Windows XP to Live On in Low-Cost Intel Devices

Intel is expecting to compete with the iPhone and BlackBerry particularly by offering what it's calling uncompromised Internet browsing, unlike the experiences users get on devices from Apple and RIM.

"If you go to the YouTube site, you might not know that's a custom-tailored YouTube site for iPhone users," Calder said. "There are some limitations to getting that full Internet. There are also some Flash applications. When I use my BlackBerry, I can get on the Internet, but it's not a very good experience. I was with my wife, she wanted to check her Hotmail. You'd think it would be simple: I have a browser, with a 3G connection. But we go to Hotmail, there's a JavaScript. And it doesn't work.

"What Intel is talking about instead with its MIDs is kind of an uncompromised Internet experience you're used to on a typical desktop computer with broadband connection."

Cherry, for his part, said he is skeptical about what will get people to buy Intel's so-called netbooks.

"We're trying to let processors and laptop size drive decisions," he said. "It's certainly one factor, but the reality is I still think applications should drive choices. To me it's more a question of, What do you need to do? What applications do you need to use, and how much power do they require?"

In North America, for example, Cherry said he's not convinced that people who don't have computers have been kept away by price. "It's more likely the failing of technology. We don't do anything well enough that they need to do. Or they find it too hard, or it's such a hassle they don't want to get into it. I don't think it's a matter of price. Dell sends me catalogs that have computers at $500, $600, or a machine that would run a retail copy of an operating system."

What happens with smaller, more limited devices, Cherry said, is that people say OK to the price and to the notion of being constrained to e-mail, browsing and simple document creation, but then human nature steps in and all of a sudden users get the urge to start editing photos and other unsupported functions, and then buyer's remorse sets in.

Intel's having none of that kind of skepticism.

Calder pointed to two hot areas where MIDs and subnotebooks could be sold: One is emerging markets, including Thailand, Russia, Indonesia and the like, where the majority of households Intel has surveyed as yet have no PC. Then again in North America and other mature markets, there are households like Calder's own, where there are plenty of PCs but also plenty of kids—households that are open to the idea of buying a spare PC that a schoolchild could do a book report on or an MID that parents could tuck into a pocket when they head to Starbucks to hang out checking e-mail and doing their social networking.

Another hot market could be found among those who have snarfed up Asus' Eee PC.

"[Asus Eee] is a very nifty little design—a mobile computer they can't keep in stock. It's selling like hotcakes," Calder said. "Asus said it sold 350,000 last year, and maybe [will sell] 5 million this year. This is in essence one of the lead netbooks out there. What's fascinating about it is if you go to the Eee PC user group, these are tech geeks. People are buying them just to tweak them to see what they can do, what they can add to them. It's not the intended market, but I was surprised to see these are not people buying a computer for the first time, these are gadget junkies salivating over these things."