What's this? Michael Dell, CEO of one of the market-leading sellers of netbooks ... isn't recommending netbooks?

"We see a fair amount of customers not really being that satisfied with the smaller screen and the lower performance, unless it's like a secondary machine or it's a very first machine and the expectations are low," Dell's (NASDAQ:DELL) chief executive said in a speech at California's Churchill Club on Tuesday night, reports trade journal The Register.

Interestingly, this isn't just observation. Dell has specific criteria for how he wants his company to be marketing netbooks:

As a replacement machine for an experienced user, it's not what we'd recommend. It's not a good experience, and we don't see users very happy with those. [Emphasis added.]

Journalists and analysts reporting on Dell's comments expressed surprise at his take, especially in light of new research suggesting that netbooks are catching on with consumers. Color me among the indifferent.

Of course Dell doesn't want to sell netbooks if he doesn't have to. Look at the numbers: Average selling prices fell 29% in the second quarter, 10 percentage points more than the portable-PC industry average. Not a good sign, especially when Dell's net margin already hovers below 4%.

Sony (NYSE:SNE) and Nokia (NYSE:NOK) may very well want to sell $500-plus netbooks. But they're fighting the tide, and they're likely to lose out -- not only to Dell, but also to Taiwanese cheapskates such as Asus. Subsidies from the likes of Sprint Nextel (NYSE:S) and AT&T (NYSE:T) could help boost netbook profits, but only if there's a value-added model in place to generate ongoing revenue from netbook owners. That's anything but assured.

So Dell has good reason to criticize the form factor, even as it generates sales for his company. Sales aren't what matters most; profits and cash flow are the twin engines that deliver sustained growth. Netbooks, for now, don't offer much fuel.

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Fool contributor Tim Beyers owned shares of Nokia at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool owns shares of Best Buy and is also on Twitter as @TheMotleyFool. The Fool's disclosure policy is small, but packs a wallop.