http://www.destinyofshadow.com/blog/?p=500

I planning on purchasing a tablet PC, but the only reason I’m interested in it is for art. I’d just like to have a reasonably-sized LCD/digitizer combo that I could drag around with me without too much fuss. I know that the sort of market that someone like me represents isn’t significant, most especially for Apple, so I suspect I’ll have to purchase a PC tablet for something like this. I have to admit, though, that the thought of an Eee-sized display with multitouch would be pretty cool - maybe a subnotebook form factor with a multitouch display? I don’t know… I do love the Touch, though, and seriously, if you don’t understand what a revolution in user interfaces a multitouch display is, I’d have to say you haven’t used it enough in comparison with your standard computer interfaces available these days. It’s like those goofy Star Trek:TNG mock-up displays, but with real-life functionality and usefulness.

Like the UMPC and Newton, the EEE PC isn’t small enough to fit into a pocket, and is only practical for users who want a low powered laptop replacement for writing or other uses compatible with its limited capacity. HP and other makers are now rushing to offer products in this mini-laptop category, but it’s not clear that there is any more demand for a mini-laptop than for the tablet/UMPC computers Microsoft has been unable to sell for the last decade.”.

Your article makes it sound like the Eee PC has been somewhat of a failure, and a poor seller. In fact, it’s been a runaway success. Last I heard, over 2 million have been sold. Amazon’s top-10 best-seller list currently includes 4 different flavours of the Eee PC. And every PC maker out there is rushing to copy the thing. that’s hardly a failure.

The Eee PC does one thing well the iPhone doesn’t: data entry. Composing any message of more than a few words is a laborious pain with the iPhone or the Touch. Though the Eee PC’s keyboard is small and takes some getting used to, it’s still way faster and easier than pecking away on the iPhone.

I’m eagerly waiting for June to see if Apple addresses the data entry failings of the iPhone. Just give us a non-crippled bluetooth stack and I’ll be happy to put my new Apple bluetooth keyboard to use on a new iPhone instead of using with my Eee PC!

The ultraportable form factor is not as insignificant as you lead us to believe. Yes, I think we can all agree that the tiny phone-sized Internet device that evryone can carry in your pocket is the ultimate form factor, and by far the largest potential market. That’s why Apple is selling the iPhone 1.0 and iPod Touch and about to come out with the iPhone 2.0, and possibly other similar-size non-phone touch device that use the same interface. It makes sense to concentrate on the biggest market first. There is still a long way for Apple to grow in the mobile communications space.

The problem with making mini-laptops is that it cannibalizes Apple’s laptop market. I get that.

Further, Apple has their hands full right now with the iPhone and related products. I get that too.

No one wants a worthless toy laptop that does not have a fast efficient OS and lots of practical apps. I get that too.

But Apple will iPodify the cell phone market, by taking away the most profitable revenues. The iPhone will be by far the most technically advanced and easiest to use cell phone for the forseeable future. Apple will use this advantage to skim most of the profits at the high end by selling iPhones and touch iPods. Apple will also use the branding power of iPhone to sell simpler cheaper phone alternativeness ( a la the iPod nano, and iPod shuffle) for folks who just want to phone and want a quality phone.

There will be a time that they accomplish all that and will still need to grow.

So back to the mini-laptops. The toys that are available now are just that. If and when Apple gets into that market, they will not make a toy. They will make a device that will at least a practical as an iPhone, which you probably would say is the best thing since sliced bread.

There will be cannibalizing of the laptop business with smaller, cheaper simpler devices. Apple will decide that they want that done on their terms. Just as they’ve done with the iPod. First they lock up mindshare with a great product, them go for marketshare and industry-controlling clout. They did it with iPods, are doing so with iPhones (we’re stillnear the beginning of that process). And eventually they’ll do it with laptops.

In all cases they expand the market by marketing smaller simpler cheaper devices alongside more expensive more function bigger devices. Apple expanded the market for media players by go to the mini, then replacing it with the nano and adding the shuffle. They will make similar move with phones to accomplish much the same tactical market goals.

And, they will cannibalize their own laptop markets, and by doing so will increase the laptop market. Their will be full-sized and uber-powerful desktop replacements and small simple devices that just do the basics: eg. email, notes, games and media consumption, on a uber-portable device that will be bigger and more profitable than iPhone for those that need a bit more space.

The iPhone will always be with you. But there will be a smaller but still substantial market for those who want something with a bit more screen real estate, and a bit more practical for dedicated media consumption and/or dedicated media creation, whether writing notes or email, making presentations or drawing, etc on the go in an uber-portable form factor.

Yes, I know there will be some cannibalizing of laptops, but it will be done Apple-style. Smaller simpler devices that are profitable and address a larger market than full-size laptops alone.

Mini Apple laptops, if cheap enough could make it possible for each and every student in America to have their own laptop computer. That’s a pretty big market. Then there is the international and emerging markets where cost is an issue. Apple can grow a strong following in many markets otherwise off-lomits in quantity because of price. Apple won’t make the mistake of many PC laptop makers that try to jam every last unneeded port or connection and Windows onto every laptop. They will cut their uberportable devices into simpler cheaper and still profitable devices.

John has it right above when he says,”Apple’s ‘whole widget’ really seems to be the strongest advantage they have in the mobile space.”

Apple has all the pieces to the puzzle. They have developed some great technologies, that can be used synergistically in many inter-related markets. It will be fun to watch Apple create all those elegant, useful and invariably successful and profitable devices.

They only create products for markets that will purchase them. I agree with you there.

I only disagree with you in believing that there is an substantial addressable market. It is just less of a priority right now than getting the phone piece done right. Apple does not need to do everything; they just need to do those thing they do well. Doing iPhone well means delivering the iPhone 2.0, and the SDK and getting the distribution done well internationally. The iPhone will be a Trojan horse in many markets. There will other gadgets to follow. All these devices can’t all be Macs, even though at heart that’s exactly what they’ll be. That will be such a powerful strategic advantage over the competition.

I can’t wait to see all the goodness that they will create. Apple is essentially changing the world. They are changing how people interact with information technology. Apple is creating a culture of technical and interface leadership that will continue for many decades. Apple will lead, and everyone else will follow. The 21st century is shaping up to be an exacting time to be in technology, especially if you’re Apple and you know how to make gadgets that people want to buy.

Below is an extract, of a memo written by Nathan P. Myhrvold [a Microsoftie] on “Road Kill on the Information Highway”, September 8, 1993, its long, I know, thought of summarizing it but thought what the heck…

Personal Computers:

I’ve saved the best for last. Our own industry is also doomed, and will be one of the more significant carcasses by the side of the information highway. The basic tasks that PCs are used for today will continue for a long as it makes sense to predict, so it isn’t a question of the category disappearing. The question is one of who will continue to satisfy these needs and how?
As a case in point, consider that the fundamental category needs for mainframes and minicomputers also still exists and will continue to do so for a very long time. Despite this, the companies involved are dying and the entire genre is likely to disappear. The reason is that a new breed of machine - the PC - came along which out flanked them. In the early years PCs were not particularly good at what minis and mainframes did, but they were terrific at a whole new set of problems that the traditional computing infrastructure had basically ignored.
Personal productivity applications drove PCs onto millions of desks and created a very vital industry which grew faster - both in business terms and price/performance - than the mainframe and minicomputer markets. The power conferred by this growth made PCs the tail which wagged the dog; free to ignore the standards which existed for mainframes and minis and move off on their own. Over time the exponential growth in computing has finally (after 17 years) given the PC industry the technical ability to beat minis and mainframes in their own domain. Although the early software platforms for PCs had to be extended to fully realize this potential (Dos to Windows to NT to Cairo), it turned out to be far easier to do this than to make mainframe or minicomputer systems address the new needs and applications. Even within the heart of minicomputer and mainframe’s domain - giant transaction processing applications etc., the old standards will not be used.
I believe that the same thing will happen again with PCs playing the role of mainframes and minis, and the computing platforms of the information highway taking over the role of the challenger.
The technical needs of computers on the information highway, or IHCs are quite different than for PCs. The killer applications for IHCs in the early years will include video on demand, games, video telephony and other distributed computing tasks on the highway. It is hard to classify this as either higher tech or lower tech than the software for PCs, because the two are quite different. Most IHCs will certainly need to be cheaper than PCs by an order of magnitude and this will inevitably cause them to be less capable in many ways, but some of their requirements are far more advanced.
Another way to say this is that the rich environment of software for PCs is largely irrelevant for IHCs. Windows, NT, System 7 and Cairo do not solve the really important technical problems required for IHC applications, and it is equally likely that the early generations of IHC software won’t be great platforms for PC style apps. This isn’t surprising because they are driven by an orthogonal set of requirements.
The IHC world will almost certainly grow faster than PCs, both in business terms and in price/performance. The PC industry is already reaching saturation from a business perspective. Technically speaking, the industry is mired in hardware standards (Intel and Motorola CISC processors) with growth rates that are flattening out relative to the state of the art - just as the 360/3090 and VAX architectures did. The Macintosh and Windows computing environments may be able to survive the painful transition to new RISC architectures, but they will lose time and momentum in doing so.
PCs will remain paramount within their domain for many years (we’ll still have a computer on every desk) but IHCs will start to penetrate a larger and larger customer base on the strength of its new and unique applications. The power of having the worlds information - and people - on line at any time is too compelling to resist. For a long time people will still have a traditional PC to handle traditional PC tasks - in precisely the same way that they have kept their mainframes and minis for the last 17 years. One day however people will realize that their little IHCs are more powerful and cheaper than PCs - just as we have finally done with mainframes. There will be a challenge for the IHC software folks to write the new systems and applications software necessary to obviate PCs, just as we had to work pretty hard to come up with NT, but this battle will clearly go to the companies who own the software standards on IHCs. The PC world won’t have any more say about how this is done than the companies who created MVS or VMS did about our world. Of course, some of the VMS people were involved, but as discussed above it is very hard for organizations to make the transition.
This may sound like a rather dire prediction, but I think that for the most part it is inevitable. The challenge for Microsoft is to be sufficiently involved with the software for the IHC world that we can be a strong player in that market. If we do this then we will be able to exploit a certain degree of synergy between IHCs and PCs - there are some natural areas where there is benefit in having the two in sync. The point made above is that those benefits are not sufficiently strong that they alone will give us a position in the new world. We’ll live or die on the strength of the technology and role that we carve out for ourselves in the brave new world of the information highway.

But on the long term, I think that a lot of people (and companies) will ask themselves if they really need to buy 2000+ USD high end laptops or cheaper but bulkier ones with similar specs. I’d say that except for scientists and engineers (which certainly don’t make up for the majority of the work force), anyone can get along just fine with less hardware in a smaller and lighter package. The fact that the MacBook Air sells at all, given the price tag, is a proof that people want small and light. The Eee PC and its clones aren’t there yet, but I think they will be in a couple of years (add a touchscreen, improve the OS, battery life).

So my take is that sometime in the coming years, toy laptops will compete with the other laptops for the same marketplace. I doubt Apple will stay out of the game, or try to compete with the Touch family of products.