Netbooks vs. Tablets: How to Decide

By: Tim Bajarin

I had the privilege of speaking at last week’s Netbook Summit in San Francisco. The event was created well before the introduction of the iPad, when netbooks were still all the rage. Since Apple introduced its tablet, the value of netbooks over tablets has been called into question amongst consumers. This was one of the show’s major topics.

I had a session on Tuesday, in which I discussed how my analyst group, Creative Strategies, predicts the iPad will affect the market. During my presentation, I noted that, while netbooks aren’t going to go away, there will be a sort of bifurcation occurring around what we call a “content consumption versus content creation” focus, driving both product categories in the future. Laptops and netbooks are optimized for content creation. But in any given day, content creation only takes up 25 percent of the time most people spend on computers. The other 75 percent is spent consuming content.

People will always need laptops or desktops to do the heavy lifting when creating things like reports, long e-mails, managing their music and video libraries, and editing their photos and videos. But if content creation is important to a user, a laptop might prove a better choice than a netbook. People appreciate the portability of a netbook, but the devices’ small screens and keyboards are not ideal for content creation. Some people make netbooks work of them, but as someone who has used these devices from day one, I find them too small for serious content creation.

For the 75 percent of the time that consumption is the focus, however, tablets can be optimal. They are highly portable and offer an easier, more flexible way to surf the Internet, play games, read books, use mobile apps, and consume movies, video, and music. Tablets offer an easy-to-use touch interface and, thanks to the rich computing environment delivered by iPad and Android-based devices, they could become the one computing tool that people of all walks of life adopt and integrate into their mobile digital lifestyles.

All of the data presented at the Summit’s Market Research panel showed that demand for netbooks will peak this year, declining after that. And when Retrevo conducted a poll of over 1,000 individuals, it found that 78 percent were leaning toward buying an iPad, instead of a netbook. However, I think that the decline in netbook demand will have more to do with how PC manufacturers reposition their thin and light laptops. In fact, most market researchers don’t even put netbooks into a separate category—rather, they’re just counted as part of the overall laptop forecast.

Indeed, we just see netbooks as small laptops. And while the demand for netbooks still exists, we believe that there will be a big shift to create thin and lights with 11 and 13 inch screens with full keyboards. These devices will replace netbooks. The big issue, however, will be price. Netbooks can sell for as low as $299, while an 11-inch thin and light starts at $449. Take the Toshiba Satellite T115. It looks like—and is as heavy as—a netbook, but it has an 11.6 inch screen and full keyboard and costs $449. Consumers will end up weighing cost with functionality more closely if they are looking to purchase a lightweight and small notebook.

But the emerging tablet market is compelling for those would-be netbook buyers looking to consume content on a lightweight, truly mobile platform. This has more to do with the digital lifestyle than anything else. People want to access information anywhere at any time, and they want it in an easy-to-read format. This is why the iPad has struck such a solid chord with consumers. Creative Strategies’ research has shown that a lot of iPad early adopters take the device with them throughout the house, using it while on the couch, lying in bed, and lounging in the backyard, as they play games, watch movies, and download video at will.

There is a device coming out later this year that has the best of both worlds baked into a single product. The Lenovo U1, announced at this year’s CES, looks like a normal netbook, but the screen pops out to become a full-fledged tablet. In netbook mode, the device runs Windows XP. In tablet mode, it runs the Thunder Linux OS, which is optimized for Web browsing and mobile apps. It’s a great transition product for those who need a netbook but want the flexibility of a tablet. It could be hot, if priced right.

If you’re trying to decide between a netbook or a tablet, keep this in mind: if your digital lifestyle requires serious content creation or management, a laptop or notebook makes a lot of sense. However, if content creation is a low priority, an iPad or other tablet could really enhance the way you consume information.

Oh, and one more thing: my session at the Netbook Summit focused on whether the iPad will disrupt the overall PC market. My comments largely focused on the fact that the iPad is most interesting when it is used as a highly mobile content consumption device. In that sense, the device does represent a new paradigm in personal computing that really could prove disruptive to the way we think about computers.

I made a point, however, to reiterate that the device is not for everyone. A lot of people who use laptops will find it a nice supplementary product, one not at the center of their digital lifestyle. I concluded my speech by adding that the real market for tablets may be among non-PC users around the world who aren’t computer literate but want transparent access to the Internet. The iPad and similar tablets could ultimately be the devices to bring the next billion people into the world of technology.