Tablets, Netbooks, Notebooks: Moving to $300 Computing (GOOG, AAPL, INTC, ARMH, NVDA, QCOM)

The usually reliable Taiwanese website Digitimes reports that Asustek Computer is preparing to launch a new netbook with a retail price between $200-$250.  To reach that price point, Digitimes cited sources who “believe” that the new device will use either the Android 3.0 or Chrome OS from Google Inc. (NASDAQ: GOOG).

The market for the device is “consumers who only need to perform office work and Internet browsing,” according to Digitimes. That leaves out those users who might be interested in using a tablet like the iPad from Apple Inc. (NASDAQ: AAPL) for games and entertainment. And the tablet market is expected to grow to 54.7 million units this year, while netbook shipments will decline from about 33 million units shipped in 2010 to around 28 million units in 2011, according to Taiwan’s DRAMeXchange.  Asustek thinks it can sell 6 million units of the low-priced netbook in  2011, about 20% of the total market for such devices.

There’s no indication of which processor Asustek plans to use, but single-core Atom processors from Intel Corp. (NASDAQ: INTC) are currently being used in devices that sell for less than $280 at retail. There are competitive processors from ARM Holdings plc (NASDAQ: ARMH) and Qualcomm Corp. (NASDAQ: QCOM).

Asustek has already ordered Tegra 2 processors from Nvidia Corp. (NASDAQ: NVDA), but those are probably too expensive to be used in these very low-cost netbooks.

The most interesting question remaining, though, is what does Google plan to do with its Chrome OS? The company gave away about 65,000 netbooks in December, all running the company’s Chrome OS which Google said was intended for use on a device with a keyboard. The Android OS is intended for use on smartphones and tablets that lack a physical keyboard.

But Android 3.0, code-named Honeycomb, is apparently robust enough to run a keyboard-driven device, and Google is going to have to choose whether or not to continue developing Chrome OS. This is likely to be the first tough decision that Larry Page will have to make when he takes over in April. Unless, of course, he decides what to do and then has departing CEO Eric Schmidt announce the news.

The rapid rise of the tablet could well have killed Chrome OS just as it is killing the market for netbooks. Google appears to have a sound operating system in Honeycomb that will work across smartphones, tablets, and netbooks. Releasing and supporting yet another OS for netbooks only is not a good move. In this case, Google might want to alter its mantra to “Don’t be stupid.”

Paul Ausick