The Digital Home

The Dell Mini apparently isn't Michael Dell's favorite product.

(Credit: CBS interactive)

Netbooks aren't for everyone, Dell CEO Michael Dell said Tuesday night at a dinner in Silicon Valley hosted by the Churchill Club.

Give a 10-inch Netbook to someone who's been using a 15-inch notebook, and the user will say, "'Hey, this is fantastic....It's so light,'" Dell said, according to The Register. "But about 36 hours later, they're saying 'The screen's gonna have to go. Give me my 15-inch screen back.'" (Editors' note: Dell also spoke at Oracle OpenWorld on Tuesday, about how his company is delivering a more efficient enterprise with its services. See the ZDNet video on right.)

The fact that Dell would take Netbooks to task in such a way should be a surprise, considering his company sells a line of 10-inch Netbooks. But Tuesday night in Santa Clara, Calif., Dell apparently didn't care. He wanted to make it clear that his company realizes the limits of Netbooks and that it offers options.

"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," Dell said, according to The Register. "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."

Although Dell obviously has issues with Netbooks, it seems that many consumers don't. A recent study from DisplaySearch found that as notebook sales fell 14 percent in the second quarter year over year, Netbook sales rose a whopping 264 percent. The research company expects the trend to continue.

With that in mind, was Dell's founder doing the right thing by taking shots at Netbooks? His company does sell them, after all. And if Netbook sales are booming, shouldn't this simply be area where Dell can capitalize.

What do you think?

The Netbook is looking more like a notebook nowadays.

(Credit: CBS Interactive)

According to a study released on Tuesday by market research firm NPD Group, Netbooks are confusing customers. Sixty percent of the nearly 600 adults surveyed said they bought a Netbook instead of a notebook because they thought they had the same functionality. Had they known that they didn't, many of those respondents would have purchased a notebook instead.

"We need to make sure consumers are buying a PC intended for what they plan to do with it," said Stephen Baker, vice president of industry analysis at NPD. "Retailers and manufacturers can't put too much emphasis on PC-like capabilities and general features that could convince consumers that a Netbook is a replacement for a notebook. Instead, they should be marketing mobility, portability, and the need for a companion PC to ensure consumers know what they are buying and are more satisfied with their purchases."

Baker makes a fine point. Netbooks aren't notebooks. They're not nearly as powerful as their larger counterparts, they're cheaper, and they're typically more suitable for those who want to go mobile. But that line between Netbooks and notebooks is quickly blurring. And it's starting to backfire.

In a recent study from Forrester Research, analysts found that Dell and Hewlett-Packard provided customer experiences that were well below par, while Apple came out on top.

According to the study, which asked 4,500 U.S. consumers to rate the usefulness and enjoyability of products, Dell received a "poor" rating in overall customer experience. The company mustered a "very poor" when it came to the customer's enjoyment using Dell products. HP's experience was rated as "poor," while Apple led the way for computer manufacturers with an overall "good" experience.

Bruce Temkin, the study's author, wrote that while PC manufacturers have some work to do to enhance the consumer's experience, Windows also contributed to the low marks.

"I do think Microsoft's software has a bit to do with it," Temkin wrote. "Consumers don't distinguish problems with the operating system from problems with the PC manufacturer. Bottom line, the Windows ecosystem needs an extreme customer experience makeover."

I agree with Temkin. But I also believe that Windows 7 is the single Windows OS that can improve the consumer's experience.

Speaking before an audience in Tokyo Tuesday, Chief Executive Michael Dell dropped a few hints that his company might be looking to release a smartphone.

"For the last three years, we have integrated 3G radios into our notebooks," said Dell. "We already have agreements with many mobile carriers around Netbook devices, so it wouldn't be unreasonable to expect that we would have smaller mobile Internet devices or smartphones in the future."

I don't think Dell can simply start selling small computers, call them smartphones, and expect to be successful. As a company that missed quite a few trends in the market and one of the last to stop selling Pocket PCs, Dell has to carefully prepare for some of the issues that await it if it does release a smartphone.

The PC business is in trouble, but that's OK!

(Credit: HP)

2009 is shaping up to be a tough year for the PC industry. According to a forecast update to IDC's Worldwide Quarterly PC Tracker, PC shipments are expected to decline sharply over the first two quarters this year.

I consider this period, one marked with declining profit margins and plummeting sales, which would be a death knell for some industries, an opportunity for this one. It is just what PC manufacturers need to get them to jump-start their research and development divisions, to find new ways to sell computers.

Perhaps this isn't the end, but rather the beginning of a new era in the PC business, where manufacturers pay more attention to consumer desire and provide them with more of the things they actually want. I hope so, anyway. And if it comes to pass, here's what I'm looking for:

License if you want to kill Psystar

(Credit: Psystar)

Psystar, the homegrown computer vendor selling its brand of Open Computers with Mac OS X installed, is back in the news this week, thanks to another court filing claiming that it can do whatever it wants, courtesy of the first-sale doctrine.

Psystar contends that because it bought copies of Mac OS X from Apple and its partners, it has every right to install that software into its own brand of computers and sell the hardware to its customers.

Does it make sense? Not really. Much like Psystar's contention that Apple was operating a monopoly and abusing its copyright, the small firm's pleas to courts have been suspect, at best.

And yet Apple continues to play the legal game with Psystar and pay its lawyers to engage this annoyance in court when Steve Jobs has more pressing issues (like running a public company) to address.

Say what you will about the Psystar's court battle with Apple, but there's really an easy solution to all this, if you're Apple: license Mac OS X.

I never thought I'd be writing this, but Dell (yes, Dell), is charging customers a monthly fee to have access to its United States-based customer service representatives.

The Washington Post reported on Thursday that the PC maker is charging customers with a Dell account $12.95 per month to have access to an American agent or $99 per year for customers who buy a new PC from the company.

Those who don't pay the sum will be contacting center agents in India or the Philippines. But before you start your bellyaching, Dell is sweetening the pot: wait times are guaranteed to be 2 or fewer minutes!

Great. Thanks, Dell.

A Dell representative told the Post that the company has "heard from customers that it's hard to understand a particular accent and that they couldn't understand the instructions they were getting." Because of that, the company has instituted the policy to "illustrate Dell's commitment to customer choice."

This mouthpiece (and Dell, for that matter) is kidding, right? The company is charging us for access to American customer support agents on products we purchased from it that went wrong? What a joke.

An analyst named Ezra Gottheil from Technology Business Research said late last week that Apple needs to consider bringing the prices of its computers down to fall in line behind other PC vendors that are lowering their own PC prices to compensate for less consumer spending.

"It is too much to ask consumers to pay more than twice as much for a PC in these times," Gottheil said in a statement.

The analyst went on to explain that she believes the market is moving away from high-priced computers, thanks to the rise in popularity of Netbooks, and with a recession haunting consumers and businesses alike, Gottheil believes Apple's current strategy of upgrading device specs without modifying price could prove damning in this economic environment.

For years, Apple has contended that it's providing more value for more money and it has always been loath to drop the price of its machines to compete on price with competitors. And so far, Apple hasn't made any statement regarding its desire to change that strategy.

But that's a good thing. Apple shouldn't lower the price of its Macs to compete on price with Hewlett-Packard and Dell. It's a premium vendor with a premium product that thrives off its higher price point. Why should it fiddle with a strategy that has worked for years just because the competition is trying to find a way to increase its own PC sales as Apple gains market share with each passing month?

Yesterday, I asked my readers a question: What should Apple do with all its extra cash? I made the argument that the company should invest in new products and do whatever it can to expand its business (including acquire other companies) and solidify itself as an even more important company in the industry.

But after reading through the comments, it became abundantly clear that some readers thought I should have included a payout back to investors in the form of dividends. After seeing that, I decided a follow-up column on that topic was in order to fully explain why many companies in the technology industry are loath to offer dividends to investors.

Sure, technology stocks may be a great place for investors to diversify their portfolios or maybe even get rich with the help of stocks like Apple and Google that keep performing extremely well. But for those that are looking for steady income from their shares in the form of dividends, the technology sector is a bad place to start.

The reason why is quite simple: most of the companies in the tech sector are obsessed with growth and need to manage huge research and development budgets. And because few competitors boast residual dividend policies, few companies feel the need to fork over cash to investors for their support.

And unfortunately, there's no sign of that trend changing.