Very, very tiny PCs go after laptops

Laptop computers, especially small and light ones, were supposed to be the way the computer companies kept mobile users as customers. It has worked pretty well. At most large PC companies like Apple (NASDAQ: AAPL) and Dell (NASDAQ: DELL), laptops outsell desktops.

The profits from the laptop business could be under siege. Little netbooks from manufacturer in Asia, lead by Acer, are making $500 ultra-small machines that are good for e-mail and internet browsing. Beyond that, they don't do much, but many consumers don't need anything beyond those functions. The products may be a good way for Acer to get market share from larger U.S. PC companies.

In a recession, these "netbooks," are fairly attractive compared to $1,200 laptops that have a lot of features many people don't want to pay for.

According to Reuters, "Up to a third of netbook sales reflect customers ditching their old desktops and laptops, analysts say."

Dell's share price is down to $12.50 from a 52-week high of $30.77. The company and its peers do not need more competition in a world where the economy is hurting and price competition is fierce.

It does not want new competition, but it got it anyway.

Douglas A. McIntyre is an editor at 247wallst.com.