The Tiny Shall Inherit The Market

In the 1980s, a little 4-lb. Radio Shack computer, the Tandy 100, had a loyal following among frequent flyers. It could store no more than 32 kilobytes of data, ran only its own built-in software, and had a tough-to-read eight-line screen (later expanded to 16). But it was rugged, had a full-size keyboard, and could operate for hours on just four AA batteries. Ardent fans--including roving reporters--kept Tandy Corp.'s 100 series alive into the 1990s, even though by then there were dozens of laptop and notebook computers with all the bells and whistles of desktop PCs. The problem: All those goodies--and the rechargeable batteries to power them--pushed their weight up to 7 or 8 lb., a big difference when you're racing through O'Hare.

Thanks to major breakthroughs in components, PC makers have finally caught up with the 1983 Tandy 100. From IBM to Zenith Data Systems, computer companies are stumbling over each other this year to introduce "subnotebook" computers--battery-powered PCs that are approximately one-third smaller than average notebook models and weigh less than 4 lb.

DISTANT COUSIN. The shrinkage does come at a cost, however. Every subnotebook has had to compromise on something, be it the size of the keyboard, the quality of the screen, or the sophistication of the microprocessor chip. Take the ThinkPad 500, IBM's subnotebook announced June 15. It weighs just 3.8 lb. and has a powerful Intel Corp. 486 microprocessor, an easy-to-read backlit screen, up to 170 megabytes of disk storage, and a rechargeable battery life of four to eight hours. However, its keyboard is a cramped 10% smaller than a full-size keyboard, and its screen is small.

Then there's Hewlett-Packard Co.'s OmniBook, announced June 7. It weighs a featherweight 2.9 lb. but uses a slower 386 chip. And the screen, though large, is not lit, making it tough to read in dim light. On the other hand, the OmniBook has a full-size keyboard and can run up to nine hours on four AA batteries, making it a distant cousin to its Radio Shack predecessor. That's no accident. While doing market research prior to developing the OmniBook, HP got a consistent message, says Robert J. Frankenberg, head of its personal-computer group: "Over and over again in our focus groups, people kept bringing up that old Tandy 100."

So, despite the trade-offs, that longing for superportability should turn the subnotebook market into the hottest segment of the PC industry. "All the press hype is on PDAs [personal digital assistants], but right now the action is in the subnotebook market," says Bruce Claf-lin, general manager of IBM's mobile-computing division. "All the market data we look at shows that in 1993 the single-largest growth segment in the portable market is in subnotebooks."

Certainly that's what Dataquest Inc.'s numbers show. The market researcher estimates that more than 320,000 subnotebooks will be sold in the U.S. this year, with volume more than doubling in 1994. By 1997, Dataquest estimates that annual sales will hit 2.8 million units.

Of course, its easy to show rapid growth when you're starting from a base of zero. There were a handful of subnotebook models in 1992, and only 23,000 were sold, Dataquest estimates. But improvements in battery technology and power-management chips to extend battery life, along with the availability of energy-saving card-size storage devices that plug into a computer, have allowed PC makers this year to squeeze lots more features into lots less space.

Zenith Data Systems, Zeos International, Dell Computer, Gateway 2000, and CompUSA have all introduced subnotebooks this year, and they're selling briskly. Initial supplies of Zenith Data Systems' Z-Lite, for example, sold out immediately after the product was shipped in early May. "The growth potential is exponential," says Clifford A. Jenks, Zenith Data's executive vice-president for North American sales. He estimates that subnotebooks will account for about 20% of all notebook sales this year and increase rapidly from there.

The market will get its biggest boost from HP's and IBM's attention-grabbing subnotebooks, analysts say. Both offer well-known brand names and well-engineered products (table). HP's OmniBook has already won raves from reviewers for its ability to employ AA batteries, a clever pop-out mouse, and ease of use. It has Microsoft Windows, Word, and Excel built into its read-only memory, as well as HP programs for calendar and address-book functions. The ThinkPad 500 scores points for including the Trackpoint II pointing device from bigger Thinkpads, a one-piece battery/recharger with its own plug attached--eliminating the need for an adaptor and cable--and a standard external floppy-disk drive.

Such features should make it easy for customers to switch to the smaller size. And that, says Dataquest analyst Janet E. Cole, is why subnotebook sales will most likely come at the expense of the larger notebooks. True, notebooks are still the rage. U.S. sales should increase 129% this year, to 1.8 million units. But, says Cole, in five years sales of full-size notebook PCs will slow significantly, just as sales of larger laptop PCs dropped off in 1990 after the arrival of notebooks.

MOBILE COMPANION. The PC makers that are cashing in on notebooks don't choose to see it that way. Compaq Computer Corp., whose notebooks are the industry's best sellers, is moving cautiously into the subnotebook market, saying only that it will likely bring one out by yearend. "We see it as a new market, the mobile companion for people who don't want the heavier weight of the notebook," says Lorie L. Strong, vice-president of Compaq's portable PC division. She asserts that notebook users want a desktop equivalent to take on the road, while subnotebook customers will primarily use their machines for electronic mail. Even IBM's Claflin says that there are advantages to the notebook size--larger displays, color, and integrated floppy-disk drives. But he doesn't necessarily accept his own argument: Claflin acknowledges that he intends to carry a ThinkPad 500 from now on.

Legions will follow suit, predicts Cole, for one reason only--weight. "For portable users, weight is the No.1 issue, then battery life. The third is display quality." Cole says manufacturers are kidding themselves if they think customers will choose different types of portables for different uses. "I don't think a lot of people draw a distinction between notebooks and subnotebooks. That's a market researcher's issue, not an end user's issue."

Consumers certainly voted with their wallets when it came to the Tandy 100. Tandy spokesman Tony Magoulas says sales of that product over its nine-year life span were "extraordinary. It was our best-selling portable ever." If the subnotebooks can inherit that legacy, there will be a spring in the step of the working traveler again.