Analyst Opinion - Given the number of problems the iPhone had, the device was lucky to have been brought to market by Apple. Any other company would be dead in the market. Battery life is terrible, the connectivity is unreliable, the MobileMe application deleted email for large numbers of users and weeks after the launch it is still having issues. But the iPhone also shows that Apple marketing, packaging, and overall user experience can overcome almost any obstacle. And it may be exactly what Netbooks and MIDs need.
This is IDF week and I have been especially interested in those upcoming Netbooks and MIDs. I have both the HP and the Dell Netbooks in house and in use and have been watching the Lenovo MID in the Olympics where the device has performed reasonably well. I actually believe that the success of both platforms will have more to do with vendors emulating an Apple-like experience than anything else.
The problem with Netbooks is that these products are really notebooks that folks want to call something else so they don’t get beat up on the fact that performance is limited and they have to run an old operating system. When the iPhone was imagined, it clearly had limitations as well. By no measure will it ever be as powerful as a MacBook and nobody cares. Naming is important: Imagine the iPhone’s name as “MacBook Mini” any implication of a notebook and it clearly would not have done as well (I am assuming at this point that the iPhone is much more than a cellphone, but a computing device that is often described as the reference design of future MIDs.)
In the case of Netbooks, they look and feel like small notebook computers. They are power-limited and that means an extra effort is needed to tune the experience. What Apple did for the iPhone was to create a unique version of the MacOS tuned for a small device. What the Netbook makers are doing is using either a slightly modified version of Ubuntu Linux, or Windows XP or Vista Basic. Or, to put it differently, a choice between an old looking OS, an old OS, or a crippled OS.
But what these devices really need is a custom version of any of the choices - one that optimizes the user experience. It needs someone to do what Apple did for the iPhone. The current generation of Netbooks feels like someone just decided to do 70% of their homework and hopes for a good grade. For Linux and this class of device, the gOS, a version of Ubuntu that looks like MacOS, would be a vastly better choice.
Of the Netbooks I have seen so far the HP is both the best and the most expensive, as it can cost more than $1000 in some configurations. There is clearly no entry-level feeling in terms of the price. Properly configured, it could be a competitor to the MacBook Air, which is also limited, but the HP Netbook has weight, battery, connectivity, and size advantages that could make it better choice than the Air for many - if it was presented in a similar fashion.
My belief is that, loaded with Windows Vista Basic, Stardock’s WindowBlinds (for appearance) and using a ReadyBoost drive, this product could actually be more interesting as it is (I would like to see a recessed USB port for the USB drive) . If HP did something similar to what Dell did with its E series, provide a low power second mode, but focused on making it like the Redfly mobile companion, I think this could actually be a hit. But only if it is presented as Apple would present it - as something different and special.
MIDs are closer to the ideal
Think of the current generation of MID, or Mobile Internet Device, as kind of a big iPod Touch that trades size for capability. A MID will provide a less compromising experience but they tend to be about 4x the size of an iPod Touch. Some will provide voice capability through VoIP. Even more important will be the impact of WiMax in this class of devices.
Because of its size, a MID is more appropriate for those that want video and/or want to share their experience with others. You don’t have to hold the thing close to your face to enjoy it and if you want to play music without headphones and not carry speakers, MIDs function like little boom boxes.
What makes MIDs different is that many come with custom versions of Linux that look a lot like what Apple did with the Mac OS for the iPhone. Also, Intel is doing the Linux work and providing it as part of the package.
Of the devices that I have seen, the Lenovo MID is by far the best looking - it is being heavily used at the Olympics this week. Many of the MIDs, and especially the Lenovo, come closer to the Apple ideal and should pick up a better following as a result. Unfortunately it isn’t coming to the U.S. MIDs will get more interesting over the next two years as size drops significantly and these devices physically fall into the same class as the iPhone/iPod Touch. However, to be successful, they still need to be packaged, presented, and marketed at Apple levels and we are still waiting to see that.
The MobileMe/iTunes Lesson: It’s services, stupid!
The other day, I was watching a Cnet review of the best music services and MP3 players. It was Interesting that they put the current Zune ahead of the iPod in terms of the best MP3 player but ranked iTunes first and didn’t even put the Zune music service into the top 5. What makes Apple successful is the blend of a device and a service. A great device without a great service is a doorstop.
This, I believe, is especially true for both the MID and Netbook platforms. They are largely leveraging connectivity to overcome their local processing power shortcomings. But, to make that work, what they connect to in terms of content services must be compelling. A syncing product like SugarSync or Live Mesh coupled with a content offering like Slacker and blended with an offering like Zing (owned by Dell) could provide a lot of the back-end both device classes so desperately need.
In the end, both MIDs and Netbooks need an Apple-like approach focused on the user experience that blends attarctive hardware, a custom OS designed for the devices, blended back end services, and present all of this as Apple would make these things really sing. Or, once again, Apple is clearly schooling a lot of vendors: To be successful, these vendors need to learn the lesson they are being taught.
Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.