Jobs: The iPhone is Apple's netbook

Apple is not looking to play in the sub-$500 laptop market, says CEO

Apple has no imminent plans to compete in the growing market for "netbooks," the small, inexpensive laptops that accounted for 5 percent of all US notebook sales last quarter, CEO Steve Jobs said Tuesday.

But the company already participates in the category, Jobs argued, citing Apple's iPhone and iPod Touch as devices that have much of the same functionality as the ultra-light, low-cost notebooks.

"We choose to be in certain segments of the market and we choose not to be in certain segments of the market," Jobs said during a Tuesday conference call with Wall Street analysts that highlighted its fiscal fourth quarter earnings. Jobs was responding to a question about whether, and when, Apple would enter the netbook market.

Repeating his categorization of the category last week as "nascent," Jobs downplayed the current market for the ultra-small laptops. "There's, as best as we can tell, not a lot of them getting sold," he said.

Later in the question-and-answer, Jobs said that although Apple would continue to add features to its notebooks as it dropped prices, he was unwilling to play in the netbook category as current defined. "We don't know how to make a [US]$500 computer that's not a piece of junk, and our DNA will not let us ship that," Jobs said. "But we can continue to deliver greater and greater value to those customers that we choose to serve and there's a lot of them. And we've seen great success by focusing on certain segments of the market and not trying to be everything to everybody."

At the same time, it was clear that Jobs considers Apple's iPhone and iPod Touch as courting netbook dollars. "One of our entrants into that category, if you will, is the iPhone for browsing the Internet and doing e-mail and all the other things that a netbook lets you do," he said. "Being connected via the cellular net wherever you are, an iPhone is a pretty good solution for that, and it fits in your pocket."

Ezra Gottheil, an analyst with Technology Business Research Inc., agreed with Jobs. "For Apple, the iPhone and iPod Touch are a way to provide Web access devices to the rest of the world," he said, referring to the popularity of netbooks outside the US. "And it prevents them from cannibalizing their MacBook lines."

Jobs, however, left the door open to a change in strategy if Apple does decide it needs to join the game. "We'll wait and see how that nascent category evolves," he said. "And we've got some pretty interesting ideas if it does evolve."

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