Netbooks may evolve to remain relevant

Netbook category will remain, but its market share is being eroded by the emergence of tablet computers and cheaper laptops, say analysts who believe that netbooks will evolve with competition.

Netbooks, which were all the rage a few years back, are facing competition from tablet computers and cheaper laptops, said analysts who note that while the product category will stand for now, there may be changes to its form to make it more competitive.

"There is, indeed, a decrease in the netbook frenzy evident just a couple of years ago," said Dane Anderson, CEO and executive vice president of research at Springboard Research, in an e-mail interview with ZDNet Asia. He added that though netbooks will continue to hold a place in the market, their market share is eroding, especially with tablets gaining prominence.

On the flip side, Gerard Tan, regional commercial director of IT at Gfk Asia, does not think tablets will pose a challenge to the product category. In an e-mail interview, he said tablets are relatively more expensive than netbooks and do not have a full operating system under the hood. He also pointed out that a good portion of netbook customers continue to be students.

Jim McGregor, chief technology strategist at In-Stat, thinks netbooks will continue to hold sway with consumers due to their low price and functionality. In an e-mail interview, he said the educational sector and other segments still prefer portable computing devices with keyboards and will choose a netbook over a tablet.

Springboard Research's Anderson added that netbooks appeal to customers more comfortable with the traditional computing platforms, especially for less entertainment-oriented apps and functions. "For example, from an ergonomic perspective, netbooks can be superior for certain types of work, such as those dependent on typing, due to its keyboard," said Anderson.

Netbooks' cloudy future
Despite the sunny prediction for netbooks now, In-Stat's McGregor noted that the category may not be able to hold on to its price point advantage in time to come. "[Netbooks] will come under more pressure over the next few years as notebooks and tablets come down in price," he said.

That said, he believes netbook designs will not remain stagnant. With competition coming from cheaper laptops and tablets, he feels the design constraints of netbooks, such as a single memory module, will change and lead to the blurring of lines between netbooks and notebooks.

Another threat to the netbook is its limited functionality. Springboard Research's Anderson added that tasks performed on the netbook, such as Web surfing and basic tasks, can be performed on tablets and "sometimes even better", especially with more apps coming out.

However, mobile apps may become a reality for netbooks. In-Stat's McGregor noted that if the PC market continues to be unable to run mobile apps, there is a chance of netbooks migrating to ARM-based processors and mobile operating systems.

When this happens, netbooks with ARM processors will become a natural development platform for mobile applications, he said. He pointed out that Apple is trying to move in the direction of running mobile applications on its Mac desktops with its recent OS update.

Cloud-reliant operating systems such as Jolicloud and Google Chrome OS, which were released recently, will also fit into the netbook's redesign. Springboard Research's Anderson pointed out that while users can do other functions on their machines, most use the netbook to access the Web. More devices will follow the trend of thinner and more cloud-reliant application models in the near future, he said.

In an e-mail interview with ZDNet Asia, a Dell spokesperson said there is notable growth in cloud-based services for consumers and businesses, as well as roll-outs of increasingly competitive unlimited wireless broadband data plans throughout key Asian markets.

Dell is among one of the companies wishing to profit from the tablet and netbook craze. The US company recently unveiled a convertible tablet-netbook, which is a hybrid netbook featuring a screen that can be swiveled to turn it into a tablet.

Lenovo is another company with a 2-in-1 device. It showed off a laptop with a detachable tablet screen in January at the Consumer Electronics Show.