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Apple Is Already Selling A Netbook

Don't let Apple COO Tim Cook fool you. During the company's earnings call yesterday, Cook did everything but pick up a netbook and set it on fire, kick it across the room and spit on it.

Cook railed at the drawbacks of netbooks currently on the market, and alluded to the nasty margins netbook vendors are earning.

Netbooks, he said, have:

cramped keyboards, terrible software, junky hardware, very small screens, and just not a consumer experience, and not something that we would put the Mac brand on quite frankly. And so, it’s not a space as it exists today that we are interested in, nor do we believe that customers in the long term would be interested in. It’s a segment we would choose not to play in.

But Apple understands the space very well; people want to carry around a light device that lets them surf the Web, listen to music, and perform some basic business functions, whether delivered through the browser or stored locally. Apple already makes the iPod Touch and "we have other products to accomplish some of what people are buying netbooks for and so, in that particular way we play in an indirect basis," Cook said.

JP Morgan analyst Mark Moskowitz also argued that the iPod touch is already a netbook, writing:

It is no secret that unit trends in PCs are currently being helped by netbooks. We think that customers are attracted to the form factor for portability, email, and the Internet. While Apple has yet to introduce a netbook, the iPod touch is similar in function, and its sales momentum seems to be mirroring the netbook unit sales trend lines in the broader market.

And that may not be the end of it. Cook added that, "if we find a way where we can deliver an innovative product that really makes a contribution, then we will do that and we have some interesting ideas in the space."

Indeed, Apple is expected to make new product announcements this summer -- in addition to the next generation of iPhone which it will introduce in June. But why else would it have ordered an ungodly 100 million 8 GB NAND flash chips? To get a sense of the outsized nature of the order, Apple shipped approxmately 4.5 million iPhones during the fourth quarter of 2008. Even if every iPhone user on the planet bought the new version this summer, even the most optimistic count would be 45 million iPhones -- not even half the number of chips ordered by Apple.

But it hasn't escaped Cook's notice that netbooks are taking a big chunk out of the PC market, a trend Apple wouldn't shun were it not for the tiny margins involved. A slightly larger version of the Touch that combined the sticky features Apple already provides its hungry customer base with the productivity tools of a netbook would be just the ticket -- and would justify ordering 100 million chips.

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