Apple execs heap scorn on netbooks

But analysts think it's a smoke screen to mask an upcoming touch-screen tablet

Apple Inc. executives may be ridiculing netbooks as a computer category not worth their while, but analysts aren't buying it.

The company will unveil something to compete in the lower-priced, less-powerful market now dominated by Windows-based netbooks, analysts said today, no matter what Tim Cook, its chief operating officer, said yesterday during the company's quarterly earnings call.

"I didn't hear any change from the company line," said Brian Marshall, an analyst at Broadpoint AmTech. "But that's getting a little stale." Apple is known for dismissing a product category until it has something of its own to offer, he added.

"If you track the industry, which Apple certainly does, you have to conclude that netbooks are a success," said Marshall. "I definitely think they'll come out with a netbook or tablet, or netbook-slash-tablet, in the second half of this year."

The company line, as Marshall put it, was reiterated yesterday by Cook, who is running Apple in the absence of CEO Steve Jobs, who remains on medical leave. When asked to describe Apple's position on the category, Cooks used the strongest-yet language to heap scorn on the small, cheap notebooks.

"When I look at what is being sold in the netbook space today, I see cramped keyboards, terrible software, junky hardware, very small screens, and just not a consumer experience, and not something that we would put the Mac brand on, quite frankly," Cook said. "And so, it's not a space as it exists today that we are interested in, nor do we believe that customers in the long term would be interested in. It's a segment we would choose not to play in."

Cook's comments echoed those in October 2008 by Jobs himself during an earlier earnings call. "We don't know how to make a $500 computer that's not a piece of junk, and our DNA will not let us ship that," he said at the time. But he had also called the market for ultra-small, ultra-cheap laptops "nascent" and downplayed its size. "There's, as best as we can tell, not a lot of them getting sold," he said in October.

That's not the case now, according to research firms such as IDC, which last week credited netbooks with preventing an even steeper decline in PC sales, and said they were a large part of the success of Acer in the U.S., where the company sold about 450,000 more computers than did Apple.

Perhaps that's why Cook hedged his bets somewhat as he continued to talk about netbooks. "That said, we do look at the space and are interested to see our customers' response to it," he said. Then, just as did Jobs last year, Cook suggested that Apple does have a player in the category. Two, in fact.

"People that want a small computer, so to speak, that does browsing and e-mail, might want to buy an iPod Touch or they might want to buy an iPhone," Cook said. "... We have other products to accomplish some of what people are buying netbooks for and so, in that particular way, we play in an indirect basis."

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