Netbooks were born out of a desire to drive sales and quash the talk about demand for computers slowing down around the world.  Slim profit margins and restrictions imposed by Microsoft ultimately have sealed their fate and caused their death. 

It all started around early 2008 when buzz was mounting about the One Laptop Per Child (OLPC) project which promised to give children all over the world a laptop with pricing as low as $100.  No one was really paying attention until a the decision was announced that anyone could buy these laptops instead of them being only for developing nations.

Courtesy: Google News

At that point, it became clear that if sales were slumping some organization with mini computers with AMD processors and a Linux based “Sugar” operating system wouldn’t be the saviours of slumping sales.  Almost out of no where the idea of a netbook came about.  The appetite for these low power, low cost machines was tremendous especially in the face of the use of more web based tools like email, and Facebook as well as the declining condition of the economy.  It made sense for Intel and Microsoft to join forces and help to prepare this wave of computers.

The first netbooks weren’t much to look at, or talk about but they met the first requirement of being dirt cheap.  They had 7 inch screens, solid state hard drives (SSDs), Wi-Fi, and batteries reported to last for over 5 hours.  This came on the back of processors from Intel, and VIA.  Ultimately people buy what they find in stores, and recommend products based on products they’ve already used.  This explains how VIA processors, Linux operating systems, and SSDs were exchanged for Intel Atom processors, Windows XP, and hard drives (usually 160GB in size).

Windows Vista had many people wonder if Windows XP would still be around.  Microsoft realized that there was a great way to sell more licenses but the cheap underpowered Atom processors would choke under the weight of a full Vista install and gave XP a reprieve in hopes of helping to drive sales.  It worked with resounding success amid reports of Linux based netbooks being returned in droves because people were unable to configure and setup their machines.

Manufacturers weren’t happy about selling $200 – $300 computers with such slim margins but were happy to be pushing product.  In true fashion, they took the idea of a netbook and started streching it further and further in hopes of making money and driving sales.  Netbooks from Asus, MSI, and Acer seemed to be announed every day with new features, updated specs, and higher price points.  With Apple leveraging the Macbook Air as their interpretation of what “Thin and Light” means others wanted to follow suit and hope to get away to charge a fraction of the $1,500+ they were asking for (and getting).

This spurred netbooks with HDMI, screens which grewn from 7 inches to 10 and pushing further.  Manufacturers loved that customers loved them and wanted to keep the faucet of sales flowing regardless of the impact to sales in other areas which were already deteriorating.  With Intel and Microsoft seeing this as a loss leader, changes had to be made.  Intel couldn’t risk losing sales for their pricier Dual Core, and Core 2 Duo processors and Microsoft couldn’t risk hurting sales of Windows Vista.

The release of Windows 7 was an even bigger problem.  Microsoft would say that netbooks would only be allowed to have a Standard version of Windows 7 installed and they would only be able to have it installed by OEMs.  This move would serve to protect the virtual monopoly they’ve enjoyed in the operating systems space.  Manufacturers would react by making sure they didn’t do anything to offend their partner in Redmond, Wa.  Netbooks wouldn’t grow past 10 inches.  Anything over 10 inches and they’d no longer be netbooks.  Instead they’d be cast as thin notebooks with full versions of Windows 7 installed, and Ultra Low Voltage (ULV) processors to help keep battery life up.  No longer would six cell batteries become standard and would be traded in for 3 or 4 cell batteries in these new thin notebooks.  Even though the processors would be slower than their Atom counterparts, they’d be paired with better video graphics.

This marriage of better video cards (GPUs) and slower processors would help to keep the balance between performance and price.  No one would care about the netbooks which used to exist.  Instead there would be two classes of mini computers.  The first class are the netbooks we’ve come to know and love and will end up dying due to their low price point, small screens and keyboards.  The second class will be larger and fit in the middle ground with prices between $500 – $800, full-sized keyboards, and screens of 12 – 14 inches with high resolutions.

In the end, we’ll see this new and exciting product category die all in the name of profits.  Once you need to spend $500, it isn’t a netbook.  Once it has a 14 inch screen it is no longer a netbook.  It may not have an optical drive but too many comprimise were made, too many changes and evolutions.  It will be great for manufacturers, but we’re looking at the upcoming end of what we know as netbooks.

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