Innovation on the way?

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Are mini-notebooks an indicator of shift in innovation versus simply an emergent price category?

When Microsoft launched Windows XP Media Center and Windows XP Tablet PC Editions in November 2002, the PC industry was infused with a level of excitement and hope that people involved had not experienced in the prior 18 months. Tech companies were strapped for cash flow, change was minimal in stationary PCs, premium performance ruled the PC ecosystem at the high end, $299 and $199 PCs bottomed out desktop profits, and a few were ahead of the technology trying to force desktop processors into notebook form factors.

To some, Media Center and Tablet PC were simply new and perhaps would help pick up ailing sales. To others, the platforms offered potential for innovation and new tools. By Microsoft infusing over $400 million into Tablet PC development alone and Intel developing Centrino technology that eased wireless connectivity and power issues, confidence in the future of mobile PC technology was reinforced unlike anything prior.

Since 2005, we have seen continued improvements and introductions in ultra-portable, mobile PCs. With the coordination of hardware changes, such as lower powered chipsets, processors, and solid state drives we’ve seen acceptance of miniaturization of classic notebooks and a pop in excitement.

Yes, the ASUS Eee PC, Acer Aspire One, Gigabyte M912V and dozens of mini-notebook models that are or about to be available hit the sweet spot for users: an affordable balance of price, portability, and practical performance. Growth rate is good. Sales are strong.

However, profit margins are minimal, sales are skewed, quality is passable on the top selling models, and return rates are higher than average. These factors are likened to the previous $199 PC race. It is reasonable to expect an adjustments in business decisions relatively soon. These issues are easily addressed, and should be handled with attention versus cuts.

Even though mini-notebooks aren’t the most creative implementation of technology, I do hope that it is an indicator of change the industry – a willingness to advance it, with major innovation to follow.