Netbooks: Cloud computing goes personal

The idea that a computing device will depend on the internet for computing power is not new. So called thin clients - terminals which depend on networks for access to applications - have been around for years. Netboooks are small portable computing devices with screens ranging from 5 to 10 inches, costing anywhere between $200-500, that depend on the internet for many computing tasks. The netbook has been championed by Intel, which created a line of microprocessors, called Atom, to control them. Research firm IDC estimates that 10.8 million netbooks will ship in 2008, just about a year after Asus launched what is considered the first device in this category - the Eee PC. Asus has a 46% share of the netbook market according to IDC.
Analysts and and experts agree that netbooks will be disruptive to the PC industry, but it's not clear in what way. Will netbooks poach sales of laptops? Are netbooks replacements for smartphones? Will netbooks increase the popularity of cloud computing? Technology vendors such as Intel and Dell expect netbooks to fit in between smartphones and laptops. In their view, netbooks will become primary computing devices in emerging markets and complements to traditional PCs in developed markets. Point is, if netbooks rely on the Internet too much, they won't replace the laptop. If they are too clunky, they won't replace the phone. And on the other hand, netbooks may actually compete with both. It's also possible that the netbook will converge with both the smartphone and laptop markets - High end smartphones get better and better and are moving up the chain in terms of features and performance. Laptops are getting smaller and lighter. Netbooks could get squeezed in between the two.
However, the technology could be disruptive on many fronts. There is currently a market segment that values extra portability. That segment is making do with a laptop and a smartphone. A device that offers greater portability could cannibalize both laptops and smartphones.
The success of netbooks may ultimately rely on always-on Internet connections. Since these small PCs lack significant storage, they largely depend on the Internet to access content and documents. Once Internet connectivity gets to the point where it's everywhere, these devices become more viable.
While netbooks might be showing popularity, there are many uncertainties. The first worry is the economy. They are definitely a discretionary purchase at a time when the global economy is struggling. Another question is whether notebooks are really suited for emerging markets. In the US, netbooks can find Internet connectivity through multiple means, but the emerging markets are different. Ubiquitous Internet access may be a more fundamental concern than the availability of cloud-based software programs.