Netbooks, smart phones: Is more convergence ahead for mobiles?

As laptops get smaller and cellphones get more powerful, will they eventually become the same device?

Will pants with really big pockets be a high-tech fashion statement in the next few years?

While cellphones and computers in general have suffered sales setbacks recently, high-end smart phones and low-end netbook computers remain two of the hottest electronic devices on the market. Might the gap between them someday be filled by a device that combines the best of each?

In some ways, the two products are already beginning to merge. The cost is becoming similar, with the priciest smart phones now more expensive than the cheapest netbooks (about $300). Wireless carriers are beginning to add netbook plans, plunging the cost of a netbook with a service plan to as low as $50, similar to discounted phones if users sign up for a contract. Manufacturers are beginning to put smart-phone chips and operating systems, such as Google’s Android, into netbooks. Meanwhile, netbook manufacturers such as Asustek are planning to make smart phones.

Both products are trying to satisfy the same need “to have something small, portable, and inexpensive with you that is always connected” to the Internet, says Rob Enderle, principal analyst at the Enderle Group in San Jose, Calif.

But a big gap in size remains. Netbooks fit in a large purse or a backpack, but not a pocket. That is leading to speculation that a company such as Apple might step in with a mid-sized “tablet” or “iPod-plus” device as early as next month. (Hence the need for those big-pocket pants.)

Smart phones – such as the BlackBerry, which is aimed at business users, and Apple’s iPhone, which is designed for consumers – offer many but not all the features of a computer in a pocket-sized device. Users can surf the Web, read e-mail, and do a number of other things depending on what applications are loaded. And, yes, the phones make calls.

Netbooks – with 7- to 10-inch screens – sport relatively puny processing power but enough oomph to handle most things people want to do on a laptop, such as check e-mail and surf the Web.

While many people would cringe at typing a long document using tiny smart-phone keys or a touch screen, netbooks have full, if sometimes crowded, keyboards. Which is not to say that smart phones can’t win a short typing sprint. CNET’s British gadget blog filmed a typing contest between an iPhone and a netbook with the volunteer typist riding in a race car going 80 m.p.h. around a track. The iPhone, with its predictive typing feature cleaning up some of the mess, tapped out “The quick brown fox jumped over the lazy dog” much more accurately.

Apple makes the popular, pocket-sized iPhone and iPod devices as well as computers, but has stayed clear of the market for netbooks. In late April, Apple’s interim chief, Tim Cook, took a swipe at netbooks as just not up to Apple’s quality standards. “When I look at what’s being sold in the netbook space today, I see cramped keyboards, terrible software, jerky hardware, very small screens, and just not a good consumer experience and not something we would put the Mac brand on,” Mr. Cook said. “It’s a stretch to call them a personal computer.”

Despite Cook’s jabs, many speculate that Apple is ready to debut a competing product of its own. “We’re expecting the new iPod” for viewing photos and video and listening to audio on a much larger screen sometime later this year, Mr. Enderle says. But he doubts we’ll see a large-screen iPhone. “The iPhone is already pretty big for a phone,” he says. “It sets the top end of the size.”

Chipmaker Intel has championed what it calls a Mobile Internet Device, or MID, that would be this intermediate size. The company envisions that each device would have a specific purpose, such as entertainment or navigation, and not be an all-purpose computer. But MIDs have yet to capture much interest among manufacturers.

If Apple does come out with a mid-size “crossover” between a smart phone and computer, “it won’t be positioned as a netbook. It will be positioned as an ‘iPhone-plus’ or something like that,” says Roger Kay, a technology analyst and president of Endpoint Technologies in Wayland, Mass. “I’m sure Apple has [a prototype] in a skunk works somewhere,” he says. But whether Apple would bring the device to market is another question. “It’s a [CEO] Steve Jobs kind of decision,” he says.

Looking five years out, flexible, roll-up reading screens may answer the desire for both a small carrying size and a big screen. “We’re going to see flexible screens which will allow smart phones to grow up to similar screen sizes that netbooks have,” or even larger, Enderle says. “The screens are really close to being production-ready.”

Netbooks continue to improve in quality, with computing power equal to the laptops of five years ago and better graphics abilities. That may move them toward true laptops in both price and features, opening up even more space for a new product between a smart phone and a netbook.

In terms of price, smart phones and netbooks are already becoming competitors. The cost of materials to build an iPhone or an Asustek-brand netbook computer are nearly identical, $181 for the iPhone and $196 for the netbook, says Portelligent, which performs “tear down” analyses of electronic products.

Cellphone sales in general were down 13 percent from a year ago in the first three months of 2009, according to Strategy Analytics, a research and consulting firm. But smart-phone sales grew 4 percent during that period. Netbook sales are expected to rise 65 percent in 2009, while sales for full-size laptops will grow only 3 percent, says DisplaySearch, a market-research firm. It estimates worldwide netbook sales of 27 million this year, with sales of full laptops at 133 million.

The future will hold even more choices for consumers, analysts say. People may own a smart phone, a tablet-sized device, a netbook, Kindle-like e-book reader, a more powerful laptop, a desktop computer – or any combination of these products that fits their needs and lifestyles.

“Customers are going to get a choice of whether they want their cellphone and Internet device separate or ... one device that does both,” Enderle says.