Channel Has A Lot Riding on Netbook-Smartphone Battle

By Al Senia

June 19, 2008

Apple Computer pretty much stole the media marketing thunder a few weeks back with the introduction of the latest iPhone, an iconic device that in its second rendition appears more suited to business users. Competing hardware vendors such as Palm, Research-in-Motion, Nokia and Samsung are preparing their responses to Apple. In fact. Samsung is already out with one: Its Instinct smartphone  is being marketed through service provider Sprint and is being positioned as an "iPhone killer" although that's a stretch given it software shortcomings and Sprint's customer service woes.

The real issue for VARs in this battle isn't which smartphone will win. Rather, it's whether subnotebooks (or "netbooks" as they are dubbed) can beat the smartphone at its own game. Major channel vendors such as Hewlett-Packard, Dell and Acer are stepping up their appeal to business road warriors. The idea is to use these devices instead of lugging around both a notebook and a smartphone.

Typically, netbooks are defined as ultra-portable notebooks that sell for less than $500, offer easy Internet surfing, email access and basic functionality, and include screens between 5 and 10 inches. The market is being prodded by chipmaker Intel, which is marketing a small, powerful new chip called "Atom" for these devices. Nvidia, a rival  manufacturer, also has introduced new low-power chips for these machines.

Research firm IDC sees a bright future for these devices. The company predicts ultramobile PC shipments will grow from last year's half-million units to more than 9 million in 2012.  We've all seen plenty of industry hype about various technologies and products, many of which never live up to expectations. So how will the netbook fare in the marketplace?

It's an interesting and important question for VARs to ponder since the netbook opportunity is more directly  accessible to the channel than the smartphone business. Asian vendor Asustek staked out the first claim to the market last year with its pioneering Eee PC, a $299 subnotebook that runs either Linux or Windows XP and is the darling of Amazon.com chat boards. Now, the vendor is readying new versions of the machine with larger screens, WiMAX connections and enhanced, faster chips.

Channel vendor Acer, which markets exclusively through VARs, recently released its Aspire One with a 9-inch screen. HP introduced its HP 2133 subnotebook for $499 several months ago, and is said to be planning new, smaller notebooks. Dell is eyeing the market and should enter it soon.

So the netbook market will soon approach critical mass. Business executives have always cast a wary eye at the iPhone, and corporate IT departments are typically exasperated by Apple and grumpy about supporting its unique (supporters prefer "elegant") operating system. At the same time, airline travel is becoming even more difficult, and the convenience of a true netbook that can actually be unfurled and used amid the chaos of an airline cabin has real appeal.

With Intel behind it, channel vendors supporting it and VARs seeking another profit opportunity, the era of the subnotebook for enterprise and SMB business markets may be upon us. The iPhone may blunt some of its appeal, but for business use, I'll bet on the new netbooks to carry the day.

(Al Senia is managing editor of ITChannelPlanet.com.)