posted by Thom Holwerda on Wed 14th Oct 2009 16:00 UTC
IconIn what is about as surprising as the sun rising in the morning, Michael Dell has started talking down netbooks. Dell made his comments about netbooks at the Churchill Club in Silicon Valley, and considering the impact of netbooks on manufacturers' bottom lines, it's really not that surprising.

"If you take a user who's used to a 14- or 15-inch notebook and you say 'Here's a 10-inch netbook,' they're gonna say 'Hey, this is so fantastic. It's so cute. It's so light. I love it,'" Dell said, "But about 36 hours later, they're saying 'The screen's gonna have to go. Give me my 15-inch screen back.'"

"We see a fair amount of customers not really being that satisfied with the smaller screen and the lower performance - unless it's like a secondary machine or it's a very first machine and the expectations are low," he added, "But as a replacement machine for an experienced user, it's not what we'd recommend. It's not a good experience, and we don't see users very happy with those."

Dell's goal with the speech was to convince the people present that consumers now prefer high-end computers instead of the low-cost variants. This is anything but surprising, as manufacturers like Dell and HP are suffering the consequences of growing consumer interest in low-cost netbooks. More and more people are buying netbooks, but their low average selling price hurts profit margins.

As a result, manufacturers need to do something. For years on end they've been able to live on this sure thing that computers always got faster, and that software always needed those faster computers. Revenue stream guaranteed. However, this all came crashing down with Windows Vista, where computer manufacturers pushed Microsoft to label even Vista uncapable machines as 'capable', something customers didn't particularly appreciate.

And now, we have even Microsoft stopping the upgrade treadmill by not increasing minimum specifications for Windows 7; in fact, it runs better than Vista. This means that people like Michael Dell can no longer synchronise their bonuses with Windows releases. Bummer.

And then along comes the netbook, which becomes a massive success, hurting bottom lines even more. It should come as no surprise, then, that hardware makers are trying to push customers towards more expensive machines. These companies look at Apple's juicy fat margins, and figure they can have a piece of that pie too.

Apart from pushing people towards more expensive regular laptops, they could also make posher netbooks - kind of what Nokia is doing with its Booklet 3G. The cat, however, is out of the bag, and now that a growing number of people have (English people, please start using grammatical number to define the number of the verb, darn it!) enjoyed the taste of the netbook, it will be hard to get that cat back into the bag.

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