Forgive the writer's embellishment, but there's a NETBOOK REVOLUTION GOING ON! Somebody should tell Apple.

Low-powered, inexpensive mini-notebooks, widely known as netbooks, experienced quarter-over-quarter growth of more than 160 percent in Q3 2008, according to DisplaySearch.

Netbooks have become the only ray of light in a dark and cloudy PC market that is forecasted by IDC to keep declining over the next few years as the economy falters.

Most of the major PC makers now have a line of netbooks, and Microsoft has adjusted its business plan to accommodate the netbook surge.

Apple doesn't tend to stress out about dire forecasts, but recent numbers may finally have Steve Jobs squeezing a stress ball: Netbooks are outselling iPhones. 

Smartphone sales numbers from Gartner and netbook sales numbers from DisplaySearch show that 4.7 million iPhones were shipped in Q3 2008 while 5.6 million netbooks were sold in the same time period. The netbook market hardly even existed a year ago.

Some analysts and columnists have trumpeted the need for an Apple netbook and predict the company will release one in the first half of 2009. If it happens, the challenge for Apple is not to copy the design and form factor of established netbooks yet also not just make a smaller, cheaper MacBook. Can Apple swallow its pride and dip into the $300-500 range for a computer? It's doubtful. I predict Apple won't even call its netbook a netbook and will come in hot with a starting price of $600, and will probably get away with it.

In the press release about the DisplaySearch netbook sales report, author John Jacobs singles out Apple's absence from the netbook game so far.

“With the lone exception of Apple, all of the top 10 PC brands have entered the mini-note PC market initially as a response to the competitive threat posed by Asus, but also to satisfy demand from customers for low-priced, thin and very light (less than 3 pounds) products that provide at least a modicum of typical office software functionality and also enable greater mobility."

At an average price of $300, the appeal of netbooks is that they are cheap. But Apple doesn't tend to do "cheap." Steve Jobs told financial analysts in October that "We don't know how to make a $500 computer that's not a piece of junk."

It is true that netbooks don't fit particularly well into Apple's portfolio. One could argue that the iPhone is Apple's netbook.

There is not much breathing room between the iPhone and iPod Touch in the $300-400 range and Apple's cheapest laptop, the $999 white-cased, older MacBook. The iPhone and iPod Touch provide access to the Internet, e-mail, and your music and photo collections. It's not the same user experience as a netbook, but it's close.

Is it close enough that Apple can blow off netbooks, or will the exploding netbook market and dwindling economy force Apple to "make a $500 computer that's not a piece of junk"?

Let me know what you think.

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