Intel, Microsoft look away as beefed-up netbooks blur lines with notebook PCs

Computerworld - Microsoft Corp.'s and Intel Corp.'s attempts to confine netbooks to the low end of the market to protect mainstream notebook PC sales have taken another hit.

On Saturday, Asustek Computer Inc. confirmed rumors that an upcoming model of its popular Eee netbook would ship with an internal DVD drive. The Eee PC 1004DN will come with a 10-in. LCD screen that supports 720p HD video, a 120GB hard drive, and a reported price tag of between $531 and $590.

While the Asus 1004DN's DVD drive and 720p video playback appear to be firsts for netbooks, its other attributes -- many of which exceed the guidelines for netbooks set out by Microsoft and Intel last year -- trail other competing models.

Hewlett-Packard Co.'s Mini 2140 will have a 1366-by-768-resolution screen with the same horizontal resolution of 19-in. widescreen monitors. Its maximum price tag is $649.

Dell Inc.'s Inspiron Mini 12 netbook comes with a 12-in. screen and a nearly full laptop-size keyboard.

Samsung's NC20 netbook does Dell one better, with a 12-in. screen and a full laptop-size keyboard.

"Everything is shifting upward quickly," said Philip Solis, an analyst at ABI Research Inc. "Netbooks are already very PC-like."

ABI is now predicting that 35 million netbooks will be sold worldwide this year, more than double the 16 million ABI shipped in 2008.

When success attacks

Along the way, they will likely continue to steal sales away from conventional laptops. Gartner Inc. said revenue from the sale of PCs plummeted between 15% and 20% during the key Christmas quarter, as sales of cheaper netbooks ate into laptop sales or forced vendors to cut prices on mainstream laptops.

Netbooks are also worming their way into big businesses.

That's one nightmare scenario that both Intel and Microsoft tried to avoid when they sought to co-opt the rising netbook phenomenon, but on their own terms.

On the one hand, they have succeeded beyond expectations. Intel's low-energy, low-cost Atom N270 processor is being used in all but a handful of netbooks today. And despite Linux's early lead, Windows XP ships on the vast majority of netbooks today.

But Microsoft's and Intel's attempts to limit the specs of netbooks have met with far less success.

For instance, resellers wanting to build Atom netbooks had to limit their screen sizes to 10 inches or less, and to 1GB of memory maximum.

Meanwhile, Microsoft said it would license Windows XP Home until mid-2010 only for machines it called ultra-low-cost PCs, which could have no greater than 1-GHz processors, 1GB of RAM, 80GB of storage and 10-in. screens.

Both Intel and Microsoft wanted to protect sales of their higher-end products. In Intel's case, this was higher-priced mobile CPUs, such as its Core 2 Duo processor, which at one point last year cost 10 to 20 times more than Atom.