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By not coughing up a low-cost MacBook, as some had expected, Apple has ceded a potentially huge market to PC makers. But is this just all part of Apple's marketing genius?

$999 is as low as Apple will go.

(Credit: Apple)

The announcement Tuesday of the $999 white polycarbonate MacBook was pretty ho-hum as product refreshes go (same price, same color as before) but the implication was important: Apple is surrendering a large, emerging laptop market to Microsoft and its coterie of PC makers.

Not that it's necessarily a bad strategy. Market researcher Gartner said recently that Apple's shipments in the U.S. grew year-over-year by 6.8 percent to total 1.57 million during the third quarter, putting it right behind Hewlett-Packard, Dell, and Acer. Comparatively, overall PC shipments in the U.S. grew by 3.5 percent from a year earlier.

But among those unimpressive overall PC numbers (HP's third-quarter shipments grew only 2.7 percent), was an impressive statistic for Acer: buoyed by Netbooks, Acer's shipments grew by 61.4 percent year-over-year, and it blew past Dell to become the No. 2 PC maker worldwide based on this growth.

Granted, Netbooks are a relatively low-profit segment (i.e., profit on a $400 Netbook is going to be a lot less than that on a $999 laptop). Nevertheless, they're a hot market. Intel CEO Paul Otellini has stated numerous times that Intel was able to create a market that grew faster than either the iPhone or Nintendo Wii. Case in point: Windows 7-based Acer Netbooks are now big on the Home Shopping Network--which claims to have sold more than 5,000 in one segment on Saturday.

And that's not the only market Apple is punting on. A new category of inexpensive, thin laptops has emerged with the roll-out of Windows 7 on Thursday. Like Netbooks, these laptops are light (typically 4 pounds) and don't include an optical drive. But they are relatively powerful and full featured. The 15.6-inch Acer Aspire Timeline, for example, with a 320GB hard disk drive and dual-core Intel processor is fairly well-endowed at only $500.

Apple is not receiving a lot kudos in the mainstream business press ... Read more

Dell, Acer, Intel, and others together are, in effect, creating a muddle of light laptop categories as part of a not-so-well-orchestrated marketing strategy, according to an analyst. This is expected to become particularly acute when a deluge of new Windows 7 laptops hit the market this week.

Acer 11.6-inch ultrathin looks like a Netbook but it's not.

(Credit: Acer)

Acer offered a graphic example of this recently when it introduced a small, inexpensive Windows 7 notebook--the Aspire Timeline AS1810T--that, from all outward appearances, looks like a Netbook. But it isn't--at least as defined by Intel. It's a new category of laptop called an ultrathin.

"There's a lot of confusion that Intel has created and they haven't really segmented the market that well," according to Bob O'Donnell, an IDC Research vice president.

And it gets more complicated. The inexpensive ultrathin is, in turn, competing now with the expensive luxury laptops, like the Dell Adamo, according to O'Donnell. "Ironically, what's actually happening we think is that the (ultrathin) is actually killing the high-end ultraportable," O'Donnell said.

Here's the problem: any given Windows 7 laptop with an 11.6- or 12-inch screen could be a Netbook, an ultrathin, or a high-end ultraportable, each with distinctly different price-performance characteristics not readily apparent to consumers.

"There's too many overlapping products," according to O'Donnell. Intel tried to prevent this from happening by declaring that any laptop with a screen larger than 10 inches diagonally is not a Netbook. That policy is fine in theory but does not carry over to the real world of head-butting competition among PC makers where even the subtlest production differentiation can mean a leg up on the competition.

Intel says look at performance and price. "Which offers the best performance overall? That's important," said Intel spokesman Bill Calder. "Pricing is a factor too. While some ultrathin laptops including 11.6 and higher are very affordable, none are in the $249 to $399 range that typically defines a Netbook," Calder said.

Some consumers might say it's not a big deal. But ... Read more

The chief executives of Intel and Advanced Micro Devices indicated this week that competition will heat up in the market for sleek, inexpensive laptops running Windows 7.

Both CEOs addressed this new market during conference calls after their companies reported earnings this week. Ultrathin laptops are inexpensive, light laptops--typically between $500 and $800--that are sold in a market segment just above less expensive Netbooks.

Intel CEO Paul Otellini on Tuesday said his company is gearing up to supply more power-efficient chips that contain two processing cores for better performance. "The bulk of the units that have shipped to date were single-core versions of the products," Otellini said. "You'll see a number of laptops show up in retail with the dual-core versions for the holiday season...more ergonomically designed, thinner, lighter," Otellini said.

HP's Pavilion dm3 starts at $549 with an AMD processor and $649 with an Intel processor.

(Credit: Hewlett-Packard)

And AMD's CEO Dirk Meyer chimed in on Thursday. "You'll hear more...next month about the product lineup that we'll be rolling out over the next two years, which will include increasing focus on those small form factor notebooks," Meyer said during AMD's conference call. In the more immediate future, Meyer said AMD will have a "broader assortment of (ultrathin) platforms walking into the Christmas cycle."

To date, this new category of laptops has had a minuscule market-share impact because there was little perceived difference between a Netbook and an ultrathin, according to Bob O'Donnell, IDC research vice president. "A lot of people said this is not actually that much faster, so you're going to see a very rapid transition to all dual-core," he said.

Windows 7 should accelerate sales too. "I think we will see better sales next year," O'Donnell said, as HP, Dell, and others bring out ultrathins with Windows 7.

The category received a boost recently with the rollout of HP's Pavilion dm3, which starts at $549 with an AMD processor and $649 with an Intel processor. The dm3 is expected to be available starting October 22 with the launch of the Microsoft Windows 7 operating system.

Other high-profile ultrathins include the $548 Acer Aspire Timeline (at Wal-Mart) and the $549 Dell Inspiron 13.

Because ultrathins are more expensive than Netbooks, they are more profitable for Intel. "Part of Intel's strategy is to pull people up from a Netbook," said O'Donnell.

AMD, on other hand, is focusing solely on the space "between Netbooks and mainstream notebooks," Meyer said, adding that AMD, in effect, created the ultrathin category with the introduction of the 12-inch HP Pavilion dv2 back in January. "We created that category really in partnership with the HP," Meyer said.

Updated on August 23 at 6:45 a.m. PDT: adding updated $299 price of Toshiba laptop.

Netbooks based on Intel's Atom processor faced a fresh assault this week: the $279 AMD-based Acer laptop.

Here's the $299--or this case, the $279---question: do you want a Netbook or a Notebook?

The choice: a Netbook with a 10-inch screen, an Intel Atom processor, no optical drive, and Windows XP that weighs about two pounds? Or, a notebook with a 15.6-inch screen, a higher-performance AMD or Intel processor, an optical drive, and Windows Vista that weights about six pounds?

Best Buy was selling a 15-inch Acer laptop for $279.99 on Wednesday.

(Credit: Brooke Crothers)

On Wednesday, Best Buy was offering an Acer laptop (AS5516-5474) that had been previously listed at $299.

A Best Buy salesperson in a Southern California store said these deals typically last a week.

Acer $279.99 laptop

(Credit: Best Buy )

The specifications: an AMD Athlon TF-20 64 processor, 15.6-inch WXGA display, 2GB DDR2 memory, DVD-RW drive, 160GB hard disk drive, ATI Radeon Xpress 1200 graphics, 802.11b/g wireless, 10/100 Ethernet LAN, and Microsoft Windows Vista Home Basic Edition.

Pretty close to basic mainstream-laptop hardware with the exception of the low-end AMD-ATI silicon and the older "g" wireless.

It weighs in at 6 pounds and measures 1.5-inches thick.

Earlier this month, Best Buy was offering a $299 Toshiba laptop sporting a 15-inch screen but then bumped the price up to $329.

Update: As of August 23, the price of the Toshiba Satellite with an Intel Celeron Processor (Onyx Blue, model: L305-S5955) had been cut to $299. The laptop showed wide availability, as of August 23.

But whether it's a $279, $299, or $329, it's a laptop design that has legs. And a real competitor to the 10-inch Netbook, which costs about the same.

And here's another question: As more of these $279-$329 deals are seen at Wal-Mart and Best Buy and as more ultra-thin laptops appear that approach $600 in price, what will happen to the popularity of the Netbook?

Is $299 too much for a laptop? Wal-Mart has answered Best Buy's $299 laptop challenge with a $298 offer.

Wal-Mart's $298 laptop.

(Credit: Wal-Mart)

"For the first time, a 3GB memory laptop from a well-known brand has ventured below $300," Wal-Mart said in a statement Thursday.

Starting July 26 (this coming Sunday), Wal-Mart will begin selling a $298 Compaq Presario notebook (CQ60-419WM) with the following specifications: a 15.6-inch display, 3GB of memory, a 160GB hard-disk drive, a CD-DVD drive, and Windows Vista pre-loaded. The laptop will use a 2.10 GHz AMD Sempron SI-42 processor and Nvidia GeForce 8200M graphics.

The $1 discount gets you a Compaq-branded laptop versus the Acer (subsequently sold out) from Best Buy. And the Compaq bests Acer with 3GB of memory versus 2GB.

A Wal-Mart blog said that quantities "are limited and will begin selling at 8 a.m. on Sunday, July 26," adding parenthetically, "May want to pass that along because we expect this one will be quite popular."

Wal-Mart will also begin offering, on the same day, a 15.6-inch Acer ultrathin laptop for $548. The AS5810-4657 model will sport Windows Vista Home Premium (qualified for free Windows 7 upgrade); an Intel ULV (ultra low voltage) SU2700 processor; 3GB memory; a 320GB hard-disk drive; and "all-day" eight-hour battery life, according to a Wal-Mart statement.

In August, Wal-Mart will sell the new 10.1-inch HP Mini 110-131NR Netbook too.

Best Buy has listed a 15-inch Acer laptop with relatively robust specifications for $299. But try getting your hands on one.

Though listed among the "new arrivals" on Best Buy's Web site, it is currently not available at stores or online. But there is anecdotal evidence of its existence. Very-recent user comments indicate that people have purchased the laptop and other stores, such as Wal-Mart Stores and Amazon (which shows it in stock), list it at a higher price.

Acer laptop comes with most of the fixins' for $299

(Credit: Best Buy)

And the specifications? An AMD Athlon 64 processor, 15.6-inch WXGA display, 2GB DDR2 memory, DVD-RW drive, 160GB hard disk drive, ATI Radeon Xpress 1200 graphics, 802.11b/g wireless, 10/100 Ethernet LAN, and Microsoft Windows Vista Home Basic Edition. Pretty close to mainstream-laptop hardware with the exception of the low-end AMD-ATI silicon and the older "g" wireless.

When contacted by phone, a Best Buy sales representative said the reseller has fielded a number of calls already about the laptop and confirmed that it was currently unavailable.

By comparison, what do you get for $299 when buying a diminutive Netbook? An Asus Eee PC at this price comes with an Atom N270 processor, 1GB memory, 10.1-inch screen, 160GB hard disk drive, Intel 950 graphics, a Webcam, no optical drive, and Windows XP.

And there are good deals on other, more-mainstream laptops at Best Buy. A Toshiba Satellite is listed at $349 with an Intel Celeron processor, 15.4-inch display, 2GB DDR2 memory, DVD-RW drive, 160GB hard disk drive, Intel 4500MHD graphics, 802.11b/g wireless, 10/100 Ethernet LAN, and Microsoft Windows Vista Home Basic Edition.

Back in the day, Netbooks ran Linux and packed solid-state drives. But Windows XP and big hard disk drives have prevailed.

Toshiba's mini NB200 does not offer a solid-state drive option in featured configurations nor Linux

The early Asus Eee PCs--which almost single-handedly created the Netbook market--came with a Linux operating system and small-capacity solid-state "flash" drives ranging from 2GB to 8GB. Early Acer Aspire Netbooks were also offered with Linux and a solid-state drive.

Those devices bore little resemblance to PC laptops. The Eee PC was a tiny, stripped-to-the-bone device that required minimalist hardware to run an efficient Linux OS. (Will a wave of Google Chrome OS-based devices revive the minimalist Netbook next year?)

Fast forward to today: Windows XP rules, with a Netbook-specific Windows 7 on the way. A glance at the Netbook lineups from any top PC maker--including Hewlett-Packard, Acer, and Toshiba--reveals few, if any, Linux offerings and equally few solid-state drive options.

Rather, beefy hardware configurations sporting 160GB hard disk drives and as much as 2GB of memory are the norm.

And the momentum for solid-state drives on mainstream laptops is waning too. A report from market researcher iSuppli says higher prices for flash memory chips may undermine high-capacity SSDs in laptops.

Average pricing for widely used 16-gigabit flash chips rose to $4.10 in the second quarter of 2009, a steep 127.8 percent increase from $1.80 in the fourth quarter of 2008, said Michael Yang, senior analyst for mobile and emerging memories at iSuppli, in a report released Wednesday.

As for Linux, time will tell if Netbooks return to their roots with Google's Android and/or the Chrome OS next year.

The Apple MacBook Air has remained almost unchanged for a year and a half--a testament to the staying power of its design. So, how will Apple respond to the wave of inexpensive, ultra-thin lookalikes hitting the market over the next six months?

The Air is still a stunning design but its novelty and high price will come under assault as lookalikes flood the market

(Credit: Apple)

The Air was a sensation when it debuted in January of 2008. Not that it sold by the boatloads, but the stunning form factor set off an industrial-design frenzy. Ergo, the Dell Adamo and the raft of "ultra-thin" laptops in the hopper as a result of Intel's push to get its "ULV" (ultra-low-voltage) chips in as many glamorous but affordable designs as possible.

The just-announced ultra-thin Acer Aspire Timeline is the writing on the wall. No, it's not the equivalent of a MacBook Air or Dell Adamo but it's close enough to give prospective buyers even more reason to balk at the $1,800-plus price tags attached to those two gorgeous designs.

And other designs are already out there like the 0.78 inch-thick MSI X340 X-Slim, which is, more or less, a photocopy of the Air. And even Lenovo is tempting fate with the 3.5-pound 13.3-inch IdeaPad U350, which will start at $649 and make the $1,900 ThinkPad X301--and the Air--look very expensive.

So, what does an Acer Aspire Timeline get you for $899? Let's take a quick look:

• Intel Core 2 Duo processor SU9400 (1.40GHz, 10 watts)
  
• 13.3-inch LED-backlit TFT LCD
  
• Mobile Intel GS45 Express chipset
  
• 4GB of DDR3 memory
  
• 6-cell lithium ion battery
  
• 500GB SATA hard drive
  
• 3.5 pounds
  
• Windows Vista Home Premium 64-bit
  

Many of those specifications are a stone's throw away from the Air (and Adamo)--or match it.

So, what will Apple's MBA encore be? Thinner? Lighter? Faster? 3G capable? Dare I say, cheaper? Or a new industrial design that will send all the ultra-thin wannabes back to the drawing board? I'm waiting.

Intel marketing chief Sean Maloney

(Credit: Intel)

Unleashing innovation is key no matter what laptop category you're talking about--whether Netbooks or low-cost notebooks, said Intel's sales chief, ahead of this week's Computex trade show in Taipei.

I spoke briefly with Intel's marketing chief Sean Maloney--who is at Computex this week--on Monday night and asked him about how the wave of low-cost, thin notebooks based on his company's "ULV" (ultra-low-voltage) chips may affect Netbook sales.

New, aesthetically appealing, inexpensive notebooks, such as the $699 Acer Aspire Timeline, could make Netbooks less attractive, which pin a lot of their popularity on bargain-basement pricing.

Maloney said Intel is not going to fret over sacrificing one category of laptops because it needs to protect another.

"It's a loser mentality to not develop one segment because you're worried about the other," he said. "I think we have several years ahead of us where we can innovate the heck out of any of these categories without getting defensive about the other one. You just need to unleash innovation in all of the segments and see what happens."

And what about the new 3G-capable Netbooks--which Qualcomm had dubbed "smartbooks"--appearing at Computex from Asus and upstarts like Mobinnnova which are tied to the ARM processor and sold through telecommunications providers? "The more the merrier. The more innovation there will be. It's good for the industry to have competition," Maloney said.

New ULV notebook wave: Acer Aspire Timeline has a number of the same specifications and attributes of the upscale Dell Adamo but is priced more than $1,000 below the Adamo

(Credit: Acer)

Maloney continued. "We've shipped very large numbers of Netbooks through service providers in the last year and a half. Most of the service providers around the world have been shipping Netbooks for some time," he said. Hewlett-Packard, for instance, is now selling an Intel Atom-based Netbook at Verizon stores in the U.S. with 3G built in.

And, how important is the rollout of the new ULV chips? "This is a big announcement and it's kind of on par with the original announcements we made with the original Centrino," Maloney said.

"Fashion is going to play an ever-bigger role (in notebooks). It's like the cell phone industry four or five years ago. An incredible number of designs are coming out in the thin form factor."

"Very light, very thin, and incredibly long battery life," he said of the ULV laptops. Sounds a lot like the evolution of the Netbook--except it isn't called a Netbook. But, as Maloney said, may the best product category win.