Nov. 21 (Bloomberg) -- So near, yet so far.

That about sums up Nokia Oyj’s maiden effort to crack the personal-computer market with its Booklet 3G.

The world’s largest maker of mobile phones comes tantalizingly close to producing the first truly great netbook. But the Booklet is done in by performance compromises dictated by an effort to keep its price competitive.

Netbooks are those ultra-small, ultra-lightweight computers that in the last year or two have sprung up like mushrooms after a rain. The Booklet, which initially can only be bought in the U.S. at Best Buy Co. stores, is part of a recent effort to adapt the smart-phone business model of wireless carriers -- in this case, AT&T Inc. -- by subsidizing the cost of the hardware in return for a contract to provide Internet access.

Physically, the Booklet may just be the most gorgeous netbook around. It’s thin -- just over three-fourths of an inch -- and weighs less than 3 pounds (1.4 kilograms). Once you open the glossy lid, it seems designed to evoke Apple Inc.’s sleek MacBook Pro: Like the MacBook, its chassis is made of a single piece of machined aluminum. And unlike other netbooks that promise extended battery life, there’s no protruding bulge to mar its lines.

Spectacular Battery Life

Oh, and about the battery life: It’s spectacular. As I write this, the Booklet has been in use for in excess of eight hours on a single charge, much of that time playing a loop of music, with the built-in 3G radio active and all power-saving settings turned off. And I still have more than two hours of juice left.

Up to now, most netbooks have run Microsoft Corp.’s sturdy, if aged, Windows XP operating system. The Booklet, by contrast, is one of the first wave that runs the new Windows 7 operating system -- in this case, a starter edition missing some of the bells and whistles of the versions found on larger notebook and desktop computers. It also comes with Nokia’s Ovi Internet services suite, including syncing with phones made by the Espoo, Finland-based manufacturer.

The 10.1-inch screen provides higher resolution than most other netbooks, meaning there’s less scrolling to view Web pages. Along the edge are three USB ports, an HDMI port for hooking it up to a high-definition TV or monitor, a headphone jack, and a hatch that houses the SIM card for wireless access and an SD memory-card slot. The Booklet also has built-in Bluetooth, Wi-Fi, a video camera and GPS.

Also along the edge is the on-off button. It’s when you push it that the Booklet’s shortcomings become apparent.

Underpowered Booklet

For the Booklet 3G is underpowered, even by netbook standards. Its 1.6 GHz Atom processor, made by Intel Corp., is at the low end of acceptable for a premium netbook, especially when coupled with a hard drive that, with a capacity of 120 gigabytes and a speed of 4,200 revolutions per minute, is both small and slow. Add to that the Booklet’s one gigabyte of memory, and you have performance that can be maddeningly sluggish.

And we’re not just talking sluggish when manipulating massive Excel spreadsheets, either. We’re talking about such mundane tasks as opening a Web browser, iTunes and a word- processing document. Just adjusting the volume while watching a high-definition video clip caused a visible stutter on screen.

There are some hardware peculiarities as well. While the keyboard feels nicely solid and the trackpad and buttons are well-placed, the low-rise keys are small enough that I initially found myself frequently hitting two keys at the same time.

Automatically Parked

I was also disconcerted a couple times when the Booklet was placed on a hard surface -- not roughly -- by on-screen warnings that the hard drive had been automatically parked to prevent damage.

A call to Nokia provided assurance this was a feature, not a bug: A built-in accelerometer is used to sense danger and provide extra protection. The warnings can be disabled, which is a good thing. If such routine handling is really endangering my computer, I think I’d rather not know.

Nokia is charging a price that seems to play much more off the Booklet’s sleek style than its substance. The Booklet is going on sale at Best Buy at a price of $299.99, if you commit to a two-year AT&T data plan at $60 a month. (Without the AT&T commitment, the cost is $599.) It is also appearing outside the U.S.; in Germany, Telefonica SA’s O2 is selling it at 249 euros on a two-year contract.

Those prices compare with, say, Hewlett-Packard Co.’s recently released Mini 311, which Verizon Wireless was selling in the U.S. last week with a data plan comparable to AT&T’s for as little as $149.99 online. For half the Booklet’s price, Verizon and HP were giving twice the memory, a faster and 33 percent larger hard drive, a bigger screen and keyboard, a full- featured version of Windows 7 and a special chip that handles graphics so the main processor doesn’t have to labor so hard.

A netbook is inherently a compromise; you give up some features, like a DVD drive, hard-disk capacity and computing power, to gain portability and flexibility. The Booklet 3G turns out to be a compromise of a compromise. And, beautiful as it is, that’s just one compromise too many.

(Rich Jaroslovsky is a Bloomberg News columnist. The opinions expressed are his own.)

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To contact the writer of this column: Rich Jaroslovsky in New York at rjaroslovsky@bloomberg.net.

Last Updated: November 19, 2009 21:00 EST