Rik alerts us to a recent Wired Magazine article that goes through Larry Ellison's failed attempts at building a cheap computer (the network computer -- or NC) that would mainly be used for internet access. That history is pretty well known. Ellison -- in large part inspired by jealousy of Bill Gates -- declared that the PC was dead, and in its place people would prefer to use a stripped down computer with everything on the internet instead. It got a ton of buzz, and lots of people expressed interest. But the product was a flop. A massive flop. And yet... here we are today, and more and more applications are online only, and the success of cheap netbooks have more than matched some of the original vision of the network computer. As the article explains:

We tend to think of technology as a steady march, a progression of increasingly better mousetraps that succeed based on their merits. But in the end, evolution may provide a better model for how technological battles are won. One mutation does not, by itself, define progress. Instead, it creates another potential path for development, sparking additional changes and improvements until one finally breaks through and establishes a new organism.

That is the process of innovation. And yet, we tend to only celebrate the invention -- the first idea -- rather than all the evolutionary process that it takes to make something successful. Things like patents tend to block that evolutionary process by limiting the pace at which those mutations and developments can occur. They slow down innovation, rather than letting it flow, by putting an arbitrary wall around each new step, rather than letting the evolution proceed uninhibited. We may get the innovation eventually, but at a much slower pace than we might otherwise.

Michael Scott points us to someone asking how come the limitations that Microsoft puts on computer vendors who are selling netbooks with XP installed don't constitute an antitrust violation. I'm sure others may differ, but I can't quite see where the antitrust violation would be here. First, there are alternatives. Linux-based netbooks are still decently popular, so if Microsoft's limits were a real problem, then there are other ways to go. Second, I would imagine that someone could buy XP through third parties and install it on any machine they want. It's just that if they want to get a wholesale deal directly from Microsoft, the company puts certain limitations on it. So I don't see it as an antitrust issue.

That said... I have to admit that I don't understand why Microsoft puts these limitations on netbooks that run XP. My guess is that it's because they really, really, really want to move people off of XP and onto Vista (or Windows 7 eventually), and they're afraid that if they let more powerful netbooks run XP, that they'll start to become full laptop replacements -- and Microsoft's grand strategy of moving customers to the latest and greatest will stall out. However, that seems hard to support. It makes little sense to try to limit customers -- especially those who really want to buy your product. If Microsoft XP makes a computer more valuable to someone, why limit that choice?

We've wondered before why mobile operators say they hate the subsidies they pay to discount handset prices, but then expand their use of them to include laptops and netbooks. The trend looks like it's here to stay, as Verizon Wireless has now confirmed it will start selling 3G-equipped netbooks by the end of June, so now, in addition to tying yourself into a 2-year contract where you're paying back the cost of your cell phone, you'll soon be able to tie yourself into a long-term data-service contract to pay back the price of a laptop, too. Of course, once that contract's up, the device will still be locked to the operator from which you bought it, making it difficult (or impossible) to take your business elsewhere. Meanwhile, business is flowing the other direction, too: Dell is reportedly looking to set up a virtual operator in Japan, selling its customers network access on another operator's mobile network to use with their mobile-equipped laptops. It's an interesting contrast in models, because it's unlikely Dell will subsidize the hardware like the operators. Part of the issue with handset subsidies is that consumers are used to paying the lower subsidized prices, and so any change that raises prices will be met with disdain. But people aren't used to the benefit of subsidies for their PCs, so may be more open to paying a higher upfront cost for the hardware if it means they don't have to sign a long-term contract with a high monthly service charge.

Late last year, Psion kicked off an attempt to reclaim the "netBook" trademark the company had largely abandoned years earlier, now that it was suddenly popular for reasons that had nothing to do with Psion's old discontinued netBook product. After making a big stink about it, both Dell and Intel moved to have Psion's trademark cancelled as abandoned. However, Psion is fighting back, not just with a response to the request to cancel, but with a lawsuit against Intel on a number of different fronts. Psion is claiming unfair business practices and also challenging Intel for "cybersquatting" on the netbook.com domain name. Of course, given that Psion was selling its product long before Intel had the name, you have to wonder how that's cybersquatting? Shouldn't Psion have tried to acquire the name back when it actually mattered? In the end, it seems like Psion is spending an awful lot of money to try to get the goodwill put into the "netbook" name by others over the past year and a half. It's a pretty obvious abuse of trademark law that hopefully a court will slap down.

It looks like the effort to save the "Netbook" name from Psion's rather weak attempt to reclaim the trademark after abandoning it for about six years has picked up some corporate support. Dell has filed a petition with the USPTO, asking it to cancel Psion's trademark, noting (accurately) that Psion hasn't used the mark in commerce for six years and failed to properly defend it, thus effectively giving up the trademark. Psion will undoubtedly fight this, but it's difficult to see why they should be able to keep the trademark on netbooks, considering the company has had nothing to do with the current success of the term.

You may recall that Psion is waging an uphill battle to try to reclaim the term "Netbook." It is true that Psion had a product called a "netBook" (note the capitalization) which was marginally popular in Europe nearly a decade ago. But, it went away. It's also true that Psion still holds a trademark on the term -- though, you'd be hard pressed to show how they're using it in commerce, considering they stopped selling netBooks years ago. The current popularity of the term has to do with a new category of devices, and has absolutely nothing to do with building on the work of Psion. But that hasn't stopped the company from aggressively asserting its right to the name, demanding manufacturers and others stop referring to what is commonly known as netbooks as netbooks, and even getting Google to ban the use of the word "netbook" in ads.

It looks like some are fed up with this, and have begun a campaign to Save the Netbooks, noting that the name has reached a point that it's generic, and that the success of the term has nothing to do with Psion, but is entirely separate from Psion. The group points to a legal analysis of why Psion probably has no right to the term, and wants to drum up more support to get Psion to stop its misuse of trademark law. No one buying a "netbook" today is confused and thinking they're buying an old Psion product. It's about time that Psion back down and give up the term. After all... they already gave up the term a while ago. Trying to reclaim it now is simply trying to grab the value that was built by others.

Well, here's an odd one. Apparently, an analyst at NPD Group, Stephen Baker, is worried that the rising popularity of netbooks is bad for the tech economy. He's claiming:

"History tells us that when we offer lower-priced products, it tends to drive down the average selling price across the board. The net result is to drive down revenue overall, even if there are more units out there."

I'm curious which tech history books he's reading, because that seems to go against pretty much every history of technology evolution I've ever seen. If you've watched the tech industry over the past few decades, things always get cheaper. It's the whole Moore's Law thing at work -- and every time things get cheaper, it allows for more to happen, making products more valuable to more people, and tends to expand, not contract, the wider overall market. Yes, the average selling price decreases, but that's a tautology. Of course if you decrease price, average selling price goes down. That's not analysis, that's saying 2 = 2. But to then say it means overall revenue goes down isn't necessarily true -- and in many tech sectors isn't true at all. In the end, providing a good product, at a reasonable price that many, many people want, is never "damaging" to the economy. It may shift things around, but it always opens up new opportunities.

I've been considering buying myself a "netbook" recently -- the mini-notebook computers that have become quite popular in the last year or so. As was recently discussed, such mini-notebooks have been around for years, but have finally figured out how to hit that right sweetspot that makes them worth buying in large numbers. I'd been following the various products on the market to try to figure out which one to get, but I realized recently that I had no idea where the whole "netbook" classification had come from. The Asus EeePC got plenty of attention when it launched about a year ago, and then there were plenty of follow up machines -- and somewhere along the line they all got lumped into the "netbook" category.

There's one company that isn't pleased at all: Psion.

For mobile computing geeks -- especially those in Europe, the Psion netBook was quite well known for years in the early part of this decade, as offering a pretty decent tiny computer, that (for whatever reason) never was much of a hit in the US. Either way, Psion gave up on the product somewhere along the way, but retains the trademark on the name, and caused a bit of a stir last week by sending out some cease and desist letters about the use of the term, noting (correctly) that it owned the trademark. There was some confusion over reports that some of these letters went to blogs and enthusiast sites, but the lawyers representing Psion were quick to clarify that most of the letters were sent to manufacturers and retailers -- with just a few that went to sites that actively ran advertisements for "netbooks."

Psion is probably in the legal right here -- though, there's a decent chance that they're too late on stopping the netbook name from becoming generic. While Psion claims that it still sells accessories for netBooks, it really doesn't sell the actual netBooks any more, so going the legal route seems a bit pointless. Why not capitalize on the trend by trying to sell products for today's netbooks, while noting that it was the original netbook maker. Rather than trying to keep the term tied to a dead market, why not use the fact that Psion was an early player in the space to help build up its own cred in today's market? The strategy of trying to get the world to use a different name, while legally correct, just seems short-sighted overall.

Business Week's Steve Hamm has a short post talking about the "sudden" success of "netbooks," those mini-laptops that are suddenly selling like crazy. As he notes, smaller laptops are not a new idea, and have been tried for many years in varying formats without much success. But, for some reason, after so many different experiments, it seems that the sweet spot in terms of size, usability and price have all been found.

This actually highlights something quite common in technology innovation: the difference between the idea, the invention and the actual innovation. Just the idea alone wasn't enough to actually make the product valuable. Finding that real sweetspot is a challenge for just about any product, and it involves an awful lot of experimentation to make it work. I've been reading about the early days of a number of inventions lately, and you see this story over and over again, where the initial versions really have no market, and it's a later, totally minor tweak that suddenly makes it valuable. And, of course, the best way to get that tweak to happen quickly (and thus expand a market, and improve the overall economy) is to let a lot of different players experiment to throw a lot of ideas at the market to see what actually does hit that sweet spot. Tragically, with a patent system that grants monopoly protection at the invention stage, this is often a lot more difficult, slowing down the attempts to actually hit that sweetspot.

A few years back, after noting the trend of laptop companies to start building in cellular data modems into their laptops, we wondered when it would reach the stage where mobile operators would subsidize the cost of a laptop, just as they subsidize the cost of mobile phones in many cases. In early 2006, we started to see such subsidized laptops go on sale in Europe, with the mobile operators selling the laptops directly for well below list price, as long as you bought into a long term data plan. The whole idea seemed a bit strange, as mobile operators have long ranted long and hard about how much they hate, hate, hate subsidies, and how they wish they could do away with them. So, why add them to laptops?

However, the idea has now traveled over to the US as well, in a deal between Acer, Radio Shack and AT&T allowing people to buy an Acer netbook for just $100, so long as they agree to a 2 year $60/month contract for an AT&T mobile data plan. It's still a little confusing as to why the mobile operators are agreeing to this, following so many vehement arguments against mobile phone subsidies, but perhaps they're finally realizing that those subsidies aren't such a bad thing when they get people using their services. Still, how long will it be until buyers start complaining about early termination fees for laptops like they do for mobile phones?