Consumers will remember 2007 as the year of mobile computing extremes, from 20-inch notebooks with mammoth price tags to pocket-sized PCs that cost less than some smart phones. It was also a year in which the big boys wielded the big guns: Intel released a new processor; Microsoft unleashed Windows Vista, its long-hyped OS; and Apple stepped up its assault on PCs with Mac OS X Leopard. The Crapware Epidemic infected so many machines it incurred the wrath of consumers who previously couldn't tell system resources from natural resources. And finally, during the holiday season, purchasing a notebook became an act of charity. Revisit these highlights and more in our look back at the breakthroughs and busts that shaped the notebook industry this year.

Desktop Replacements: How Big is Too Big?
20-inch notebooks with traditional clamshell designs aren't uncommon, but once you get past a certain size it's fair to ask whether you even need a notebook form factor. "I'd say above 17 inches you need to switch to a stationary client," said Roger L. Kay, founder and president of Endpoint Technologies Associations, Inc. For most consumers, the best stationary alternative isn't a tower, but an all-in-one, such as the new Apple iMac or Gateway One.

The appeal of all-in-ones lies mostly in their sleek style and simple user interfaces. "Apple's really been the only company to make the all-in-one desktop work in high volumes, although HP has had some success with its TouchSmart PC," said Ross Rubin, director of industry analysis at The NPD Group. Although the TouchSmart's touchscreen interface is less familiar to users than the iMac's, HP plans to continue producing touchscreen products and insists the format is practical.

"[The HP TouchSmart] features a quick, touch-based walk-up computing mode as well as full Vista functionality," said John Cook, vice president of marketing at HP.

Other companies have refused to completely abandon the clamshell form factor and have developed hybrid formats for big-screen notebooks. Dell's XPS M2010, for instance, has a hinge supporting its 20-inch screen, allowing for more comfortable viewing. Similarly, HP's Pavilion HDX Entertainment Notebook PC, also known as "Dragon," combines a 20-inch display with a dual hinge, making it the most adjustable screen on the market (not to mention one of our favorite notebooks of the year).

"We see our HDX Dragon notebook as a perfect solution," said Stacy Wolff, director of notebook design for HP's personal systems group. "It provides mobility with great comfort features like a 20-inch height-adjustable display and full-sized keyboard. In our research, people gravitated to this more flexible and mobile design."

UMPCs: Too Little, Too Lame?
Although Ultra-Mobile PCs seem cool when you see one being used on an episode of 24, convincing people they should invest in one is another matter. Just look at the sales forecasts by ABI Research, which say that a mere 270,000 of these devices will be sold during 2007. That's pretty anemic growth when you consider 220,000 were bought in 2006.

Even though several innovative and lower-priced UMPCs were introduced in 2007, such as the OQO model 02 (starting at $1,299), FlipStart 1.0 ($1,499), and Fujitsu LifeBook U810 ($999), there just doesn't yet seem to be a compelling reason for buyers to invest in a handheld device that runs full Windows. "It was a category created by Microsoft and Intel apparently without any market research to indicate a burning desire on the part of the public for such devices," said Stan Schatt, ABI Research vice president. "They're too expensive, have much too short battery life, and are sluggish when used with Microsoft's Vista operating system."

Meanwhile, Apple sold a million iPhones within 74 days of its introduction. Many consider the iPhone to be the first commercially successful UMPC, even if it doesn't meet the strict definition of one. "I do think the iPhone demonstrated that the market needs to accept that the hardware and software have to be unique to the class and that mini-notebooks (outside of Japan) probably won't sell well," said Rob Enderle, principal analyst of Enderle Group.

The iPhone is seen as a precursor to an entire new hardware category dubbed Mobile Internet Devices, many of which will be powered by Linux. In fact, ABI Research expects 90 million MIDs to be sold by 2012, versus a mere 4 million UMPCs. Nevertheless, UMPC pioneers like OQO are bullish on the future of Vista-powered handhelds. "The key for people is to be able to run their standard applications wherever they are," said Bob Rosin, senior vice president of marketing and alliances for OQO. "We're selling more than three times what we did last year during the same time period. So that's a lot of growth."

Vista Stumbles
This year, 20 million copies of Vista were sold in the first month of its availability, according to Microsoft. And more than 60 million copies were sold as of September. And despite the rumors that businesses are holding off, at least one big one, Continental Airlines, has already taken the Vista plunge, deploying almost 2,000 Vista-based desktop computers so far. They should have 7,000 to 10,000 deployed by the end of the year.

Yet even with this momentum, a change as big as switching from XP to Vista is bound to be painful--and it has been. "Vista has been a problem product so far," said Enderle. It's slower than XP; it's a relative battery hog; and for some it has a steep learning curve. It has also suffered from many driver issues.

Service Pack 1 is coming to the rescue and should address at least some of these issues. According to Neil Charney, general manager, Windows client at Microsoft, "SP1 will contain changes focused on addressing specific reliability and performance issues, supporting new types of hardware, and adding support for several emerging standards."

Not everyone thinks Vista is in desperate need of fixing, however. Hans Castro, PC industry analyst at Current Analysis West, told us that "the Windows Vista negative sentiment is overblown," although he admitted that "the transition from Windows XP to Windows Vista was met with more difficulty and apprehension than any OS upgrade in recent years." That's why Microsoft decided to allow PC manufacturers to continue selling XP machines through June 30th, five months longer than initially planned.

SP1, combined with Intel's next-generation 45-nanometer processor, should light the way for late-adopting consumers and businesses and will likely bring Vista to its full potential. But for now there's nothing wrong with XP either.

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