What Can Tablets Learn from Netbooks?

High tech’s fickle nature is clearly illustrated in the life of netbooks. The devices emerged with a great deal of hoopla a handful of years ago. But once tablets took off with the introduction of the Apple iPad, the hype died down, so why would a businessperson turn to a netbook now?

Netbooks emerged as lower cost, highly functional laptops. “Initially, netbook sales were buoyed by the recession; buyers were looking to spend as little as possible,” noted says Jeff Orr, group director, mobile devices at ABI Research Inc., which found the average sales price for a netbook to be $290.

The devices are based on the standard WinTel architecture (Intel Corp. microprocessors and Microsoft Windows operating system). “Netbooks provide users with lots of headroom,” explained Rob Enderle, Principal Analyst at the Enderle Group. Users have lots of RAM and storage space, for instance, the HP Mini 1104 features up to 2GB of main memory and 320GB of disk storage. Consequently, the devices are compatible with standard corporate Windows applications. 

The keyboards are a plus. “A person would feel comfortable entering a lot of information - say a report or term paper, on a netbook,” noted ABI Research’s Orr.

Long battery life is another attractive feature. ASUS claims that its Eee PC 1011CX operates for 11 hours a day -- although users typically experience less functionality than benchmarks touted in vendors’ ads. In sum, they are a good fit for road warriors who spend a lot of time away from the office and work with business apps.

While netbooks have had a business feel, tablets are clearly geared to consumers. The slick marketing and coolness factor of the iPad created buzz about these products.”Tablets are trendy at the moment,” stated Enderle Group’s Enderle.

Ease-of-use has been a major plus for tablets. “Consumers find touchscreens much simpler to manipulate than keyboards and mice,” stated Sarah Rotman Epps, a senior analyst at Forrester Research Inc. Recent movement to speech recognition technology has made their use even easier.

Convenience is a factor also found with tablets. In today’s busy world, consumers sometimes have to access the internet when they are standing. They can hold a tablet in one hand and use the other hand to surf.

And tablets are great for watching video content. The third-generation iPad features a 2048 x 1536 resolution with 3.1 million pixels, a million pixels more than an HDTV.

While the devices are great at displaying content, they do not mesh well with content creation. “A tablet still isn’t as good as netbook for tasks, such as video editing,” said Enderle Group’s Enderle. They often lack the storage space needed to manipulate content: the HTC Flyer tablet comes with 1GB of RAM and 32GB of storage. Estimates on any given day, content creation only takes up 25% of users’ time while content viewing usurps 75% of the day.

Tablets can be expensive though. ABI Research found that the average tablet sold for $480, 65% more than a netbook.

Despite the limitations, tablets have had a chilling impact on the netbook marketplace. “In developed markets, netbooks are seen as crippled systems and devices that should be avoided,” said Enderle at Enderle Group.

In December of 2009, netbook sales were flying high. Sales increased by 70% year over year, according to NPD, and Acer chairman J.T Wang predicted that unit sales would reach 50 million by the end of 2010. That did not happen. The Apple iPad was announced in January 2010, and by August of that year, netbook sales fell by 4%, according to NPD.

The decline continued in 2011. In the fall quarter of 2011, tablet shipments surpassed netbook sales for the first time, reaching 13.6 million tablets compared to just 7.3 million netbooks.

So what does the future hold? Well, it may be murkier than those who view netbooks as dead end technology. Increasingly, the dividing lines between netbooks and tablets have been blurring. While Apple has been slow to add USB features to its iPad, Google Inc. adopted USB hosting in Android 3.1, so devices, like the Toshiba Thrive feature full-sized USB inputs. Tablet vendors are adding functions so their devices are better able to create content. ASUS offers a keyboard dock for its Transformer tablet, and Windows 8 on ARM will bring a near full version of Office to tablets along with other productivity features.

Suppliers are bringing their product lines together, Apple is moving to meld the features of its Mac and iPad systems and Microsoft plans to do the same with Windows 8. “Windows 8 will largely shine on a hybrid configuration of a notebook/tablet that could eclipse not only these two device classes, but much of the notebook market as well over time, if it is successful” concluded Enderle Group’s Enderle. So while there are significant design differences between the two now, that may not be the case moving forward.