Will Netbooks EVER Find A Home In Business?

As regular readers of InformationWeek SMB know, I'm pretty much obssessed with figuring out the business uses of netbooks. And I recently came across a Forrester Research study from last fall that offers some useful insights.

The study, called Rewrite the Netbook Story For Business Technology Buyers, by Jennifer Belissent, PhD., concentrates mainly on netbook use in emerging markets. It says the combination of newly available broadband access, the rise of Web-based software, and cost-conscious businesses makes netbooks a perfect choice for businesses in those markets.

But what about here in the U.S., where netbooks remain a largely consumer-based phenomenon? In most cases, even netbooks used in business settings are still being bought by individuals, not companies.

Bellisent acknowledges that "their business value proposition remains unclear." But she thinks it's mainly a marketing problem: "Many business buyers haven’t quite figured out what to do with them, in part, because netbook marketers haven’t quite figured out how to position them."

True enough, I suppose, but maybe that's because we're all still trying to figure out where they fit into the business world. As Bellisent says, most people think of "netbooks as more of a luxury companion device, as the device that parents give to their children, or as a cheap device for students in emerging markets," not as a business machine. Only 23% of U.S. adults are interested in netbooks as a replacement for a more expensive laptop.

To change that, Bellisent users emerging market lessons to suggest new ways to think of netbooks in business settings:

1. Not as a step down from a full-size laptop but as a step up from a smartphone.

2. As an energy efficient alternative to a full-size laptop.

3. As the lowest cost form of PC.

4. As a terminal to access on-demand business applications.

5. And, notably, as an SMB device. According to Forrester’s Enterprise And SMB Hardware Survey, North America And Europe, Q3 2009, small businesses are more interested in and more likely to purchase netbooks than are larger enterprises. Of those surveyed, 14% of companies with 20 to 99 employees have purchased netbooks, compared with 9% of enterprises with 1,000 to 4,999 employees, 6% of very large enterprises with 5,000 to 19,999 employees, and just 4% of Global 2000 companies with 20,000 or more employees.

Unfortunately, the study doesn't explore why SMBs are more interested in netbooks than are enterprises. Is it all about the price, or are there other factors in play?

According to Bellisent, netbooks will find increasing home in business settings if netbook vendors can do a few things:

"Identify and develop use cases and value propositions" for netbooks. Well, yeah. But figuring out those use cases and value propositions has always been the big stumbling block, right?

"Develop new business models." One example she offers is bundling the netbooks with financial services delivered online. In the U.S., we've seen telcos begin bundling netbooks with wireless broadband services, but I have yet to see figures on whether this is making a dent in business markets.

"Partner with new channels to target specific audiences." As above, she suggests banks, healthcare, and other vertical industries.

"Review market requirements and address needs with products and pricing." Too often, Bellisent argues, netbooks have been developed not based on customer needs but on avoiding cannibalizing other products. Change that, and netbooks will find new buyers. Maybe so, but I'm not sure that I buy the argument. If you ask me, companies like ASUS and MSI have already been doing their best to push the netbook envelope, and mainstream makers like HP and Dell have already been forced to follow suit. (Intel and Microsoft, on the other hand, do seem worried about cannibalization.)

Ultimately, Bellisent establishes some key points about netbooks and businesses, but she hasn't quite cracked the nut. Unless and until netbooks evolve to the point where they don't require dramatic compromises in computer experiences, they're going to find business uses only where their advantages -- light weight, long battery life, low cost -- outweigh their disadvantages of slow performance and small screens and keyboards. And that's not going to happen as long as Intel -- which doesn't make that much on the Atom processors that power most netbooks -- and Microsoft -- which seemingly hasn't settled its netbook strategy beyond wanting to move them from Windows XP to Windows 7 -- remain committed to keeping netbooks as adjunct PCs.

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