netbook

Steve Jobs and Steve Ballmer have a problem.  It’s called the netbook.  These under-powered computers are threatening the most lucrative segment of the PC market today, the laptop.  And, in classic “Innovator’s Dilemma” fashion, the Steves are failing to take the steps required to address the problem.

Apple’s reaction has simply been to deny the viability of the netbook market.  In yesterday’s earnings call Apple honcho Tim Cook said “When I’m looking at what’s sold in the netbook market, I see cramped keyboards, junky hardware, very small screens, bad software. Not a consumer experience that we would put the Mac brand on.”  Ironic, isn’t it?  Cook’s remarks echo IBM’s dismissal of the early personal computer market; the very dismissal which led to the formation of Apple itself.

Microsoft, on the other hand, has responded with Windows 7 Starter Edition – the version of Windows 7 that can only run three applications.  Ed Bott’s assessment aside, it’s hard to see how any ordinary computer user will be happy with a three application limitation.  More to the point, Windows 7 Starter Edition flies in the face of the entire basis upon which Microsoft has been built – that Moore’s Law will continue to bring better and higher powered computing platforms to the masses at lower and lower prices.  Over time, those netbook devices will become powerful general purpose computing platforms.  Indeed, Atom chips are already being deployed in desktops and servers where their power characteristics are generating real savings. 

The netbook phenomenon is driving both of these giants of the personal computing industry to unnatural acts.  Clearly they are worried, and neither have a clue what to do yet. 

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