The Cheap Notebook PC: What Took Them So Long?

In the wake of the One Laptop Per Child project finally inching that much closer to delivering a product, the sub-$300 notebook PC—like ASUS’s Eee PC—is suddenly a hot item.

So why hasn’t this happened sooner?

Simple. PC makers couldn’t afford it—at least not until now. Ironic that while the basic costs and capacities of everything from MP3 players to digital cameras have dropped, we’re only now getting a bit of real computing power trickle-down into the sub-$300 realm.

Is there a market? I think so. I’ve talked to a number of people on fixed or low incomes—students, retirees, freelancers, people stuck paying off debts with bad credit—and all of them loved the idea. Simple was fine: they just wanted something they could use to browse the Web, do word processing, answer email … in short, do all of the basic, untaxing things the vast majority of people do with computers in the first place.

They didn’t even care about running Windows per se; to them, any computer was better than no computer at all. Granted, some of this functionality has already appeared in the form of smart phones and PDAs, but those are still costly—costlier than ever now that most smart phones are offered with a data or service plan and only made affordable in conjunction with one.

So how come we haven’t seen a $300-ish notebook sooner? There are three basic reasons:

1) Profit margins on hardware are thin enough that to make something for that little virtually guarantees you will lose money. Desktop PC manufacturers make barely a few dollars per machines as is; this is why they push hard to also sell additional hardware (printers, scanners), software (security or office apps), maintenance and service plans.

2) Of the people who do have the money to shell out for a full-featured notebook PC, more of them are buying notebooks as potential replacement desktop machines, which automatically pushes up baseline expectations for what a notebook should be. The lowest-end Dell notebook available as of this writing, for instance, starts at $499 (a low, low $15 a month if you qualify for financing) with 512MB of RAM, a 60GB HD, and a 256MB video card. These are the specs for a decent starter desktop machine, but they’re still total overkill for someone with more modest needs—and for some people, the difference between over $500 and $300 is make or break.

3) You get what you pay for. This definitely applies to electronics, where a higher price can be applied back into research and development, QC, and all the other things that make something worth buying at any price. A lower price almost inevitably means poorer materials or workmanship, less thorough QC, or any number of other corners being cut.

Next page: Why cheap notebooks are on the way