$300 Computer Sets New Standard

$300 Computer Sets New Standard

The last time Georgia Santos went computer shopping, she steered clear of the hulking desktops and barely glanced at the dizzying array of laptops.

Instead, the 23-year-old New York student made a beeline for the newest and cheapest species to emerge from the computing industry: the netbook.

She said she has an aging laptop at home, but instead of swapping it for a similar model, she wants to replace it with a sub-$300 Hewlett-Packard Mini netbook.

She knows this new class of computers can't compete with fully-functional laptops and desktops when it comes to memory, power and battery life. And, truth be told, she is a little worried that she won't be able to easily watch or burn DVDs on a netbook.

But she told ABCNews.com, "I work most of the time on the Internet and not with large files. ... I think it would work."

As the computing industry prepares for what is expected to be its sharpest decline in PC shipments in history, netbooks are providing a singular glimmer of hope. But though netbooks may cushion the overall downturn, they are also challenging the very definition of pesonal computers.

"They are kind of breaking the business model," said Robert Enderle, principal analyst at the Enderle Group.

The recession, combined with our increased mobility and the spread of applications that let us store and manipulate data in the Internet "cloud," will "fuel these low-cost computers and cause us to rethink computing in general," he said.

PC Industry Prepares for Worst Year Ever

Earlier this month, the technology research firm Gartner Inc. said in a report that the PC industry would suffer "unprecedented" market slowdowns. It forecasted that PC shipments would fall 11.9 percent from 2008 levels, with desktops hit particularly hard, estimating a 31.9 percent dropoff.

Despite the parade of dismal news, Gartner predicted that shipments of mini notebooks, or netbooks, would rise about 79 percent, from 11.7 million units in 2008 to 21 million in 2009.

But though the popularity of the netbooks is surging, George Shiffler, the research director at Gartner, cautions that the netbook is not about to crush its more powerful cousins.

"They really aren't a substitute for a higher-end notebook," Shiffler told ABC News.com. "What we have been seeing [consumers] do is buy these as second notebooks to accompany computers they already have."

Though they may help the overall industry, they still comprise only 8 percent of the overall market. And, he said, they've taken off, in part, because they're a novelty. "The netbook isn't the answer," he predicted.

However, Shiffler also said netbooks could put downward pressure on the prices of more powerful computers.

Netbooks Reach Tipping Point

Although smaller, lower-power laptops had been around, netbooks didn't really catch on until the fall of 2008. At that point, experts said an attractive price point, a weakening economy and effective marketing combined to push netbooks to the tipping point.

The cheapest netbooks, such as the Acer Aspire One Netbook and the Asus Eee PC Netbook, can start just below $250. But the more expensive ones, such as the Sony VAIO Lifestyle Netbook, can reach nearly $900, exceeding the cost of some regular laptops.

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