Mini-Laptops: The Next Big Thing?

Computer makers are now taking tiny laptops seriously, due to the success of Taiwan's Asustek and India's HCL. Acer will soon join the fray

For years, many in the PC industry dismissed efforts by a small group of innovators to come up with small laptop computers that would be far more affordable than the traditional notebooks sold by the likes of Hewlett-Packard (HPQ) and Dell (DELL). Nicholas Negroponte, the visionary Massachusetts Institute of Technology professor, launched his One Laptop Per Child (OLPC) foundation with the goal of creating a $100 machine. But skeptics wrote off Negroponte and OLPC as do-gooders without a real business model who were more interested in providing computers to impoverished kids in African or Asian villages than selling them profitably in developed countries.

Proving the naysayers right, the XO laptop that rolled off the factory line late last year was beautifully designed and loaded with innovative features, but way over its $100 price tag and behind schedule. The XO also met with an underwhelming response from governments in the developing world, and Negroponte is now reorganizing (BusinessWeek.com, 3/5/08) his group.

If OLPC didn't make much business sense, then neither did the low-cost laptop project of Negroponte's main rival, Intel (INTC). Engineers at the semiconductor giant's Shanghai development center were working on the Classmate PC (BusinessWeek, 7/9/07), but it, too, was aimed at children in the world's poor countries.

Asustek's Newest Eee PC

Now, computer companies are finally starting to take miniature laptops seriously. That's largely due to Asustek Computer, a Taiwanese maker of notebook PCs. On Mar. 5 at the CeBit electronics show in Hannover, Germany, Asustek unveiled its newest Eee PC, the most advanced mini-laptop. The Windows XP-driven model, with an 8.9-inch screen and 1 gigabyte of flash memory (and no hard drive), is a follow-up to the first generation of Asustek's Eee PC, a Linux-based model with a 7-in. screen and 512 megabytes of flash that the company launched last October at a starting price for consumers of $260. Asustek hasn't revealed the price of the new machine yet but it's likely to be around $650.

Asustek is aiming its mini-laptop not at rural students in Nigeria but at affluent consumers in the U.S., Japan, and elsewhere in the developed world who may be put off by a full-fledged computer. "There's very big potential for nonsophisticated users—young kids, housewives, and senior citizens," says Asus chairman Jonney Shih. The company sold 300,000 of its Eee PCs in the last three months of 2007 and predicts it will ship as many as 5 million this year. The response "has exceeded our expectations in almost all countries," boasts Shih.

Sensing a rare opportunity for new growth in the sluggish computer industry, other companies are rushing to launch mini-laptops. Among the leaders is Indian computer maker HCL, which has worked with Intel to come out with a machine based on the Classmate PC. The No. 2 PC company in India, behind HP, HCL in January launched the MiLeap X Series in India. The machine has a 7-in. screen, an Intel Celeron processor, and a $350 price tag. Last month, HCL even unveiled a pink version in time for Valentine's Day.

Acer Plans Its Entrance

More powerful players are preparing to take on Asustek. Acer, the Taiwanese company that purchased 2 Next Page

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