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Didn't see that coming moment of the decade: netbooks

Just when you thought PC form factors were done and innovation as far as US PC makers were concerned was a foreign country, Asus stepped up with its sub-laptop EEE PC in 2007.

The machine was smaller and lighter than the smallest notebook - measuring no more than 8.9 by 6.5 inches and weighing about two pounds, and dumped the idea of disk storage for solid-state drive to get there. It was also cheaper because it didn't license Windows and ran a custom version of Linux.

There had been similar small-form-factor devices called sub-compacts before from Apple and Psion - who used the name "netBook" and who tried in 2009 to prosecute retailers and PC makers demanding payment for their use of the phrase "netbook". But such devices were often over-priced for what they offered and never caught on.

The EEE PC exploded with such force it caught slumbering US PC makers and Microsoft by surprise and added much-needed growth to a slow business. Gartner this year estimated that overall PC shipments for 2009 would grow by 2.8 per cent compared to 2008 to hit 299 million units. The number of netbooks shipped is expected to more than double to hit 35 million.

The ramifications of the netbook have been huge. Hewlett-Packard and Dell have been dragged into building machines while Microsoft has had to keep Windows XP alive, in part, as Windows Vista was too fat and slow to run on a netbook. Netbooks accounted for between 10 and 11 per cent of Microsoft's client revenue each quarter this year.

But with their low average selling prices, netbooks are hurting OEMs and Microsoft. Most units sell for around $200, meaning there's not much profit to be had. US PC makers would be happier if people bought more expensive laptops, and have been coy about their netbook plans. Microsoft would also prefer that its OEM and retail customers buy more expensive SKUs of Windows, rather than Windows XP.

Netbooks have given a boost to Linux in a market where it has always been challenged: the PC. Researcher ABI reported that Linux is on 32 per cent of those 35 million netbooks that will be shipped in 2009.

The normally visionary Apple, meanwhile, has been put both on the defensive and the wrong side of history by netbooks. The company killed its popular netbook-sized 12-inch PowerBook class of machine in May 2006 - before that ground-breaking Asus device - and pushed instead 13-, 15- and 17-inch laptops. This year Apple snootily dismissed netbooks as "junky and unusable".

Those who have embraced netbooks, particularly Acer, have done remarkably well. Such was the netbook's boost to Acer's business that the Taiwanese PC maker in 2009 beat Dell to become the world's second largest PC maker.

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