Product Placement: Netbooks as Playthings

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When a friend returned from living in Australia for a year, she summed up her experience with the tweener technology known as the netbook with a conclusion that market-research firms took dozens of pages to reach: "It's for when you're out hiking around somewhere and need a way to feed your Crackbook addiction."

Facebook-famished users in the U.S. and Canada are just embracing that same idea. According to a report by Paul Jackson of Forrester Research ( FORR), only 3% of more than 5,000 North American adults surveyed online say they own a netbook. However, of those, 52% say they use it primarily for entertainment, relegating more serious work to their laptops, desktops and smart phones.

The netbook's somewhat frivolous functionality plays into its unfair stereotype: an inhabitant of the island of misfit tech toys with no essential purpose. Wedged between a low-end, $329 Compaq Presario laptop by Hewlett-Packard ( HPQ) and a high-end and high-function $199 Apple ( AAPL) iPhone, Research In Motion ( RIMM) BlackBerry or Palm ( PALM) Pre, the netbook walks a fine line between supplementary and superfluous.

That uncertainty led Psion ( PSE) to kill the original netbook earlier this decade and Palm to abandon plans for what could have been the seminal netbook, the Foleo, in late 2007. Yet, netbook ownership is rising at a rate similar to that of smart phones, with nearly 11.5 million netbooks sold worldwide last year compared with about 400,000 in 2007. Last year's total is expected to triple in 2009.

So who are the Web-zombie slackers now buying these low-octane laptops? Gen X makes up roughly 42% of the buyer base, according to the report. They're 30-something (average age 35), first-adopter techie (80%) dudes (68%) who would have had a Sega ( 6460) Saturn in their dorm rooms during the mid-1990s. As Acer ( ACID), Asus ( ASKD), Dell ( Dell), Hewlett-Packard, Samsung ( C005930) and Sony ( SNE) chase netbook users' nearly $97,000 average annual salaries, netbooks scarcely register a blip in the public consciousness.

In a report issued by the NPD Group earlier this year, nearly 75% of consumers surveyed had never heard of a netbook. When shoppers finally buy one, as NPD discovered last month, 60% think it'll work just like a laptop. It may run Microsoft's ( MSFT) Windows, but good luck burning a disc on it.

This is where the "Reality Bites"-watching gadget guys have the upper hand. They don't want another laptop, they don't want another smart phone. They want a device with better visuals and interface than their little 3G wonder gizmo, and they don't want to truck out a brick containing every file they own just to blog on the commute home. Almost a third of those surveyed in the Forrester report say they look at their netbook as a second or third PC to use on the fly.

That's similar to the response of their counterparts in Europe, where 70% of netbooks were sold last year. European telecom companies have bulked up netbooks with broadband options similar to what Verizon ( VZ) and AT&T ( T) offer through 3G networks for smart phones. Verizon and T-Mobile ( DT) are already partnered with Hewlett-Packard on a netbook plan similar to their phone-data arrangement, while AT&T brought Acer and Dell aboard for an upcoming netbook-service launch.

Rest easy, North American netbook users. You may look a whole lot like Jason Bateman's fading hipster character from "Juno" now, but in a year or so you're going to look a lot more familiar.

Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, The Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.

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