For the cost of one night’s stay in a New York hotel you can now buy a laptop that weighs 3.2 pounds, runs for more than seven hours with an extended battery, and is equally usable with Windows XP and the open-source Linux operating system. Pundits deride these “netbooks,” saying they are good for little more than Web browsing and light editing. But I think these little machines are going to turn the personal-computer industry upside down.

The Asus Eee PC is widely seen as the first netbook to reach the U.S. market. Introduced in the fall of 2007, the Eee had a four-gigabyte solid-state disk (a “flash” drive) instead of a hard drive, and it ran Linux instead of Windows. Because it had a seven-inch screen and correspondingly tiny keyboard, industry experts predicted that Asus would be lucky to sell 300,000 units its first quarter in the market. It sold 350,000. Last year, roughly 10 million netbooks shipped, according to market research firm IDC.

Netbooks’ success is due to more than their low price. Today’s sleek, grown-up Eee PC 1000, available in multiple colors, has a 10-inch screen (1,024 by 600 pixels), a bigger keyboard, a full gigabyte of RAM, and a webcam, speaker, and mike. Asus sells different versions with solid-state drives up to 40 gigabytes or conventional hard drives with either 80 or 160 gigabytes. And now you can buy them with Linux or Windows XP–an operating system that runs just fine on this restricted little machine, thank you.

Netbooks are now available from ­Lenovo, Acer, Hewlett-Packard, Dell, and a number of smaller companies. Apple may even be working on one: last year the New York Times’ John Markoff blogged that a search provider told him it had “spotted Web visits” of an Apple computer with a screen size somewhere between that of an iPhone and a MacBook.

Howard Locker, director of new technology at Lenovo, says that the right way to think about netbooks is as cheap laptops with processors and video cards four years out of date.

“From a processing and graphics viewpoint, they are from 2005,” says Locker. But that’s okay, he adds, because “the hardware has moved so rapidly beyond what people need, you can go with four-year-old technology and it’s good enough” for most users.

Netbooks exist, says Locker, because no killer app has been developed that requires the full power of today’s high-end notebook computers. He’s half right.

The fact is, many such killer apps with high-end computing requirements have been deployed since 2005. But they all run on the cloud-computing clusters used by companies such as Google, Facebook, and Twitter. To make the best use of those services, users want a take-it-anywhere platform. Lightness, not processing power, is a serious selling point. Hence the netbook’s success.

Power on the Cheap
Except for the relatively small number of people doing high-performance gaming or streaming high-definition movies, today’s computer users do not need all the power that top-of-the-line microprocessors can deliver. Companies like Intel and AMD know this. That’s why they have spent much of the past four years innovating in different areas, such as power management and functional integration. Netbook technology emerged from those decisions.

Though today’s netbook is indeed similar to a typical 2005 laptop in raw CPU and video performance–my 12-inch ­PowerBook had a gigahertz processor with 512 megabytes of RAM and a 60-gigabyte hard drive–it can do significantly more computing per watt of power than that 2005 machine. As a result, netbook vendors can use smaller, lighter battery packs, yet get more battery life than those older machines ever had.

These days most of the wait time experienced by PC users is caused by slow Internet connections or Web servers, not by slow client machines. As an experiment, I hooked up a Lenovo S10e to a 19-inch monitor and watched “The Man Trap,” one of the original Star Trek episodes, streamed from the CBS website. It took a good 30 seconds for the Flash-based player to download over my pathetic DSL connection, but as soon as the playback started, it was flawless.

So not only are netbooks cheap, but they are powerful enough for ordinary computing. The main reason the engineers and professionals I’ve spoken with have purchased them, though, is the combination of cost, weight, and battery life. That’s the beauty of the netbook: these criteria are mutually supporting.

Netbooks also do a fine job running traditional productivity applications such as Microsoft Office. Every netbook running Windows XP that I examined for this article came with a complete copy of Office 2007 installed and ready to go.

Just because a $300 netbook will run Microsoft Office, however, doesn’t mean that it should. That preinstalled copy is just a 60-day trial; to use it longer requires buying an activation key from Microsoft’s online store for between $240 and $400. I find it hard to justify spending more on Office than on the netbook itself–particularly when the free alternatives, Open Office and Google Docs, keep getting better. The netbook’s low, low price can’t be good for sales of Microsoft Office–or for sales of Windows.

Another software vendor bound to be troubled by the netbook’s price is Apple. Over the past few months, more than a dozen websites have popped up offering instructions on how to get Apple’s Leopard operating system to run on these low-cost laptops. Apple is not pleased; it even forced Wired.com to take down a video showing how to install OSX on an MSI Wind netbook.

The problem here is that even though Apple sells Leopard in shrink-wrapped boxes for a little more than $100, the software is licensed for use only on Apple hardware. Some feel that Apple has no business controlling its software in this way, for the same reason that booksellers in the United States are not allowed to use “license agreements” that prohibit their customers from lending or reselling used books–a principle technically known as the “first sale” doctrine. Ultimately, questions about the application of this doctrine to software will be resolved in court–probably several courts.

I didn’t care about this issue when Apple’s laptops cost only $200 more than the competition’s. But when the MSI Wind can be had for almost $1,500 less than the Macbook Air, it becomes upsetting. Many people want to run MacOS but don’t want to pay the premium for Apple hardware. Now they have a choice, albeit one of questionable legality.

Trouble in a Minor Key
The netbooks’ small size and light weight make them much more portable than traditional laptops. I often don’t carry my 15-inch MacBook Pro, simply because it weighs seven pounds, including power supply and spare battery. But I walked around with the Acer Aspire One in my backpack for three days without even realizing it: I’d loaded up the machine, gone off to a coffee shop, and then simply forgotten that it was in there.

But what about usability? I decided to take a rough survey. Not surprisingly, the main complaint concerned netbooks’ cramped keyboards and nonstandard key positions. I’ve had a hard time with the placement of the shift key on the Lenovo–I keep pressing the up arrow by accident. And keyboard complaints dominate the negative comments I’ve seen in online forums. Similarly, the netbook users I’ve accosted with queries at coffee shops and conferences agree that the keyboards are annoying. Yet most users insist that they adjusted to the size and layout after only a few hours.

Those who demand a large keyboard should take a serious look at the HP Mini 1000. This machine has bigger keys arranged in a more traditional layout than the other netbooks: I could type on the 1000 with my eyes closed and not make an error.

Since most netbook vendors also have successful lines of full-size laptops, I suspect that they may have purposely kept their netbook keyboards small and cramped in an effort to differentiate the netbooks from their ultralight laptops in the $900-to-$2,000 range. But such efforts at market segmentation won’t last, as the Eee PC 1000 and Mini 1000 demonstrate. I expect larger keyboards to show up on these netbooks over the next year, since adding an inch to a keyboard adds little to the cost while making the system much more usable.

My loose survey did bring one surprise: a lack of complaints about the netbooks’ small screens. It’s true that a screen just 600 pixels high is quickly consumed by the menu and button bars of most Microsoft applications. On the other hand, most applications can be reconfigured to make more judicious use of the vertical real estate. The netbooks’ limited height is not a problem with websites, since netbooks scroll fast.

Finally, since netbooks have USB inputs and standard video outputs, small keyboards and screens are really an issue only when you’re on the road. At home you can use an external keyboard, mouse, and display. Netbooks are bound to make dockable laptops much more appealing to home users than they have been until now.

Disposable and Disruptive
Netbooks are so cheap it’s not far-fetched to imagine that a person might want to buy a new one each year.

Indeed, the netbook’s price poses yet another, albeit indirect, danger to Microsoft. Aware of such a low-cost alternative, Windows users will find it hard to justify spending hours downloading software, installing applications, and customizing preferences every time they buy a new machine. For that reason, expect netbooks to live up to their name and accelerate the trend of cloud computing, whereby software and services are accessed over the Web. Lenovo even offers a Linux-based quick-starting shell that lets you get on the Internet less than 10 seconds after turning on the machine.

Netbooks might expand the U.S. laptop market to people who could never before afford one. But they are sure also to cannibalize today’s laptop market, slashing profits for both hardware and software makers. These machines are probably bad for Microsoft, Intel, and Apple. But they’re going to be great for Google, Facebook, and Twitter.

Simson Garfinkel is a Technology Review ­contributing editor.