Just a few years ago, many pundits expected consumers to shun netbooks. With less power than traditional laptops, a tiny screen and keyboard, and more bulk than a mobile phone, they appeared, at first, to be solving a problem that no one had. But thanks to good design, decent battery life, and, above all, a cheap price, the netbook took off. A few years on, many people have come to rely on one as a more-mobile, secondary laptop.

But the netbook could be about to splinter. Skytone, a Chinese manufacturer, has started showing off the first netbook to run Android, an operating system developed by Google that currently runs on just a single device, the G1mobile phone. Using Android makes sense for Skytone because its netbook is minimal (even by netbook standards): it supports 128 megabits of RAM and only up to 4 gigabytes of storage on a flash-based, solid-state disk. And importantly, its central processing unit is an ARM11 chip–the same model found inside the iPhone.

Dubbed the Alpha 680, the netbook has more in common with a phone than with a normal laptop, says Phil Solis, an analyst with ABI Research. In addition to the processor and operating system, it’s expected to retail for about $250–less than some high-end smart phones. This bare-bones device may point toward a trend, Solis says, with more netbooks relying on cell-phone chips–known for power efficiency–and on cell-phone operating systems.

“You can’t run Windows on ARM,” says Solis, “but all mobile operating systems are made to work on ARM. That opens it up to Windows CE, Symbian, and Android. Those are made to work in tighter constraints.”

Currently, many netbooks use Intel’s Atom processor, which is built using the x86 architecture found in most of the company’s desktop, laptop, and server chips. Most netbooks get about an hour of power per battery cell. On an ARM-based notebook, Solis says, it could be possible to get eight hours from a three-cell battery.

Of course, while long battery life is appealing, there is a definite trade-off. “If you’re looking for a powerful speedy laptop, then these netbooks aren’t for you,” Solis says. “But if you’re looking for something that can last you all day without recharging, and that’s at an even lower cost than most netbooks, then these might work.”

Android is being tweaked to take advantage of streamlined netbooks by manufacturers interested in using an open-source operating system that has the heft of Google behind it.

It’s unclear, however, how much influence Google will have on Android’s evolution. The company declined an interview for this story, responding with a statement: “Android is a free, open source mobile platform. This means that anyone can take the Android platform and add code or download it to create a mobile device without restrictions. The Android smartphone platform was designed from the beginning to scale downward to feature phones and upward to [mobile Internet devices] and netbook-style devices.”

But if the Alpha 680 is any indication, it might not be so easy to make Android work smoothly on a netbook. Solis says that early demonstrations suggest that the operating system needs work in order to run properly on the Skytone device. “Android isn’t ready,” he says. “They need to do work to make it run well on a netbook.”

The main problem revolves around the user interface. “Making the UI work well is exceptionally hard,” says Mark Murphy, an Android developer and contributor to the Android Guys blog. It’s a matter of making sure that the hardware and software communicate effectively with each other, and it’s a different case for each device. One issue is ensuring that the interface and applications adjust appropriately to the larger screen size of a netbook. Also, Murphy says, Android is designed for touch screens, directional pads and trackballs as pointing devices.

While a majority of mobile-device manufacturers are publicly supporting Android, it’s not as clear which major laptop companies might choose ARM and Android over Intel’s Atom and Windows. Still, as rumors of other Android devices start to emerge, there will be more pressure for the operating system to perform, for both developers and consumers. It’s important that there’s some consistency in the way that Android is implemented, says Chetan Sharma, an analyst who runs his own firm in Issaquah, WA. Otherwise, he says, developers will need to pick and choose a particular version of Android to work with instead of being able to contribute across the board. For their part, consumers expect reliable, easy-to-use software, Sharma adds.

“A moment of truth is coming for Android,” says Sharma. “If all of the applications are developed seamlessly, then that means that fragmentation issues that have plagued the mobile industry are on the path to being resolved.” Still, he cautions, device manufactures will need to tweak Android for their own products, which “might create different flavors of Android.”

But whether Android will be ready or not, cheaper netbooks are on their way, predicts Kevin Burden, another analyst at ABI Research. Consumers “want these things to be $150. They want to let their kids bang away on them, and when they break, they’ll just throw it away and buy another one,” he says.

Moreover, low-end netbooks could find their way into emerging markets such as China and India, says Solis. “It opens up to people who can afford a $200 netbook, but not one that’s $500.”