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Are the new breed of netbooks the real deal or marketing hype?Samsung NC10 Netbook

In last week’s podcast and blog post, I laid out a dilemma for the gadget-obsessed. The Amazon Kindle 2 and a slew of mini notebook computers – or netbooks – have entered the market in the last year or so at a price point of $350.

Is either, or both of them, worth the tech investment?

Play Episode as a Podcast (recommended):
 

The price point of $350 is very interesting, especially in these times. For a lot of people, if there’s a gadget you need for $40 or less, such as a thumb drive, a new set of earbuds, or a case for your iPhone, most likely you’ll grab it as an impulse buy because it will make you happy or more efficient.

If there’s something over $400, like a new TV, a new Macbook, or a video console system and a few games, then it becomes more discretionary and something you put off until you have the budget for it. Or at least that’s how it you SHOULD look at it.

Do I?  In looking back at my major geek purchases over the last 18 months, it turns out I’ve been remarkably consistent in my upgrade pattern. Let’s take a look:

Technology Upgrade Timeline

Frankly, this analysis is rather stunning. I’m almost ashamed. Three to four years???

Where do I turn in my early adopter membership card?

This purchase pattern makes sense if you’re being pragmatic about things, which obviously I was without even knowing it. We all have our obsessions. For example, I hung out with pretty hard core group of mountain biking friends a few years ago. When I got a new bike, I went with the best balance of price vs. performance.

But my friend Ben skewed quite a bit differently. He sunk over $5,000 into his bike. If there was a newer, lighter, stronger component – and there always was – he had to have it. He was the most aggressive rider of the group, once breaking the weld on his titanium frame.

But the funniest part was watching him strap this $5,000 piece of elite machinery onto the roof rack of his 1991 Ford Festiva. Put it this way. We called it the clown car. Retail value of the car at that time? About $900.

1991 Ford Festiva

When reached for comment, Ben said, “You guys can make fun all you want, but that car held up to such extraordinary abuse at my hands. I sold it for 75 cents and a game token to my friend Jeff a year ago, complete with a hornet’s nest in the back bumper.  It still runs like a dream.”

My friend Loren echoed the same sentiment, saying he bought a $3,500 bike the same year his 1992 Honda was worth about the same price.

For some, their obsession is bikes, while others might lust after cars or clothes or shoes or books or music. They always have a little bit more than the next guy, and always have the latest and greatest on their radar.

Surprising business model

OK, back to netbooks.  In the March issue of Wired, Clive Thompson covers The Netbook Effect and makes some great points, which I will highlight. In reality, the latest-and-greatest high end market was NOT the target for these machines. One Taiwanese manufacturer – they’re the ones dominating market share right now – said his next billion customers would come from BRIC countries. BRIC stands for Brazil, Russia, India, and China, where billions of very price-conscious consumers have yet to buy their first computer.

But something strange happened as the tech-obsessed snapped up these low-cost machines as their backup computer, finding out that they really don’t need the bloated operating systems and 6 pound behemoths that have been pushed on us like the high profit margin SUVs of the computer world.

Instead, users are content to surf the web, Twitter, blog, use Facebook, and do short projects in the cloud on Google docs.

The business and marketing world play catch-up

Now there are several groups scrambling to play catch-up.

Microsoft – The software titan in Redmond is getting assaulted on many levels. Macworld notes that 30% of netbooks are shipping with Linux, meaning not only does Microsoft not get paid for Windows on those machines, they’re also not going to sell Office, and they’re taking a smaller cut on Windows XP installs on the ones they do sell.

Dell-Mini-Netbook

Major PC Brands – Companies like Dell and HP are now rolling out their own versions of netbooks, but will face razor thin margins and most likely drastic sales dips in their higher end laptops. And many are saying, why would Apple even enter the game and risk the profit margins that their $1000 and up Macbooks are making.

Marketing – When I looked at the Kindle 2 last week, the marketing hype was primarily coming AT me. Sure, I saw the buzz on blogs, and as a Manhattan resident, I knew about Jeff Bezos and Stephen King announcing the new model at the New York Public Library. Every time I went on Amazon, I was confronted with a sales pitch for the Kindle. If I wanted, there was a system where I could meet an existing Kindle user to check it out in person. I had to wade through the marketing, figure out if this is something I could actually use in my life, in the end, I decided… well, go back and listen to the Kindle podcast to find out what I decided.

But with netbooks, I’m seeing the same level of early adopter hype on blogs, but I have to actively SEEK OUT the product. At the Circuit City near me, there was a single, sad, lonely HP model chained to the counter, praying to be bought before being left behind as the retailer went out of business. At the Best Buy, the selection was as meager as the level of information from the staff.

Case in point: Where does one go to look at an MSI Wind? When I got to their website through a Google search, one of the links had a redirect going on. Their website is slow loading and not very organized, and their free gift of his and hers USB Drives doesn’t exactly inspire.

When I found the MSI Wind retail store locator, here’s how it played out:

BestBuy: didn’t see one when I was there
Costco: Nearest one to me is in Queens
EBC Computers: Wow, 3 locations in the Utah area!
Fry’s Electronics: I thought they went out of business; closest store is Duluth, GA
MicroCenter: Link gave me an error message; typing myself, 21 locations, including Long Island

Do you see what’s happening here? A LOT of work on my part. As usual, the best way to learn about these is ironically, on Amazon.com.

So clearly, unlike the Kindle, it’s not the marketing that is drawing me to this product, it’s the fact that it is a shiny new gadget and it’s calling my name.

Eventually, my coworker Brian brought in his new MSI Wind for me to demo in person.

Instantly, my gadget lust was re, um, rekindled.

While this probably wasn’t the exact model I would get (he only went for the 3 hour battery), it was definitely something I could see adding to my technical arsenal.

But how could I justify it?
When would I use it?

- I wouldn’t use it at work. I have my company-issued PC laptop.
- At home, I don’t see how a smaller screen and smaller keyboard would ever trump my more powerful 15″ Macbook Pro.
- On my frequent cross-country trips to the Wired office in San Francisco, I need my work laptop to connect with our network, so that’s coming with me. And if I’m staying for an extended period of time, I actually bring my Macbook with all my podcast templates along as well. No way a third computer is hitting my carry-on, at least not without approval from a chiropractor.
- What about my New York to Boston trips to see family? Not only does my Macbook make the trip so I can catch up on Netflix DVDs (note that netbooks don’t include a DVD player), but my iPhone and Treo provide more than enough backup when there’s traffic on I-95.

But despite all that, this is a product I definitely see myself splurging on.

- I’m not much of a ‘sit in a coffee shop and blog’ kind of guy, but this would sure make it a lot easier.
- I often give presentations at my tech meetup group, so the thought of a tiny laptop with a PDF attached to a projector sounds great.
- What about a fantasy football draft? Real-time access to player stats, customized cheatsheets, and most importantly, NOT having a $2000 computer laying around during the open bar portion? No brainer.
- And finally, international travel. While these trips don’t come along nearly often enough, this is where a netbook would shine.

So as of right now, the netbook still resides in the “research with the intent to buy” column. Things are changing so fast and manufacturers are adapting to user feedback at a breakneck pace, that I’m going to wait a bit longer to make sure I get the following features.

Netbook specifications checklist

- The new Atom chipset
- 802.11n wifi
- Super long battery life
- 2 gigs of ram
- As big an SSD hard drive as they can create
- A well made keyboard and trackpad
- All well under 3 pounds

So help me out here gadget lovers! Have you made the plunge? If you own a netbook, how are YOU getting the most use out of it?

Write me at MarketingGuy [at] Wired.com, or find me at twitter.com/hopkinsonreport.

Now if you’ll excuse me, I have a fantasy baseball draft to plan in Buenos Aires.

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Also see:

Marketing the Amazon Kindle – Making me want one when I don’t need one.

Marketing Lessons from Slumdog Millionaire.

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