The race to the bottom

Have you noticed the trend to netbooks? Yes, those small, cheap computers that sell for between $300-$500? When I was at Best Buy last weekend, there were more people huddled around the netbooks than were looking at the traditional laptops. (Or, maybe it just seemed that way, since netbooks are soooo small they're easily dwarfed by people!)

What I want to know is what people are using them for, and how happy they are with them in the long term.

Now, I can imagine people being perfectly happy with netbooks for surfing the web, checking mail, IMing with buddies, and taking notes in class. But, there's always that one other app that you want to use that needs more processing power, or storage space, or a bigger keyboard than netbooks provide. What then?

I'm not as worried about the more sophisticated computer users. I can see the power users getting a netbook as a secondary, ultraportable computer. They know the limitations and are willing to work within their boundaries. I fear that less computer-savvy users see netbooks just for the low price, and think they will be capable of doing whatever their desktop cousins can do. For proof, they'll point to the ad and say, "See, it comes with Windows, just like my old computer!".

So, what's the problem? Unsophisticated computer users will buy netbooks because they are cheap, and will end up disappointed with their limitations. Having potentially mistakenly spent  $300-$500 on a netbook, they will be less likely to invest more money in a better PC when they do want to step up to a more powerful computer than if they still had that cash in their pockets. Sophisticated users buying netbooks as a secondary computer will put off buying that new higher end-machine. Either way, the industry changes its focus to what's selling–small, cheap, and less innovative computers.

With lower profit margins, computer firms will be less likely to invest in R&D which will reduce innovation. With more of the same low-cost hardware being produced, and less truly innovative new products coming out, manufacturers will have to beat each other on price to maintain their sales. This, of course, leads to less profits, less innovation, and computers in which you sacrifice successively more to get less and less. It's a race to the bottom. And, it doesn't seem like a race in which either the manufacturers of netbooks or the consumer end users will ultimately win.