back to article Subsidized netbook model could sweep away 20 years of PC history

While many stories this week rest on whether or not Apple will bother with a netbook (Steve Jobs has said the iPhone does everything a netbook does anyway, and was reported as saying “We don’t know how to build a sub-$500 computer that is not a piece of junk”), the issue really is whether or not you belong to the school of …


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  1. Anonymous Coward

    There is an alternative, though

    Imagine, if you will, that netbook sales go down instead of up. Where then will that leave all those wonderful plans? I would find it very surprising if companies like Dell are able to extract a healty profit from the sale of these nettops. Clearly the iPhone, and the nascent success of the notbooks have shown that people have a need for small portable computers, but once that niche has been filled, what then remains for the netbook.

    Speaking from personal experience, I have just bought a Dell mini 9 in order to write my thesis, but beyond that I don't see a real practical purpose. I have an iPhone for checking my email and RSS feeds on the go, and an iMac at home for the more serious stuff. I bought the netbook (with OSX installed on it) just so I can sequester myself in the library and not be tempted by all those mountains of porn, movies and music to which my iMac is curiously predisposed.

    If anyone can make an attractive netbook, it certainly is Apple. Only the other day, I thought to myself, why are all these companies making netbooks content just to compete with each other? Why don't they ctretch the enveloppe? Once Apple jumps in, they're gonna be hurtin' a real quick, frankly.

  2. Rocket

    sounds like ...

    "The issue with a netbook is that it should be cheaper than a small notebook computer, probably not have an optical disk, run on a lot less power, with a less powerful processing chip, most likely based on cellular style ARM cores, and it should stay connected to the internet over cellular broadband so that someone can use it for an entire day on a single battery charge. Some netbooks will have no disk storage (just using flash) so that the device is lighter and less power-hungry, and some of them are little bigger than two handsets placed together or as large as a very small notebook computer."

    Sounds like to me

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  4. Andrew Moore
    Jobs Horns


    “We don’t know how to build a sub-$500 computer that is not a piece of junk”


    “We don’t know how to build a $500-plus computer that is not a piece of junk”

  5. Anonymous Coward
    Anonymous Coward

    People . . . pah!

    Firstly, the sad truth is that the existing mobile market shows that many consumers DO like the 'low initial cost, high monthly cost' subsidy model for phones. In fact, you can see this by looking specifically at the iPhone, which started out as having a high initial cost but lower running costs over to the low upfront cost, high running cost model of most other smart-phones . . . and sales exploded.

    I'm not sure why people like this model seeing as it costs them more in the long run - for instance, people have tried it with computers in the past and it's not really worked - only businesses lease computers. I suspect it's something to do with seeing the whole thing as a 'service' - so when someone goes into Carphone Warehouse and comes out with a laptop under contract, they don't see it as being the same as buying the same laptop with a 26% APR credit agreement.

    Finally - while the rise of the Netbook / Smartphone / MID is a chance for creative disruption that may upset the global IT hegemony, I'm not sure if that should be the regulators goal, but we do need some action to prevent the kind of tie-in/exclusivity deals we're seeing at the moment (we saw what happened in the fixed line market once the telco's lost their ability to restrict the connected equipment)

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  7. The Fuzzy Wotnot

    Can't see Apple doing anything about it

    As Jobs has said, they won't cheapen the name by releasing cheaper stuff, even if it was good or not. Expensive clothes are expensive 'cos the label has cachet, the cloth is the cheap denim used in the jeans sold in TESCO for kids at a fiver.

    Apple and Jobs pride themselves on selling neat little bundles of tech at over-inflated prices to Muppets ( myself included! ) convincing ourselves we're buying into a brave new world of tech, when in fact we're locked into tech prisons with limited potential, throwaway hardware. Ipods, updated every year. iMac locked box with no upgrade potential. iphone, locked phone with no upgrade potential.

    You want a cheap OSX mini? Get a MSI Wind or Acer Aspire One, install OSX, instant £250 OSX mini-top!

  8. Torben Mogensen

    Subsidy != cheap

    When you look closely at the various subsidy schemes offered by telephone operators for phones or netbooks, you rarely save anything. In most cases, you are not only locked to the subscription for half a year and up, you normally pay a higher subscription rate than if you just buy a subscription alone. so, normally you can get the combination as cheap or cheaper if you buy the phone or netbook separately from the subscription. The only difference is that you have to pay more up front. But you get more choice: You can combine devices and subscriptions that the operators don't offer as a package.

    In fact, I think the term "subsidy" is misleading: It implies that the operator really does pay for some of the cost instead of just (over time) passing it all onto the customer. You should call it "buy now, pay later" instead.

  9. corestore

    Cable boxes

    "Take the simple case of US cable operators. Customers can only use the set tops they deliver and as a result the customer experience stays the same for an entire decade – with no innovation whatsoever. Also, cable packages are always so rigid. Do you want 100 or the 150 channel package – you can never just choose channels. You cannot decide how many tuners you have, and the prices are jacked sky high by the set top manufacturers who control the Conditional Access systems – and these systems are used to deny device competition."

    So totally true. I've felt for some time that there's definitely a market for an 'open', probably open-source, STB/DVR; imagine if ReplayTV had build a system capable of accepting cable TV access cards, acting as competition to the established STB makers? Someone really needs to take a run at this market. I could do some serious ranting here, but I'll forbear.

  10. Terry Ellis

    Open networks

    Isn't the comment in this article open having mobile operators opening up their networks in direct contrast to the thoughts of many just the other week when Sky was bleating on about having Virgin Media open up its infrastructure to competitors?

    Why shouldn't the mobile networks employ these kind of deals? In the end, the consumer is happy to go along with it whether or not this ultimately reduces choice or otherwise. In many cases, the deal is better for the consumer else they would already be going to purchase handsets at full price and accompanying sim card as you suggest.

    I don't buy the idea that ultimately there will be less choice. The market will provide what ever the customer wants (or in some cases needs). Yes it's true that the OS market was (and is) long dominated by one player, but potentially those days are coming to an end (not necessarilly because there are better OSes around, but because of the internet). In addition, I wonder whether the perceived lack of innovation in the OS space due to having only one OS actually benefitted the application space - would our applications be as rich had developers always had to develop for multiple OS?

    Still, the length of contracts does concern me somewhat but I think that eventually, it won't be cost effective to have a contract - the market would eventually realise that (you can't really go any better than offering a free handset/laptop).

    Perhaps a solution would be for someone to come out and operate an 'open' mobile network in the same way that the internet is open, and have a market of only MVNOs?

  11. Anonymous Coward
    Jobs Horns

    OS X is so dull

    Why would you bother

  12. Daniel Pimley

    @ A Baird and Andrew Moore

    Thanks for your erudite comments. Why don't you just fuck off?

  13. Chris

    Maybe defining what a netbook is would have helped...

    "Steve Jobs has said the iPhone does everything a netbook does anyway"

    Maybe using his definition of "netbook", but using the one that pretty much every other manufacturer uses then the iPhone falls short of the mark. Yes, a high-spec phone will allow you to do much of what a real netbook does, but for me the one crucial difference is that a phone or any of the other really cheap netbook-wannabes can't run the exact same software as I use on my computer at home - I might be able to replicate most/all of the same functionality using different software, but sometimes I want/need access to the *same* software when I'm on the move. Considering how capable my WinMo Touch Pro is, taking a Jobsian attitude would mean my AspireOne would remain unused at home gathering dust whilst I was out and about. Which it doesn't...

    "We don’t know how to build a sub-$500 computer that is not a piece of junk”

    So hire some decent engineers who understand the concept of cost-sensitive design without compromising on the essential specifications. If Acer can build the quite frankly pretty impressive AspireOne for $300 (according to Best Buy), then just how much money does Jobs think it'd take to pimp a similar baseline design out sufficiently for him to deem it worthy of an Apple badge? Actually, I wonder just what changes he thinks would be necessary, because from where I sit the hardware is as close to perfection as I could hope for given the size of the thing - the screen is beautifully clear, the keyboard beats seven shades of youknowwhat out of the hideous excuse for a keyboard he thought was worthy of the Macbook, the whole thing just works.

  14. Tom Cooke

    Subsidy model

    I work for a mobile phone company, and know exactly how the commercial model works. Until the (quite recent) advent of SIM-only contracts, customers using more airtime than would be economical on prepay had no feasible alternative to over-priced airtime subsidising their handset. As a previous poster pointed out, customers *liked* that - they got a new handset every 12 months, even though a quick calculation on the back of an envelope would show them how much over the odds they were paying. I even had two or more contracts myself to get the shiny new toys every six or four months. I've moved to SIM-only (I get same airtime for £10 via a bundle with my cable provider as I would for £35 on standard contract) and the urge for shiny toys has worn off. Customers are now wising up to the possibilities of SIM-only on mobile, but now they're all taking mobile broadband at - guess what - £30+ per month with a subsidised laptop. Sense of deja vu? But I really think that given the economic situation, customers will bite the bullet, spend the money on hardware (phone, laptop, iPhone) up front if they've got it, and start actually working out how much a contract would cost over the lifetime and deciding to go SIM-only or even prepay.

  15. Robert Hill

    Thanks for speaking for all of,

    wait, you aren't. You are speaking from the point of view of a tech head, who is quite comfortable buying their own cable box (which, btw, in the US you CAN, it's just that you have to ensure compatibility with your chosen network, so most people don't bother).

    In the same way, most people just don't CARE about their mobile phone - it works, it makes calls, it may even let them browse the mobile operator's portal and even the Web! Good enough - they don't care about the brightest, shiniest toys.

    What most people care about is the overall economics, and buying a seperate up-market handset and a SIM nearly always costs more money than taking a contract. In effect, the operator is CREDITING you for your lock-in. And for _most_ people, for whom there is little difference in operators, or even handsets, that works out to be better.

    The netbook market will work much the same, and BE much the same for MOST people. MOST people will only want netbooks that run Windows XP or Vista or 7, not OS X or Linux. These are nearly commodities now, and will be further commoditized in a year. MOST people that buy them will look to the airtime as the major expense, and will be better off on a contract than pay-as-you-go for data airtime. So why NOT get a commoditized netbook free?

    You make points about "innovation", but let's fact it, their isn't much room to innovate in toasters, loudspeakers, pens, and other commercially mature markets. And that's what PCs are quickly becoming, despite the "noise" journalists like to create about the the innovation arguement is pretty weak. Most people want a keyboard, screen, and enough power to browse the web, run Office, and the occasional games. I don't count myself amonst those, but I am blessed with enough non-geek friends to realize that this is the case for most people - and the industry should not just cater to me, but to the greatest number...

  16. Rachel Greenham

    Steve Jobs has said...

    "Steve Jobs has said the iPhone does everything a netbook does anyway"

    As someone with several Macs and an iPhone... a short list of some of the things I do with my netbook (linux) that I can't do with my iPhone:

    1: Type

    2: Do Java development (ie: work)

    3: Watch Flash

    4: Stay online in IRC

    5: Block ads while browsing

    7: Use version control for stuff I'm working on (more than just java development in 2:)

    8: Work fully with office docs (with

    That's a start. There's more stuff I can just about do on the iPhone (VNC and SSH to remote hosts for instance) but it's such a painful experience (mostly because of point 1: above) that I'd rather go upstairs to get my netbook.

    So the earlier poster is right: Steve Jobs is just sticking with a wilfully limited idea of what a netbook is. Let's not forget it's a real computer with all that flexibility. Yes it's slower than a lot of other modern machines, but you can still get almost anything done you can do on a more powerful machine. The machine will stretch to it. The iPhone just has hard limits - and a lot of them are actually limits that Apple have chosen to burden the iPhone with by limiting openness, not ones that are necessarily inherent to the hardware or the OS.

  17. Dave Bell

    What Apple might sell...

    I wouldn't see any big reason to buy a cheap Apple Netbook.

    But if Apple can guarantee that peripherals work, and give me a decent keyboard, it would have real extra value.

    Otherwise, I might as well load Linux on a netbook, or a second-hand older notebook.

  18. Anonymous Coward
    Thumb Down

    It's been coming for a while

    I can easily see the day, when I and my wife each pay £40 a month for a slower, more restricted and capped mobile broadband, simply because it comes with a new Laptop. I will curse that I can't upgrade it after 6 months, and she will say she only upgrades her laptop every 2 years anyway. Though her 18month contract on the phone has been nothing but a curse because of the "the model looks nice" but the phone software is shit, selling approach they take. Ultimately I'll be paying a subscription to Amazon to read books, O2 for the Iphone Orange for the Macbook BBC for the iPlayer that's built into my subsidised Sony TV and Nintendo for the Wii. This will drive prices of laptops up (they'll soon be hitting £1000 unsubsidized) the quality of them will go down and so will choice, freedom and innovation. I dread it, but it's already here. How dare the iPhone only be available on O2, there should be laws against that.

  19. Gordon Silver badge

    Android WTF?

    Seriously why was it even mentioned in the same breath as winmo and iphoneOs. It's completely unproven. It will be many years if ever before it can boast a userbase close to either.

  20. OrsonX
    IT Angle

    just because

    OS X on an AspireOne... so how do you go about doing that then?

  21. Anonymous Coward
    Anonymous Coward

    Open Smoken

    Just trying to get hold of the basic electronic kit is the hard part at the moment.

    Say you want an ARM based system, try and get a hold of basic motherboard for one, yeah a few dev motherboards exist all with builtin LCD, but with an ARM you want it on a dinky motherboard. Then you want to buy a dinky case, and the electronics to read sim cards.

    Hardware is the problem, I couldn't give two hoots about the Windows OS or whatever is the flavour du jour, I just want the parts and I am good to go. So, hardware manufacturers stop sipping at the trough of MS and start releasing the parts.

    Open source has triumphed, no one cares about the shitty little user who does stuff on a computer system akin to a child making a drawing for the fridge, they will use what they are given and they will like it or lump it, the namby pambys.

    Look how well the crayon operating system has done so far. Imagine what will happen when they are given a big boy pen. Oh, there will always be moaners but they moan about the crayons anyhow, shouldn't give them any time or validation, they are just ignorant.

    We need more open electronics. We need to be able to custom build our devices, wield the soldering iron, and become one with the capacitor and the resistor. Stuff the plebeians.

  22. Steve Roper

    @Open Smoken

    Oh, pulleeeeze! If you're going to troll a geek comments thread, at least TRY to be a little less obvious!

  23. Anonymous Coward
    Thumb Down


    this ignores the fact that netbooks are, to be completely honest, crap.

    They are useful for having as an extra system to carry around and use wireless networks, but they are so limited in processing, disk and memory as to be essentially useless for almost all non internet browsing use.

    Netbooks will only ever be an extra system in addition to a proper computer (or even a mac, which doesn't count as a proper computer)

  24. Quirkafleeg

    "per mip"

    What, exactly, is a "mip"? Is it supposed to be like MIPS, but with an unspecified measurement period?

  25. Watashi

    Apple not biting

    Apple's business model is precisely to NOT make cheap hardware. Would Ferrari be the ultimate sports car if you could buy a Ferrari saloon car for £15K? Or Gucci be so in demand with the rich if you could get a Gucci handbag at TK Max for £20? Exclusivity combined with high quality is the key to their success.

    That's why Apple is bringing out these new double capacity batteries. Rather than downgrading the spec of their hardware so that you can use it all day without recharging, they're upgrading the batteries. No high-paid, fashion concious executive is going to use a cheap-and-nasty subsidised netbook when they can pay ten times more for a pretty Macbook status symbol that does the same job.

    Subsidised netbooks do have a future, however, and I think it will come through business packages. The question is whether the packages will come from a company's hardware supplier (eg Dell) with the network supplier tagged on, or with the networks doing deals with hardware suppliers. Could be a mixture of both. Buy HP computers for your buisness IT hardware and use O2 for your business mobiles and you'll get a big discount on HP/O2 netbooks. For personal use, I doubt the deals that will be available will offer a meaningful saving on costs - however, lots of people don't like having to chose their computers (due to too much choice and too little knowledge). Netbook packages from network suppliers would make it easier for many to enter the market.

  26. Ken Hagan Gold badge

    Re: per "mip"

    It's a back-formation from MIPS. It happened about two minutes after the initial front-formation, about a quarter of a century ago, at least. I expect you still insist on putting the dots in L.A.S.E.R..

  27. Cameron Colley

    RE: Meh

    I think you just argued that netbooks are crap because they're only useful for their intended use?

  28. James Pickett


    "useless for almost all non internet browsing use"

    Like WP or spreadsheets? So last season, I know...

  29. Rex Alfie Lee

    What a Shock!

    How shocking, that Intel & M$ have a hegemony?

    The truth is that M$ will do anything to stay in the monopolistic position they hold. The fact is that they crucify people who don't give way to M$ & that's the line that Steve & Bill created themselves.

    Hopefully M$ will die a deserved death & Linux will take its rightful place in charge.

  30. Heff


    Wow, a fucking _think-tank_ to tell me what I've known since I was in the single digits and OS/2 shareware vanished from the front of PC magazines. Free market forces dictate, only they arent free in the tech sector because R&D is a minor bitch, but licensing is a major one.

    lets recap!

    IBM said : make it IBM compatible.

    Intel said : We'll pay for your advertising if you only sell our chips

    Sony Said : Blu-Ray is the future; because we say so.

    Apple Said : You will buy songs through us, and only us.

    Cellphone networks said :you will never own your device. you 'lease' it from us.

    Microsoft said : This is a EULA. you own nothing.

    Nokia said : Symbian, and only Symbian.

    Games Developers said : This is a more Bizarre EULA.

    XBLA said : you dont buy the games. you buy points to spend on games.

    Steam said : you buy the game through steam, but if we think you're pirating anything, you 'lose the rights' to everything you bought.

    MS strongarmed Dell into not selling linux. Then Dell would sell linux online. on bottom end boxes, in some out of the way fucking labyrinthian part of the online sales site. on a machine you got no discounts or rebates on. they got geek credit for this,media face-time, and MS's antitrust woes waned a little.

    Apple says "sure, you 'own' the iphone. but, uh, we dont want you using it in any way we cant control. but you dont own the music you paid for. also, have a crippled bluetooth stack. have a constant war over applications. and we'll issue a new patch to re-lock the phone, because you insist on jailbreaking it to do the things you want it to do that its actually capable of."

    I too miss the days where the Shit I bought was MINE. Where I could pick up a game and not be lectured for ten minutes about what I am and am not allowed to do with it. Where a telephone came in a box with two pieces of paper; a guarantee and an instruction leaflet.When Music was something you got on a tape or a CD and when you were bored of it you could sell it on or give it away. Where buying a computer meant purchasing interesting things in boxes, spending a day assembling it, and never, ever once being forced into a situation where you agree to do a bunch of pointless bullshit just so a lawyer on the other side of the planet can get a lapdance at lunchtime.

    These days are gone. I dont own my phone. I dont own my cable box. I dont own my operating system or a single piece of software on it other than the stuff I write myself. In the future, I wont own my television either. My kids probably wont own books, they'll lease them, or rent them through some kindle clone/descendant, which will track what they read, for how long, and what time of day. we'll rent the books on the cheap, so every other page in the rented, electronic book is an advert about other books like the one we're reading. Our TV will log our requests for On-demand TV and build a profile of what we like to watch and when. We'll subscribe to a brand of radio station that plays music I think I like, thats carefully selected by labels that subsidise the station. I'll take the cheap package. every 5 or ten songs someones upcoming gig from the label will be pushed in my face.

    Give it another twenty years and owning a soldering iron will be grounds for a search of your house to make sure you arent circumventing some corporations rights by tinkering with _their_ hardware. My TV log and cellphone usage and book-rental list will be searchable by law enforcement agencies in order to ensure im not a terrorist. Another ten years after that, they'll be submitted to Credit Agencies to determine how much of a liability you are. You'll agree to this, otherwise you wont be able to rent books or watch TV or use a phone. Freedom of information act, not to mention nutbags with agendas and good old fashioned crap security means that If I watch 'Natural Born Killers' 18 times over the course of a month, someone might come and knock on my door to have a chat about _why_.

    If you think this is all tin-foil-hat talk, the purchase and distributions of chemicals now places you on a watch-list, as certain chemicals are integral in the fabrication of explosives and horrid toxic shit like Sarin and the like. of course, I _might_ just be trying to start a cottage-industry soap factory in my basement, but I bet im going to have to fill out an awful lot of forms for it, and isnt it suspicious that I want to make my own soap?

    We'll reach a stage where opening something to find out how it works, probably what got most of us into the tech sector to start with, will put us in breach of the law. I crack my iphones case and wire in a replacement bluetooth stack; I've just voided my contract, breached RIAA/MPAA/DCMA jargon and m now liable for a fine. because its not mine, even though I payed for it, even though Im still paying for it, even though i'll be legally obliged to continue paying for it even after my service has been withdrawn due to me tinkering with the hardware.

    really. no user serviceable parts are inside.

  31. John Smith Gold badge

    Please accept your free PC with our cell service

    Its complimentary, it ain't free.

  32. richard
    Dead Vulture

    longest post ever from mr heff?

    anyone done better?

    and mr heff, you might as well go and crawl back into a cave with your coloured rocks to amuse you. or you could just buy an xbox and enjoy all of the activities in gta4, then you'll sleep at night.

  33. Anonymous Coward
    Paris Hilton


    All we would end up doing is replacing Microsoft with Apple. Far better if it was replaced with Google, for some reason neither explained nor very clear. Own much google stock ?

    PH, not an android.

  34. Dan

    Fact-Checking FAIL

    Back in 1980s and 90s you could either buy an Apple Mac from Apple or a Windows machine from everyone else.

    Interesting, then, that I was running PRODOS, MS-DOS, and DR-DOS during that period, and only the school system was running Macintosh. (Mostly, even they were running PRODOS well into the 1990s.)

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