Last year, so-called "netbooks"–smaller, cheaper versions of laptop computers–made their way into the hands of countless students and educators. Now, concerns about the economy are driving a further increase in the number of netbooks available to schools.

Netbooks are computers that often cost less than $400, with small screens and keyboards that make them look Lilliputian next to laptops that seemed perfectly portable only a year ago.

These little computers introduced consumers to the idea that extreme portability could be combined with a low price, as long as people were willing to use the computer for getting online or connecting to a school’s network and not much more. Netbooks typically don’t include a DVD drive, the fastest microprocessor, or enough storage space to house endless amounts of photos and videos.

This year, because of the dismal economy and laptop buyers’ increasing comfort with these miniature computers, more netbooks are headed to store shelves. Some netbooks will keep their lower-than-a-cheap-PC price, but others will cost what bigger laptops do and include features such as touch screens and metal casings as companies look to keep the category’s momentum going.

At the International Consumer Electronics Show (CES) in Las Vegas last week, Taiwan-based AsusTek Computer Inc.–which launched its $269 to $699 Eee PC netbooks in 2007–introduced a new one called the Eee PC Touch. It sports a nearly 9-inch touch screen that swivels or folds over so it can be used as a tablet-style PC. Asus expects the Touch to be available in March for $499 and plans to release a version with a 10-inch screen.

That size and price aren’t far from a regular laptop. A Dell Inspiron 1525 with a 15-inch screen and more powerful processor starts at $479 through the Round Rock, Texas-based company’s web site.

Jackie Hsu, Asus’ president of the Americas, said his company sold 5 million Eee PCs worldwide in 2008. He expects the market to grow this year because there are more product choices.

Indeed, larger computer makers such as Dell Inc., MSI Computer, Lenovo Group Ltd., Acer Inc., and Hewlett-Packard Co. are betting on netbooks as well. Several of them introduced upcoming models at this year’s CES.

Palo Alto, Calif.-based HP, the world’s No. 1 computer maker, showed an addition to its Mini netbook line, the Mini 2140, which is expected to be available this month for $499. Unlike the company’s $329 Mini 1000, the 2140 includes features like an aluminum case, keyboards coated to resist wear, and an accelerometer that can tell when the device is dropped and will instruct the hard drive to shut down.

Dell, the second-largest computer maker, unveiled a new netbook as well. And it is hoping to drive sales of an earlier model by temporarily cutting its price to $99. That includes a $350 rebate when buyers agree to pay for a two-year AT&T Inc. data plan that gives the computer internet access over the air.

Retailers have high hopes for netbooks in 2009, too, if Amazon.com is any indication. Between Black Friday and Christmas, eight of the top 10 best-selling laptops on the site were netbooks, said Amazon’s vice president of consumer electronics, Paul Ryder.

"I think the category will continue to do better than the standard laptop category. It’s still new, so I think it’s going to grow faster," he said.

This could present a problem for computer makers, though.

Several of them hoped netbooks would not be a replacement for an out-of-date laptop, but a companion device that people take with them while on the go. For now, though, NPD Group analyst Stephen Baker thinks the bad economy will help netbook sales and cut into sales of larger laptops. People who ordinarily would have spent $600 on a laptop might trade down and spend less to buy a netbook instead.

"The end result is that I think these are more likely to be cannibalistic, at least in the early parts of 2009," he said.

But in the long run, some analysts–Baker included–are skeptical about the netbook category’s life span. Baker believes netbooks could fade out next year and be replaced by even smaller devices that are also focused on getting their owners on the internet.

Gartner Inc. analyst Ken Dulaney said the category is "slowly evaporating" and points out that while the bad economy might make netbooks more appealing in the short term, they are unlikely to win over a broad swath of consumers who require bigger keyboards and more powerful performance found in bigger laptops.

"If your usage pattern really demands a notebook, you will be disappointed," he said.

Links:

Asus

HP

Dell

Gartner

Note to readers:

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