CES - Netbooks take center stage at trade show

By Gabriel Madway

LAS VEGAS (Reuters) - Netbooks were everywhere and on everyone's lips at the Consumer Electronics Show in Las Vegas, expanding as a category of small laptop PCs that are rewriting the rules for the struggling computer industry.

While nearly every major PC makers had a new netbook on display at the four-day show ending on Sunday, no two companies seemed to agree on what the rules are to define this segment of tiny, ultra-portable notebooks.

Some netbooks are stripped-down PCs optimized for Internet use and costing a relatively affordable $300-$400. But others are fancier, like Sony Corp's (6758.T: Quote, Profile, Research) $900, 8-inch device with all the bells and whistles of full-sized notebooks.

It is early enough in the game -- netbooks did not take off until last year -- that their ultimate place in the PC universe is still unknown. If netbooks are, as many PC companies hope, a companion product to a traditional laptop or desktop computer, then they have discovered a new avenue to grow sales.

If, however, netbooks are replacement laptops, then they would eat into the notebook market in a substantial way and pinch the margins of PC makers.

Forrester analyst J.P. Gownder calls netbooks the "third form factor in the consumer PC space, in addition to laptops and desktops" and said in a research report that companies should emphasize them as a complementary product.

Phil McKinney, chief technology officer for Hewlett-Packard Co's personal systems group, said the company continues to view netbooks as a companion device. "We kind of look at the minis as what we call a tweener product," he said.

What is certain is that netbooks are one of the few bright spots for PC makers being punished by reduced IT spending and falling consumer demand due to the global economic slowdown.