Apple is known for creating revolutionary devices that redefine their product categories
and disrupt various markets.
Take the iPhone for example, it forced us to reimagine what a smartphone was and how
it could be used.
But it also made devices like music players obsolete, which began the decline of the iPod.
And in this video we’re going to explore a very similar situation as it pertains to
the netbook.
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Now before we discuss how Apple destroyed the netbook industry, we need to begin by
defining what a netbook even is.
And that includes understanding the state of the tech market back when netbooks were
first introduced.
In 2007 Apple introduced the iPhone, which was arguably the first modern smartphone consumers
had ever seen, and it helped establish the beginnings of the mobile tech revolution.
You see, up until that point, mobile devices weren’t very capable machines.
Sure you could answer emails and do some rudimentary internet browsing with something like the
Blackberry, but there were serious limitations that prevented it from delivering a desktop-class
experience.
iPods were also very popular, but they were designed for very specific purposes.
For example, listening to music or watching tv shows and movies you bought from iTunes.
And keep in mind modern tablets like the iPad hadn’t been invented yet.
So if you wanted a traditional desktop experience on the go, your only option was to lug around
a notebook computer.
Which weren’t as thin and light in 2007 as they are today.
Many computer manufactures identified this gap in the market, and decided to bring back
a product concept that had been attempted in the past, but failed virtually every time.
And that product was the netbook.
Netbooks were basically miniaturized notebook computers that included only the most essential
features in an attempt to be as affordable, compact, and light as possible.
Now as I mentioned, this history of product goes back before 2007, but had never seen
much commercial success.
And I’ll tell you why.
In the 90’s netbooks were actually quite expensive.
One of the most popular, Toshiba’s Libretto, debuted with a retail price of $2,000.
Which wasn’t much cheaper than a standard notebook that featured more power and a more
capable operating system.
That was another issue, most netbooks required proprietary software applications in order
to run properly on their less powerful processors.
And for those that didn’t, its software was typically stripped down and suffered from
usability limitations.
So with all of those disadvantages, the netbook market never experienced much growth during
that period.
But all of this changed in 2007 thanks to a few different factors.
First, computer processing technology had advanced enough to fit a sufficient amount
of power into a small form factor.
So for many users, netbooks were powerful enough for their daily tasks.
Second, the rise of web-based applications and mobile networking made software more suitable
for netbooks and eliminated the need for proprietary application development.
Third, the cost of netbooks were lower than ever before at about $300-$400, heavily undercutting
the average notebook computer price of about $700.
And when you combine the affordability factor with the 2008 global recession that effected
consumer spending, it’s easy to see why netbooks became an appealing option for users
who wanted a near desktop computer experience on the go.
In fact, netbooks proved to be so successful that the market grew 30 times from 2007 to
2008, totaling about 12 million units sold.
And by 2010, netbooks accounted for nearly 20% of the entire portable computer market,
which was a pretty impressive showing from a product category that had failed to gain
traction in the past.
But there was one serious compromise netbooks had to make in order to achieve their compact
form factor and affordable price.
And that was, an enjoyable user experience.
Netbooks had small low-resolution displays with low brightness that made them virtually
unusable outdoors or in bright environments.
They had cramped keyboards that made typing quite frustrating, their trackpads were tiny
and required multiple swipes to move a cursor across the screen, their battery life was
typically too short to be reliable throughout the day, and their slow processor and small
hard drive made them virtually unusable for any serious productivity work.
And while consumers appeared to be okay with all those compromises, it left too much room
for the industry to be disrupted by a more user-friendly product.
And that’s exactly what happened in April 2010 with the release of Apple’s iPad.
In fact, during it’s keynote introduction in January, Steve Jobs mentioned the netbook
[clip] And what Jobs said was true.
Netbooks hadn’t been better at doing any task, they were simply a cheap version of
traditional notebooks.
And the iPad was the exact opposite.
It included modern technology like its 9.7” multi touch display and optimized operating
system that featured an app store which made the device even more capable and valuable.
All at a starting price of just $500, which put it in the netbook’s price range.
So what the iPad did is it took the features users loved about netbooks: like their compact
size and affordability, and included them in a device with none of the netbooks compromises.
The iPad had a beautiful, bright, high-resolution touch display that eliminated the need for
a physical keyboard and trackpad, and it had 10-hour battery life.
Which was at least double what you’d get from any netbook at the time.
It also had a thin, compact design that was built for portability.
And this isn’t even considering it’s high-quality industrial design made from aluminum and glass
as opposed to clunky plastic netbooks.
It was clear Apple had a winning product that was poised to single-handedly destroy the
netbook industry.
So it may come as a surprise to learn that the iPad was one of the most criticized products
Apple ever released.
And I’m not just talking about the usual hate from random people on the internet, I’m
talking about reputable news outlets that were quick to dismiss the iPad for reasons
that seemed pretty obscure.
PCWorld published an article that said this, “at the end of the day, the show's centerpiece
- the iPad -- is just a big iPod Touch.
Lots of folks will want it, in a hypothetical sort of way.
But it's hard to imagine all that many of them will fork over the initial $499 for a
crippled version.”
Here’s another article from Fortune, it said “When I put it down on my sofa and
caught it in less flattering light, I saw my unattractive fingerprints all over it.
When I took it to work the next day, it weighed down the new handbag I’d bought in part
because it would fit it.”
And here’s a breakdown of the criticism from Twitter users, 27% felt the iPad was
just a big iPod touch or iPhone, 23% felt it’s name sounded too silly, 15% made feminine
hygiene jokes, 13% were upset it didn’t support Flash, 12% were upset it didn’t
include a camera, 5% wanted multitasking capabilities, and the remaining 5% were concerned about
AT&T network issues on the 3G models.
Now looking back, these complaints may seem pretty strange because we all know the iPad
has become something much different than the iPod touch or iPhone, and we’ve all gotten
used to its name.
But in 2010 criticism of the iPad from people online was overwhelmingly negative.
I remember a friend on Facebook making a post that said something like “Why would someone
need an iPad when a laptop already does everything?
It’s just another pointless luxury product Apple can sell to their fans who just want
a status symbol.”
Similar sentiments were echoed across so many different forums and social media sites that
Steve Jobs actually became annoyed and depressed by the public’s reaction to the iPad.
Especially since he was quoted as saying the iPad was the most important product of his
life.
So for him, that level of backlash was likely unexpected.
And the criticism continued until the iPad was actually released to the public about
two months later.
And I have to give David Pogue of the New York Times credit, because what he predict
turned out to be true.
He said, "That [criticism] will last until the iPad actually goes on sale in April.
Then, if history is any guide, Phase 3 will begin: positive reviews, people lining up
to buy the thing, and the mysterious disappearance of the basher-bloggers.”
And that’s exactly what happened.
The iPad went on to become one of Apple’s fastest selling products and the company actually
had trouble keeping up with demand for weeks after its release.
And what did all of this have to do with the netbook?
Well, it effectively destroyed the netbook market overnight, with sales declining once
the iPad was introduced.
And just one year later in 2011 tablet sales overtook netbooks for the first time.
By 2012, Dell, Toshiba, Asus, Acer, and MSI all stopped manufacturing their netbooks and
instead began focusing on more powerful ultrabooks to compete with the MacBook Air.
So just like that the netbook industry come to a screeching halt.
And all because of Apple’s iPad.
But that was about seven years ago, and today many people are asking, “could netbooks
ever have a place in the computer market again?”
And I think as long as great tablets like the iPad are around, the answer to that is
no.
But on the other hand, we are seeing products like the Chromebook becoming more popular
year after year.
And Chromebooks appear to be serving the same market as netbooks once did.
They’re affordable and built to be used with online web apps provided by Google.
This means you don’t need a large hard drive since all your data is in the cloud.
They’ve proven to be very popular in the education market with school all across the
US adopting Chromebooks in the classroom, and they’re actually eating into Microsoft’s
domination of the computer market since Chromebooks run Linux instead of Windows.
But the biggest issue with the Chromebook is that it’s still a notebook computer.
And the computer market as a whole has been in decline since 2012.
That’s why Apple has been saying we’re entering the post-PC era.
Technology today is centered around mobile device like smartphones, tablets, and smartwatches,
and we’re likely to see that trend continue for quite some time, until traditional computers
are only used by specific people for a specific purpose.
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Alright guys thanks for watching and I’ll see you next time.