase the iPad's success, it's notable that just as quickly they've stopped talking about Netbooks. Some people call them mini-notebooks. Even more people now call them that thing that's bigger than a smartphone but smaller than a laptop that looks more than a little bit clunky next to a tablet device.

Between October and December last year, PC makers shipped 10.5 million mini-notebooks, according to Gartner. That may have been a market peak. Fast-forward to the first quarter of this year: 9.7 million units shipped. Tick forward again to the second quarter of this year, and 8.4 million Netbooks left PC factories. The numbers are expected to drop even further in the coming months.

So what happened? It's not a stretch to connect the dots between the rise of the iPad and the sudden drop in last year's most-hyped product category. Even before the iPad was officially introduced in January, the talk of the PC world just a few weeks prior at CES 2010 was about tablets. Hewlett-Packard, Dell, and Archos showed touch-screen tablets somewhat tentatively--few details were named, and some shipping dates were vague--but it was clear the attention had shifted away from targeting consumers looking for a new mobile device with Netbooks.

As Oracle's Larry Ellison once said, the tech industry's penchant for fads is a lot like the fashion world. It wasn't all that long ago that Netbooks were lauded as the future of mobile computing in a form factor larger than a smartphone, and for an entirely more reasonable price than a full-size notebook. In a Netbook you got a shrunk-down notebook (all the better for plopping down with at a coffee shop or when on the road), with a screen between 5 and 10 inches, running Windows XP or 7, or even Linux. That was paired with low-power processors that encourage longer battery life, all for between $300 and $600.

Asus kicked off the Netbook fad with the Eee PC in late 2007, and even before shipments dropped off earlier this year the buzz surrounding mini-notebooks was already fading. A year after playing a starring role at CES 2009, Netbooks were hardly mentioned at the annual Las Vegas techfest last January.

Dell and others still sell Netbooks like this Inspiron Mini 10V, but overall shipments of the small notebooks probably already peaked late last year. CNET

Market researchers crunching the numbers picked up on this earlier this year, releasing data showing how Netbooks are falling out of favor behind traditional PCs and even the touch-screen tablet craze.

In its U.S. Consumer PC Market 2015 report released this summer, Forrester Research projected that in four years, the U.S. PC market will be led by notebooks, with a 42 percent market share; followed by tablets, with 23 percent of the market; desktops, with 18 percent; and Netbooks will occupy just a 17 percent share.

It's not that Netbooks are going to go away overnight. If you want an inexpensive, undersized notebook that comes with productivity software like Microsoft Word (which, should be noted, the iPad does not) or the equivalent, you can get one. Acer, Asus, Lenovo, and LG recently announced new dual-core Netbooks, and there's a trend toward "premium Netbooks" with larger screens that cost more and have more power, but are really edging into regular notebook territory.

But for people shopping for a mobile device that truly falls between the smartphone or the laptop computer, the tablet has leapt to the front in mindshare.

After Netbooks, tablets might next be stealing share from the lower end of the notebook market. The iPad has been on Apple store shelves for less than six months and already it's being credited with causing PC buyers to hesitate or delay buying notebooks.

UBS analyst Maynard Um wrote in a research note to clients Wednesday that pressure from the iPad is "causing a scramble by vendors" to launch iPad clones.

"We believe that a majority of this impact is occurring on the lower end of PC sales as the iPad is priced close enough to this range that it becomes attractive to consumers looking to make purchases within this segment," Um wrote. "We are not sold that the iPad is purely cannibalizing PC sales, as the functionality of the iPad cannot yet fully match the functionality of notebook PCs. However, consumers who purchase iPads may be more willing to delay purchases and upgrades of existing PCs."

That's notable for a single product from a single vendor, but there will shortly be plenty of iPad-like devices out there. Dell's Streak, Samsung's Galaxy Tab, and whatever HP and RIM come up with in the coming months will make it hard to recall the appeal of Netbooks in the first place.