The Cheap Notebook PC: What Took Them So Long?

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In the wake of the One Laptop Per Child project finally inching that much closer to delivering a product, the sub-$300 notebook PC—like ASUS’s Eee PC—is suddenly a hot item.

So why hasn’t this happened sooner?

Simple. PC makers couldn’t afford it—at least not until now. Ironic that while the basic costs and capacities of everything from MP3 players to digital cameras have dropped, we’re only now getting a bit of real computing power trickle-down into the sub-$300 realm.

Is there a market? I think so. I’ve talked to a number of people on fixed or low incomes—students, retirees, freelancers, people stuck paying off debts with bad credit—and all of them loved the idea. Simple was fine: they just wanted something they could use to browse the Web, do word processing, answer email … in short, do all of the basic, untaxing things the vast majority of people do with computers in the first place.

They didn’t even care about running Windows per se; to them, any computer was better than no computer at all. Granted, some of this functionality has already appeared in the form of smart phones and PDAs, but those are still costly—costlier than ever now that most smart phones are offered with a data or service plan and only made affordable in conjunction with one.

So how come we haven’t seen a $300-ish notebook sooner? There are three basic reasons:

1) Profit margins on hardware are thin enough that to make something for that little virtually guarantees you will lose money. Desktop PC manufacturers make barely a few dollars per machines as is; this is why they push hard to also sell additional hardware (printers, scanners), software (security or office apps), maintenance and service plans.

2) Of the people who do have the money to shell out for a full-featured notebook PC, more of them are buying notebooks as potential replacement desktop machines, which automatically pushes up baseline expectations for what a notebook should be. The lowest-end Dell notebook available as of this writing, for instance, starts at $499 (a low, low $15 a month if you qualify for financing) with 512MB of RAM, a 60GB HD, and a 256MB video card. These are the specs for a decent starter desktop machine, but they’re still total overkill for someone with more modest needs—and for some people, the difference between over $500 and $300 is make or break.

3) You get what you pay for. This definitely applies to electronics, where a higher price can be applied back into research and development, QC, and all the other things that make something worth buying at any price. A lower price almost inevitably means poorer materials or workmanship, less thorough QC, or any number of other corners being cut.

Next page: Why cheap notebooks are on the way

At the same time, a number of other things have come into the picture to make the $300 notebook that much more feasible:

1) The broader acceptance of free and open-source software. ASUS was able to shave quite a bit off the price of each Eee PC by loading it with the Linux operating system and open-source software (such as OpenOffice) that costs them almost nothing to provide. Windows licenses are not cheap, and most PC makers attempt to offset the cost of Windows by, again, offering add-ons.

2) Cheaper solid-state storage, which is speedy and enhances battery life. Flash memory has finally fallen to prices where the amount of space you’d need for an actual notebook PC (4-8GB) is affordable. The 2GB card I bought for my camera the other month cost a mere $15; I imagine the prices are much cheaper for manufacturers buying in bulk.

3) Other cost-cutting measures that don’t affect quality as broadly. VIA’s own NanoBook uses not only VIA’s own C7-M processor, but VIA’s North and South Bridge chipsets, their audio components, and their portable graphics subsystem. They build enough of the pieces themselves; why not use them together?

4) Public pressure. Now that people see something like the OLPC is possible, they wonder why something like that can’t be offered in a more commercial vein as well. The XOGiving site indicates that you can send one laptop to someone for $200, which means $300 isn’t an impossible target to aim for.

I wonder, however, if the fact that all of this has emerged now is reflective of the bucking of a long-time trend. For too long, the economics of the industry have rewarded companies who stay current with technology rather than providing truly affordable computing power. A couple of years back I wrote a column for PC Today where I lamented the gigaflops-and-gigahertz-at-any-cost mentality. We’ve been trying to make things faster and more powerful, and in doing so neglected whole classes of folks who didn’t need faster or more powerful. They needed something that worked, with nothing fancy—although I admit that depended on your definition of “fancy.” For example, these days wireless could be considered strongly required and not a frill.

Providing what just works, rather than staying with what’s current, has at least some precedent elsewhere. Consider Japan’s Mujirushi, a chain store with a house brand that embraces unpretentious simplicity as a cost-cutting measure. They were profiled recently in Slate, and the article described how their frugality worked in their favor as a brand unto itself. They sell “U-shaped” spaghetti—pasta without the ends trimmed, as they normally are during manufacturing—and potato chips that may look weird but are at least as tasty as the real thing.

There’s a lesson here. I’m now looking forward not to whatever Apple has up its sleeve for the next generation of the iPhone—which is guaranteed to be overpriced and vendor-locked, anyway—but machines that are cheap, simple and casually nondescript, and still do everything you need. It’s hard to see how that can go wrong.