Is Apple's iPad, MacBook Air Behind the Death of the Netbook?

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Netbooks were supposed to be the future of portable computing. As smaller, thinner and lighter versions of traditional laptop computers, netbooks were designed to be an energy-friendly, cost-effective alternative to expensive PCs. Consumers were receptive to the idea but apprehensive of the price. Netbooks initially retailed for upwards of $300. Many of them, including high-end models from Dell (NASDAQ: DELL ) and Hewlett-Packard (NYSE: HPQ ), retailed for more than $400. For an additional $100 to $300, consumers could buy a full-size laptop instead.

After testing the first- and second-generation netbooks, consumers learned that while the battery life was great (many of them could run for at least four hours), the processing power was not. This made it difficult to do anything more than surf the Web, check e-mail and write documents. The latter task was hindered by the smaller frame and awkward keyboard shape that most netbooks provided. Consumers with large hands were particularly bothered by this element.

Regardless, tech companies continued to push the netbook format for quite some time. That began to change after Apple (NASDAQ: AAPL ) unveiled the remodeled MacBook Air in 2010. The computer may not have been revolutionary, but it was thinner and lighter than most on the market. It also came with a solid state hard drive, enabling it to load programs faster and move in and out of standby in seconds.

Apple released the 2010 MacBook Air in two sizes: 13-inch and 11-inch. The latter was about the size of a netbook, but the price (starting at $1,000) was closer to that of a full-size computer. Apple got away with this pricing structure because the Air was so much more powerful than any other PC in its class. The light weight and reliable storage option (solid state drives do not have any moving parts) added to the Air's appeal.

The Air was not the only game-changing product released two years ago. In 2010, Apple also introduced the first iPad. With a starting price of $500, the iPad was only slightly more expensive than a high-end netbook.

Fast-forward to 2012, the year in which Apple announced that the iPad had sold more than 100 million units worldwide. At the same time, worldwide netbook sales continue to decline .

Dell and Hewlett-Packard are among the major manufacturers that no longer produce netbooks. According to DigiTimes , Acer and Asus will soon follow suit and cease production of new netbooks.

Apple no doubt started the trend that killed the notebook, but it is not the only company responsible. Intel (NASDAQ: INTC ), which announced its Ultrabook initiative in 2011, has been trying to build processors for a lower-cost MacBook Air competitor. Some of the older Ultrabooks, which typically started in the $1,000 price range, now retail for roughly $700. They may not be as small or as cheap as a netbook, but Ultrabooks tend to be much better machines.

In addition to the efforts of Apple, Intel and other manufacturers, the death of netbooks must also be placed on the netbooks themselves. No matter how much money consumers were willing to spend, they rarely lived up to expectations. In addition to the cheaper plastics, weak touch pads and uncomfortable keyboards, netbooks also came with low-resolution screens. Consumers quickly found that they could perform more tasks with a smartphone, most of which feature high-resolution displays.

While the netbook concept may have been a failure, its spirit will live on in future MacBook Airs, Ultrabooks and tablet/laptop hybrids that attempt to cram a powerful PC into one tiny package.

Follow me @LouisBedigianBZ

(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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This article appears in: Investing , Stocks

Referenced Stocks: AAPL , DELL , HPQ , INTC

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