Netbooks: Emerging market entry-level technology or Western fashion accessory?

by Brendan Smith

A recent article in Business Mirror notes that Intel is getting ready to release a new version of its low-cost Atom processor, and with this version it's hoping to hit the market it was targeting in the first place: emerging market consumers buying their first computer. The company had originally thought that the chip, which allows PC manufacturers to sell laptops for less than $500 in most instances, would appeal most to people in fast-developing economies like China and India. Instead, it has been Western consumers who have taken to netbooks as a second computer, drawn not only by their low price but by their small dimensions, low weight and snappy looks.

The new version of Atom is designed to use less power and be capable of enduring the more extreme conditions present in many developing countries, including hotter climates and the dust that often wrecks electronic devices in rural areas. Intel believes that many consumers in developing countries have shunned netbooks because of doubts about their durability, and the new power-sipping Atom is designed to eliminate the need for a fan, allowing the computers to be sealed and preventing dust contamination.

While improving the durability of hardware is critical, there may be other reasons that developing country consumers, especially in rural areas, have hesitated to buy netbooks. As their name implies, netbooks are designed primarily to leverage the power of the Internet, and many residents of developing countries lack reliable connectivity, particularly in rural areas. The growing popularity of netbooks and "nettops" means that device makers have to figure out ways to provide reliable connections for these units. Hardware makers are in talks with mobile carriers on deals to provide customers with free or subsidized netbooks or nettops in return for a long-term contract, as is done with mobile phones. These models, which have been attempted in the U.S. and elsewhere, may boost the uptake of netbooks by essentially allowing consumers to buy netbooks and Internet service in installments. Hardware companies and mobile Internet providers that can devise compelling value propositions for developing world consumers may be well-positioned to capitalize on the next wave of Internet adoption.