In 2007, it was the year of the netbook. Now, the iPad—and the many “me too” imitators—are the latest mobile gizmo fad. In terms of functionality and price, these two devices have some significant overlap. They both run in the $299 to $399 range, they are both designed for mostly online experiences—web apps, email and web browsing—and they both are tapping into the emerging 4G/3G mobile Internet market. The spike in tablet sales that’s occurring simultaneously to a plateauing in netbook model releases from the major manufacturers has many analysts sounding the death knell for the lilliputian laptop computing sector. The world isn’t big enough for both the tablet and the netbook, they argue, and in terms of hype and sexiness, the gorgeous, svelte touchpad-driven tablets take the cake.

I, however, take the contrary view. And here’s why:
Tablets are a luxury item. Netbooks are a budget buy.

Nobody needs a tablet. Few businesses are distributing iPads to traveling business people so they can log on to the web, author reports and connect to their private VPN. And even fewer non-profits are spearheading initiatives to get iPads into the hands of children in developing countries.

Let’s remember where these two devices lay their roots. The netbook came to the U.S. market during a massive recession, and was preceded in part by the One Laptop Per Child initiative. The netbook was meant to be affordable—a basic computer for students and professionals who can’t afford a more powerful laptop. That makes sense.

The tablet, on the other hand, owes a goodly chunk of its success to the iPad, which, let’s face it, is an overgrown iPhone that can’t make cellular calls. The most amazing thing about the iPad is that Apple has created a market out of thin air. There was no significant demand for yet another mobile computing device that bridged the gap between smartphones and subnotebooks, but didn’t do everything that either could do. This has bubble written all over it.

Laptops will evolve, but so will netbooks.

One of the arguments supporting the demise of the netbook is that laptops are becoming so affordable and so portable that they will overtake the netbook. For now, it’s mostly true. The price differential between a low end laptop and a high end netbook is $50 to $100, with the former often offering much better performance. But here’s the thing: who’s to say that netbooks can’t be cheaper and more powerful, too? Imagine this: a machine that’s comparable to the 10-inch ASUS EEEPC in form factor but packs comparable processing power to a budget desktop of today. Now, imagine it costs $150 or less. That’s downright compelling.

Mobile operating systems are restrictive by nature.

There’s simply too much you cannot do on a smartphone or tablet. And that has a lot to do with the business model. Features such as tethering, installing third-party software and video chatting are severely restricted on Apple devices, mostly for the sake of protecting that precious bandwidth. When was the last time you had to “jailbreak” Windows or OS X to get the functionality you needed out of it?

Conclusion

Bottom-line: the tablet is a luxury toy. The netbook is a low-end solution to the realities of computing. Not all of us need computers that are capable of running intensive 3D games or mixing down massive video projects. But we do need a way to ergonomically and efficiently produce documents, manage emails and contacts, move sensitive data back and forth securely and interface with business networking protocols. A keyboard, USB ports and a fully functional operating system are far more valuable than a gyroscope and a capacitive touchscreen.