Why Does the Netbook Still Exist?

We all knew this day was coming. Netbooks had their time in the limelight a few years ago, but that was before Apple (Nasdaq: AAPL  ) squashed them in their formative years with the iPad. In one sentence, Steve Jobs' described, in a simplistic way that only he could, the reason netbooks were doomed: "Netbooks aren't better at anything."

That didn't stop domestic PC makers, including Dell (Nasdaq: DELL  ) and Hewlett-Packard (NYSE: HPQ  ) , and foreign manufacturers, such as Lenovo, Acer, and Asus, from putting up a fight. The second quarter of 2011 marked the first time global tablet shipments surpassed netbook shipments.

According to market research firm ABI Research, second-quarter tablet shipments jumped to 13.6 million units, while netbook shipments shrank to 7.3 million. Compare those figures with the first quarter, when 6.4 million tablets and 8.4 million netbooks moved. Netbook sales are plummeting while tablet sales roar forward.

Well, one of the big netbook players has now officially dropped out of the consumer netbook game: Dell. Its line of Inspiron Minis is joining the dodo as an awkward creation not meant for the land of the living. Instead, Dell is now focusing on higher-end thin and powerful laptops, saying "thin and powerful is where it is at for us," as Intel (Nasdaq: INTC  ) continues to push its Ultrabook designs. Ultrabooks are Intel's response to Apple's incredibly popular revamped MacBook Air lineup.

HP is still selling netbooks, which is surprising considering HP's predisposition for trying to ax its hardware divisions this year.

Netbooks simply don't have a home to call their own anymore. There are tablets creeping up from the low end, like Amazon.com's (Nasdaq: AMZN  ) $199 Kindle Fire, while higher-end offerings such as MacBook Airs and Ultrabooks breathe down from above. Microsoft (Nasdaq: MSFT  ) Windows 8 tablets and PCs with better specs are due out next year, adding more reasons not to buy a netbook. They're being squeezed out of existence.

I hope netbooks enjoyed their Lindsey Lohan-esque 15 minutes of fame. Unlike Lohan, though, they can't simply bare their assets in now-private Playboy to try to reboot their careers.

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Fool contributor Evan Niu owns shares of Amazon.com and Apple, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Microsoft, Amazon.com, Apple, and Intel and has bought calls on Intel. Motley Fool newsletter services have recommended buying shares of Dell, Amazon.com, Microsoft, Intel, and Apple and creating bull call spread positions in Microsoft, Apple, and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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  • Report this Comment On December 16, 2011, at 10:16 PM, TMFMitten wrote:

    I don't really think it's an apples-to-apples comparison (pardon the pun). Netbooks are productivity machines; iPads are entertainment devices. I keep a netbook in my car in case I need to do any work away from home; I'd never even think of pulling out an iPad for that purpose. Could be as simple as the fact that more people want the on-the-go entertainment device than need the on-the-go productivity device. I know it's shocking to some, but Steve Jobs wasn't always right.

  • Report this Comment On December 17, 2011, at 4:21 AM, deasystems wrote:

    It makes sense: Netbooks are useless for those seeking to do something productive. iPads, on the other hand, facilitate productive and creative uses and do so with twice the battery life of netbooks along with much greater convenience.

  • Report this Comment On December 24, 2011, at 10:04 AM, TMFMitten wrote:

    Sure, except for the fact that the iPad is not a productivity device.

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