Apple's Steve Jobs kills the netbook -- is the PC next?

April 16, 2013 8:30 AM EDT

Still the bells; silence the critics; let the band play on: no, I'm not talking about the UK administration's dissociated reaction to the passing of a former Prime Minister, instead I’m discussing Apple [AAPL], the iPad and the final extinction of netbooks.

Netbooks aren't better at anything

Steve Jobs saw it coming. He explicitly referred to netbooks during the iPad launch, dismissing the whole category as follows:

"They're slow, they have low quality displays and they run clunky old PC software. They're not better than a laptop at anything, they're just cheaper: they're just cheap laptops. We don't think they're a third category device, but we think we've got something that is, and we'd like to show it to you today for the first time. And we call it, the iPad," he said.

Since then we've seen netbooks dwindle in popularity more than the UK Coalition government, the difference being consumers didn't need to wait for an election and voted with their wallets almost immediately: Netbook sales went into free fall.

At that time eagle-eyed analysts such as Katy Huberty pointed out that iPad sales were destroying those of netbooks. Huberty's claims were rejected at the time, but the diagnosis proved correct.

This category is extinct

There's been no turnaround for this sector, driving some high profile netbook brands to quit the business. Where are we now? Put simply, IHS iSuppli believes netbooks will be extinct by 2015.

"Once a white-hot PC product that sold in the tens of millions of units annually," IHS writes, "netbook computers are now marking their final days, with the rise of tablets causing their shipments to wind down to virtually zero after next year."

See, Jobs was right. These things might have been cheap, but they had no legitimacy beyond their status as a cheap laptop. As soon as a choice hit the market, consumers adopted a device that gave them something better and the iPad beat them on battery life, functionality and design.

Meanwhile the App Store helped ensure you could find a way to use your iPad the way you wanted to use it, while Apple's focus on iOS security made its tablets the only tablet to take if you were serious about enterprise use.

Netbook sales collapsed, falling from 32.14 million units in 2010 to a projected 3.97 million netbooks this year, the analysts claim, down 72 per cent from 2012.

"Netbooks shot to popularity immediately after launch because they were optimized for low cost, delivering what many consumers believed as acceptable computer performance," said Craig Stice, senior principal analyst for computer platforms at IHS in the report. "However, netbooks began their descent to oblivion with the introduction in 2010 of Apple’s iPad."

Apple doesn't do 'cheap', it does 'good'

“The market for the small, inexpensive notebooks had steadily climbed for three years from the time the devices were first introduced in 2007, peaking in 2010 when shipments hit a high of 32.14 million units. Since then, however, the netbook space has imploded and gone into decline – fast,” IHS iSuppli said, as reported by the LA Times.

This is all very interesting, but the back-story matters too. You see, in the years preceding the release of the iPad the usual motley collection critics, soothsayers and self-declared Apple wise people were nodding their heads and, after a quick glance to see if anyone was watching, urging the company to introduce a product to compete in the sub-$500 netbook space.

That's not how Apple saw it. Apple CEO Tim Cook frequently explains how the company isn't interested in introducing products that simply emulate what else is around. It likes to introduce devices that make a difference.

Jobs saw it a similar way, rejecting the pressure to manufacture a netbook equivalent, he said: "We don't know how to make a $500 computer that's not a piece of junk, and our DNA won't let us ship that."

Think for yourself

That's the same logic that's guiding Apple today as it refuses to introduce an iPhone in as dizzying a range of sizes as its soon to be beleaguered foe, Samsung. Just because other people say something doesn't mean it is right. Merely because investors think it's a good idea doesn't make it so.

This clarity of purpose seems to work.

The iPad now accounts for one out of every six computers shipped and the huge decline in recent PC shipments shows shoppers are either slowing down planned purchases in response to the stark prevailing economic melt down, or adopting cheaper, cooler devices, such as an iPad.

This pattern is going to continue, and if you extrapolate it it becomes pretty clear it isn't just the netbook the iPad is devouring -- it's the PC.

Call it post- or plus-PC (semantics are just nature's way for smug people to look smart) the effect will be the same -- it won't be long now until your iPad will be the first PC you buy.

No more heroes

Certainly that's not right here, right now, but for most users and most standard uses, the iPad is already far better than a netbook and/or a notebook and will only improve.

And for those who really need a notebook? Apple has plans there, too. A Digitimes report explained:

"Apple has issued requests for quotations (RFQ) to Taiwan-based supply chain makers for the revision of several notebook models including MacBook Pro and MacBook Air series in June 2013, causing ultrabook vendors to be concerned, according to supply chain makers."

With PC sales in decline, it seems likely Apple will be working to develop new breeds of device that welds a little iPad superiority within its MacBook range. This hints we'll see some interesting new developments within OS X when the latest iteration ships in a few months time.

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