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The proliferation at Computex of ultra-small, inexpensive netbooks poses this pesky question: why are traditional ultra-compact laptops so expensive?

The Asus Eee PC 1000 debuted this week with a 10-inch screen, 40GB solid state drive, and Windows XP. Pricing has been rumored at between $600 and $700.

Features and size threaten to push the Eee PC 1000 netbook into a category traditionally referred to as subnotebooks--with one glaring difference: price.

Subnotebooks like the 11-inch Lenovo IdeaPad or Sony Vaio TZ series typically start at above $1,500 and go up from there, ranging up to $3,000.

HP mini-note and traditional ultra-portable notebooks: both ultra-compact designs, but big price gap

(Credit: HP)

But as netbooks inevitably add more features, analysts and industry insiders are beginning to wonder what will happen to the traditional laptop category. "(If) you add more (gigabytes) of storage and a bigger screen, I don't know what makes this any different than a normal laptop," said Avi Cohen, a managing partner at Avian Securities.

Cohen said the obvious downside is a slower Atom processor--compared with a mainstream Core 2 chip--but on the upside Atom has better battery life. "Arguably there's a category of consumers that don't need such high processing power. Or, at least, a different kind of processing power," Cohen said.

Maybe many more than computer makers realize. Industry sources familiar with Intel's netbook strategy also see a potential clash of categories eventually. "Of course, it's always been a concern, as (netbooks) gets more and more traction," said one source familiar with Intel's thinking on this topic.

And as netbooks add more features and creep up in price, Intel has to worry about the market confusion that may ensue. "Is a $700 laptop, even running Atom, a netbook?"--the source asked. That may be the question that laptop vendors and Intel will have to grapple with as the netbook category grows.

(An Intel company blog back in March described the netbook as a small laptop "designed for wireless communication and access to the Internet. And they cost about $250, making Netbooks a potentially disruptive and high volume market segment.")

Of course, subnotebooks like the HP 2510p, Lenovo IdeaPad, and Sony Vaio TZ offer more features than today's netbooks: faster processors, more memory, bigger hard disk drives, and usually larger screens than a netbook like the HP Mini-Note.

But two forces may be working against this purported advantage: One, all of these features may be overkill for a lot of consumers who use traditional, pricey subnotebooks for only email and simple Web browsing. And, two, netbook makers may continue to expand their offerings to push them closer to subnotebooks while keeping the price low.

This is something that Glenn Henry, CEO of Centaur, the Via Technologies subsidiary that designed the Isaiah processor, has said. "The one gigahertz (Isaiah) is plenty powerful enough to do lots of things," Henry said. Via is also targeting the low-cost netbook category--and has been for some time. Its C7 processor is currently used in the HP Mini-Note 2133.

"If this category continues like it is, at the end of the year you may have mega hard drive-based netbooks," said the source familiar with Intel's strategy. "Let's say someone comes out with a really nifty (design), it's got some extra features, a bigger screen, and a few extra bells and whistles. I don't think that's a netbook even if it's running an Atom processor."

What is it then? That's the $64,000 question.

If there was any doubt about the state of solid-state drives, Computex seems to be putting it to rest.

SanDisk, TDK, and Intel, among others, are announcing new solid-state drives while Asus is launching the Eee PC 1000 with a larger-capacity drive.

SanDisk pSSD solid-state drive

(Credit: SanDisk)

Solid-state drives (SSDs) are used increasingly instead of hard disk drives in small computers like the Asus Eee PC and devices like the Apple iPhone because SSDs use less power and are generally more rugged--due to the fact that they have no moving parts.

The Asus Eee PC 1000, for example, will be offered with SSDs up to 40GB in capacity, beating the 20GB SSD offered in the Eee PC 901.

With this market segment in mind, SanDisk introduced a line of solid-state drives that are designed for "netbooks"--a category of compact, low-cost notebook PCs best exemplified by the Eee PC.

The SanDisk "pSSD" (Parallel ATA solid state drive) is available in 4-, 8-, and 16-GB capacities. The device can achieve a "streaming read" speed of 39 megabytes per second and a streaming write (record) of 17MBps, according to SanDisk. These speeds compare favorably with the low-performance 1.8-inch hard disk drives used in small notebooks.

The pSSD solid-state drives are expected to be available starting in August when pricing will be announced.

TDK also launched new solid-state drives. The "HS1" series is a line of 1.8-inch solid-state drives with the Micro Serial-ATA (SATA) interface. The Micro SATA specification provides for a smaller connector for the high-speed SATA interface used widely in PCs today.

The HS1 series offers capacities of 16, 32, and 64 gigabytes, respectively. The product uses SLC (single-level cell) NAND flash memory. SLC-based solid-state drives are used widely, today but many SSD manufacturers are planning to move to more advanced multilevel cell (MLC) technology later this year.

Burst performance is 100MBps for reading data and 50MBps for writing data. These speeds compare favorably with 2.5-inch hard disk drives.

TDK's SSDs are now available for volume shipment at sample prices of about $1,900 for a 64GB model and about $1,400 for the 32GB model.

On Tuesday, Intel will introduce the Z-P230 Parallel ATA (PATA) series of solid-state drives. The Z-P230 "is a cost-effective storage solution designed to replace traditional hard disk drives in netbook and nettop systems, yet is four times smaller and lighter than a standard 1.8-inch hard disk drive," Intel said. The drives come in 4GB and 8GB capacities.

The Intel SSDs are being launched along with low-power Atom processors that include the N270 for netbooks and the 230 for low-cost desktops--what Intel calls nettops. The chips run at up to 1.6 GHz with an average power consumption of 2.5 watts.

Intel will also announce high-capacity solid-state drives in the second half of this year that have capacities of 80GB and 160GB.

Asus new Eee Box super small form factor desktop.

(Credit: Asus)

Word got out a little early this morning regarding Asus's small Eee Box, so we can share what we saw in a preview in our offices a few weeks back. The small, Wii-looking PC will hit the U.S. via online retailers (and perhaps a few specialty brick-and-mortar shops) later this year.

The listed dimensions of the unit are 8.5-inches high, 1-inch wide, and 7-inches deep, standing upright on its included stand. It can also lie down flat.

Official specs are as follows:

• Operating system: Linux System/ Hardware Compatible with Windows XP
• CPU: Intel Atom N270 (1.6 GHz, FSB 533)
• Memory: 1 GB / 2 GB DDR2
• Hard drive: 80GB / 160GB 5,400 rpm
• Chipset: Intel 945GSE + ICH7M
• Integrated graphics chip: Intel GMA 950
• Networking: 10/100/1000 Mbps LAN, 802.11n WLAN, Bluetooth optional
• Media card reader supporting: SD, SDHC, Mini SD, (Micro SD through adapter) ; MMC, MMC plus, MMC4.x, RS MMC, RSMMC4.x (MMC mobile through adapter);MS,MS PRO

For its rear ports you get two USB 2.0, one Gigabit LAN, a DVI output, left and right audio line out with S/PDIF, and an input for a WiFi antenna. There is no optical drive, but the Eee Box does feature a user removable hard drive to simplify upgrades and repairs.

Asus is selling a variety of other Eee Box configurations around the world, but it will have three available in the U.S. One for $269 comes with 1GB of RAM, an 80GB hard drive, and an unspecified version of Linux. Another Linux-based model comes with 2GB of RAM and a 160GB hard drive for $299. Finally, a Windows XP-based version with 1GB or RAM and an 80GB hard drive will sell for $299.

When it comes out later this summer, the Eee Box will complement Asus' much-talked about Eee PC laptops, and it will compete directly with Shuttle's KPC K-4500 Linux desktop. While none of those systems are exactly mainstream, they're all known for low prices and a surprising amount of features for the dollar.

Sony is prepping a notebook based on Via's OpenBook reference design, PC World is reporting.

At the WiMax Expo taking place in Taipei, contract manufacturer Quanta Computer showed a mini-laptop based on Via's just-released design that will be out in the third quarter of this year. A sharp-eyed reporter spotted Sony as the listed manufacturer for the device. When questioned, Quanta representatives apparently clammed up, and it doesn't appear Sony will be commenting either.

The mini notebook has an 8.9-inch screen, at least an 80GB hard drive, will use a 1.6-Gigahertz C7-M processor from Via, and sports a VX800 chipset. The prototype on display was running Windows Vista Home Basic.

So has the Vaio maker finally caved? In February, a Sony exec said if the Eee PC started to do well, and major PC makers started to chase the low-cost laptop market, it was the beginning of "a race to the bottom."

Too late. Hewlett-Packard, Acer, and maybe even Dell, are joining the low-cost, lightweight computing fray. And those are just the big names. Asus continues to crank out Eee PCs, and similar devices from no-names like MSI are widely anticipated.

Sony likes to position itself and its products on the high-end. But it started producing a line of its Vaio notebooks last year that sold for as low as $800. At the time, the company said it wasn't interested in going any lower.

Things, of course, can change. And though low-cost laptops are still a tiny niche of the market, it is another way for manufacturers to differentiate their product lines as notebook prices and profit margins continue their inevitable decline.

WiMax is in the cards for the Eee PC. Asus will demonstrate notebooks Monday that integrate WiMax chips from San Jose, Calif.-based GCT Semiconductor.

Asus Eee PC

(Credit: Asus)

Despite recent statements that the Eee PC 901 will not get WiMax, GCT Semiconductor announced--along with Asus--Sunday that Asus has integrated GCT's GDM7205 WiMAX single-chip silicon into the F8 notebook series and Eee PC.

GCT says the F8 series and Eee PC will be demonstrated with WiMax at the WiMax Expo Taipei that begins on June 2nd.

The widely-reported specifications for the Eee PC 901 are a 1.6GHz Atom processor, an 8.9-inch screen, solid state drive (12GB or 20GB), 1GB of memory, and either Linux or Windows XP. A future version of the Eee PC is expected to get WiMax.

Intel will also be demonstrating WiMax in the Asus M51VA notebook at Computex. Versions of the Eee PC may also come with the Intel WiMax chipset.

But Asus is clearly working with GCT also. "We are pleased to be working with a proven industry leader like GCT, who has enabled Asus to provide our customers with systems containing reliable high performance WiMax capability," said Jellent Sun, Asus' senior director of notebook product marketing, in a statement.

GCT said that its single-chip WiMax solution enables "lower power consumption for longer battery life, smaller form-factor design and lower bill of materials cost."

GCT is also supplying WiMax chips for notebooks based on Via Technologies silicon.

Former One Laptop Per Child President Walter Bender has formed a nonprofit called Sugar Labs, which will advance the Sugar graphical interface he originally created for the low-cost computing project.

Sugar Labs will partner with developers of Sugar-compatible applications and other hardware makers that want to use the user interface on their devices.

"By being independent of any specific hardware platform and by remaining dedicated to the principles of free and open-source software, Sugar Labs ensures that others can develop diverse interfaces and applications from which governments and schools can choose," Bender wrote on the Sugar Labs Web site.

One of the first of the "others" on the list is Asus' popular Eee PC.

Bender moved on from OLPC last month after it was revealed the project's founder was leaning toward abandoning the use of Sugar and Linux in favor of putting Windows XP on his $188 XO laptops.

Microsoft and OLPC made it official yesterday, though there will still be OLPCs offered with Linux. In an interview with CNET News.com, OLPC founder and Chairman Nicholas Negroponte said the company is aiming to port the XO's Sugar interface over to Windows and has been "in discussions" with third parties, which would appear to refer at least in part to Sugar Labs.

Updated 6:15 AM PDT to reflect official announcement, as expected.

The biggest name in computing is joining the growing mini-notebook fray.

On Tuesday, Hewlett-Packard announced its new Mini-Note PC, due to begin shipping next week. You might recognize it as the HP Compaq 2133, which was the internal HP name back when early images were leaked online.

HP's Mini-Note has an 8.9-inch screen and weighs in at 2.6 pounds. (Click image for photo gallery.)

(Credit: Hewlett-Packard)

HP's entry into the trendy mini-notebook market is certainly the biggest name--so far. To get an idea of how popular these devices are of late, check out Amazon.com's list of 10 most-purchased PCs. Three of Amazon's top 10 notebooks are versions of the Eee PC from Asus. The rest is comprised of Sony Vaios and Apple MacBooks. That a traditional white box PC maker is in the same list as those two, which are pricier laptops with a legacy of good design is fairly amazing--but not entirely shocking. The Eee PC has been the talk of the gadget and tech world since its fall 2007 launch.

Now HP has just put its fairly large boot smack into the middle of Asus' territory. Will it be able to steal the Eee PC's thunder? It has a good chance. Though it's slightly bigger than the Eee PC, the Mini-Note also has big brand-name backing, and slightly more flair for design than the Eee.

Though HP is flaunting the low-end $499 version of the Mini-Note, don't be fooled. This is not a pricing competition with Asus. HP is the largest PC manufacturer in the world, and if it wanted to make the most inexpensive Windows machine out there, it likely could.

Instead, it chose a combination of mature features (Wi-Fi, USB, a Via processor) with some nice bonuses, like a spill-proof keyboard, a shock-resistant hard drive, and a sleek aluminum case.

What's more likely is this: It's probably the first major fork in the road for this category of computing. NPD is predicting that many more manufacturers will throw their hat into this same ring sometime this year (Acer is rumored to be next). The devices will probably break along the lines of an Eee PC-type device, and the Mini-Note: low-cost, Linux-based Web companions versus tiny, full-featured Windows notebooks, according to Ross Rubin, director of industry analysis for The NPD Group.

Key features
The Mini-Note is nice-looking and boasts some appealing features: it weighs in at 2.6 pounds, has an 8.9-inch screen with 1280x768 resolution, and comes with an optional Webcam. But the difference here is it could, if need be, actually function as a primary computer: the option of SUSE Linux with a 64GB solid-state drive or Windows XP or Vista with up to 160GB of hard drive space.

HP touts the Mini-Note as "smaller and lighter than many math or science books."

(Credit: Hewlett-Packard)

The key difference for a lot of users, however, will be the Mini-Note's keyboard. It has essentially a full QWERTY keyboard, shrunk just 8 percent smaller than the traditional typing surface we're used to.

On low-cost laptops intended for students--like the XO from One Laptop Per Child, the Eee PC from Asus, and the Classmate PC from Intel--a major complaint and a key limitation is the twee keyboard, which poses a challenge for average adult-size fingers. That's why the keyboard--and not the screen, the battery, or the motherboard--is driving the form factor of the Mini-Note. HP says it built the entire machine around the custom keyboard.

Like the three aforementioned machines, the Mini-Note is not aimed at the mass market. It starts on the low end at $499 for the Linux, SSD version, but a fully configured device with Vista can top out at $1,200.

Who'll use it?
For its part, HP is looking at two very specific niches of users for the Mini-Note--primary and secondary school students, and business travelers. Though Asus also insisted it was targeting kids with the Eee PC, HP's brand name and more sophisticated configuration options give it much more room to actually reap a profit from these things, noted Rubin.

HP might ship the most computers in the world, but it also recognized an opportunity they could be missing out on, according to Dan Forlenza, vice president and general manager of HP's business notebooks division.

"We like (market) share, but we're more interested in profitable growth," Forlenza said in an interview.

Education is a niche in which HP doesn't lead. The Palo Alto, Calif., PC maker shipped just over a million computers to U.S.-based K through 12 students last year, which puts them in third place behind Dell, with 2.7 million PCs in schools, and Apple with 1.2 million units, according to IDC.

"The mass market (for these kinds of devices) isn't as wide as a lot of folks think because of their limited functionality," said Richard Shim, PC analyst for IDC. Though the feature set of small notebooks like the Mini-Note and its ilk will expand in the coming years, its best feature--the price--will lose its shine as mainstream notebook prices also continue to fall.

Notably, HP isn't trying to market this as a UMPC-like device that could work for everyone. It's a wise move that could spare the Mini-Note PC from the same fate as HP's previous attempts at this category (the Journada, the OmniBook), according to Shim. "We all have drawers full of handhelds that can attest to that. It doesn't seem like there's a lot of wiggle room in the market for this type of product from a mass-market standpoint."

In the glorious race to the bottom, another contender has emerged to take on the Asus hit that is the Eee PC mininotebook. Taiwanese manufactuerer Elitegroup Computer Systems unveiled its G10IL mininotebook, which will feature Intel's new Atom processors and either an 8.9- or 10.2-inch screen. Like the MSI Wind prototype Crave spied earlier this month, the ECS G10IL features an unfortunate name and a fetching design: clean, glossy, and white. At first glance, it looks like some sort of mini-MacBook crossed with a Sony VAIO.

The ECS G10IL: poorly named but looks to be well designed.

(Credit: Elitegroup Computer Systems)

The ECS G10IL has three USB 2.0 ports, Ethernet and modem jacks, WLAN and Bluetooth, and a 4-in-1 card reader. Key for any ubermobile device, the G10IL provides mobile broadband; in this case, 7.2Mbps HSPA. Other specs listed on the ECS site include the choice of Windows XP or Linux, up to 2GB of RAM in the lone DIMM slot, an integrated Webcam, either an solid state drive or spinning hard drive, and a 4- or 6-cell battery.

A release date is unknown, but Laptoping.com reports that ECS will talk pricing next month.

More low-cost laptops are headed to a retailer near you.

Intel plans on expanding the distribution of its inexpensive, school children-friendly Classmate PC to U.S. and European retail outlets, according to a Reuters report on Wednesday.

Intel's Classmate PC

(Credit: Intel)

The Classmate will sell for $250 to $350, Lila Ibrahim, general manager of Intel's emerging market platform group, told Reuters. Apparently Intel has already been conducting pilot programs using the devices in classrooms in the U.S. and Australia.

Though the Classmate is already available on the retail markets of India, Mexico, and Indonesia, this will be the first time the device has been for sale to consumers in the developed world.

Intel designed the PC for use in schools in developing nations. Local manufacturers build them with customized software configurations for the needs of specific local markets.

The XO from the One Laptop Per Child initiative, which also builds low-cost notebooks for the same markets, has been available via retail in the U.S. for a while. OLPC had a promotion where consumers here paid $400, which bought one XO for them and one for a school kid in the developing world.

But they're not the only ones jumping into this fray. Asus launched its low-cost, stripped-down Linux-based Eee PC last fall specifically for the U.S., Japanese, and European retail markets, and caused quite the stir. It sold 350,000 units in the first quarter it was available here, and is making some of the biggest names in computing a wee bit nervous. It's giving pause to worldwide PC leader Hewlett-Packard, and second-largest notebook manufacturer Acer, both of whom are said to be readying their own low-cost, small form-factor laptops for sometime this year.

The Eee PC certainly is bringing cachet to the tiny, Linux-based laptop segment, but will that translate to the cheaper Classmate PC? The Classmate is a bit clunkier looking, and has a silly-looking (though great for kids) handle on the spine, whereas the Eee comes in a variety of colors and looks like a laptop an adult wouldn't mind being seen with at his or her local coffeehouse.