Gambling on Netbooks in Vegas

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Intel also plans to announce a slew of partners that are developing software applications specifically designed for touchscreen netbooks for use by children and educators. "[Touch] is coming along, and we are right on the edge of when it's starting to happen," says Tony Salvador, director of strategic planning and architecture for the emerging-markets platforms group at Intel. Microsoft (MSFT) is expected to release a touchscreen-friendly operating system in late 2009, which could push touchscreen netbooks further into the mainstream.

A Mac Netbook?

Meanwhile, Apple (AAPL) has built a working prototype of a touchscreen, iPod-like netbook that could be unveiled later in 2009, according to people who have been briefed on the company's plans. These follow touchscreen netbook announcements from smaller players such as Gigabyte. Touchscreen netbooks could account for 10% of all netbook shipments this year, according to Bob O'Donnell, program vice-president at IDC.

Makers of touchscreen netbooks are hoping the new class of devices will prove more successful than an earlier attempt at touch computing, the tablet PC, unveiled to much fanfare several years ago. Today tablets account for less than 1% of traditional notebook shipments and are growing more slowly than the larger laptop market, O'Donnell says. "Sometimes when one technology doesn't work, it doesn't mean the market won't move to embrace something new," says IDC analyst Robert Murtagh. And touchscreen netbooks will cost half to a third the price of tablets. They also may have better software support.

Still, even some of the biggest proponents of netbooks aren't sure the touchscreen variety will take off. "Clearly, the iPhone has transformed customer expectations," says Henri Richard, senior vice-president at Freescale. "I don't know that a touchscreen is a must-have—it's a nice-to-have."

Roger Kay, president of Endpoint Technologies Associates, agrees that caution is warranted, though he's more optimistic. "Touch is a Bermuda Triangle," he says. "Every [computer] product that has ventured there has died." Still, "this is an important development," he adds. As part of a netbook, it "could work."

Kharif is a senior writer for BusinessWeek.com in Portland, Ore.