At least twice, during quarterly earnings conference calls with analysts, Apple’s COO Tim Cook has claimed that the company didn’t know how to make a Mac that was as inexpensive as a netbook—a statement that seemed unbelievable on its face. Was it that Apple didn’t know, or that it didn’t want to? To many, particularly those who were familiar with Apple’s industry-leading profit margins, the answer seemed obvious: Apple could easily make a $500 laptop, but wouldn’t unless forced, as it wasn’t ready to undermine its $1000 and $2000 models.

Last week, not on a whim but rather as a direct result of Cook’s comments, I decided that I was going to take on a little project that I have refused to do since going back to the Mac in 2004: I was going to buy one of those sub-$500 PC laptops, specifically a netbook, just to see what the experience was like. Yet rather than taking the most obvious route and buying the cheapest of cheap machines, or signing a deal with the devil by buying a fully Mac-hackable machine from the loathsome Dell, I picked a computer from a company that I’d respected back when I was using Windows: Toshiba. And rather than buying Toshiba’s least expensive netbook, I went with the better model, which contained a MacBook-like keyboard, a 1.3MP-iSight-like camera, and Bluetooth hardware—in fact, so many Mac-like components that it could easily be a Mac, but for the shell. It’s called the NB205-N311W, and arrived with a power supply and zero other components in the box for $400, shipped.

The positives of this machine were almost instantly apparent. With a 10” LED backlit screen and a 3-lb. weight—mostly because of a battery that offers 9 hours of run time for Windows—it’s so small and light that my old carrying bag seems completely unsuited to its dimensions. It has an integrated card reader, which new MacBook Pros have, but my metal MacBook doesn’t. There’s a fully usable but small trackpad, and that MacBook-like “island” keyboard is 92% the size of a standard one, which is plenty usable—far, far moreso than the iPhone’s. Plus, there’s a 160GB hard disk inside. And with more hacks than certain Dells, but fewer than many other netbooks, it runs OS X. More on that in a minute.

Having stated the NB205’s positives, I need to emphasize that having used this machine, I firmly believe that Tim Cook was right to suggest that Apple couldn’t build a netbook it would be proud to sell at these sorts of prices. Toshiba has made some relatively great PCs. It has also made some remarkable little pocket computers, including its early Librettos, which seemed to defy reality years ago by running a full version of Windows XP in a small book-sized form factor. But the NB205, which is supposed to be one of the very best netbooks ever made, and is up to prior Toshiba standards, still does not have the completely quality out-of-box look or feel of even the lowest-end MacBook. It, like virtually every netbook out there, is not a product today’s Apple could ever release.

 

The power supply is a big, junky mess of bulging parts and Velcro. Its trackpad’s buttons creak. The screen, covered in a thin sheet of plastic, feels like a constant reminder of how nice even the plastic MacBook’s screen is, and its bezel isn’t the same color as was advertised or shown on the box. There are cheesy diagonal lines running through the trackpad, the bezel, and the top casing. And the keys are covered in secondary icons that just feel unnecessary and confusing. The various stickers on the machine could all be pulled off, their adhesive peeling with a little extra rubbing alcohol, but what was left at the end is still undeniably a somewhat cheap-feeling, cheap-looking PC. And this is the more expensive version—one that has been praised by PC publications all over the place as being better than its peers. The $350 one is apparently worse, thanks to a less impressive keyboard, which due to confusion in model numbers you mightn’t realize you’re obligated to deal with if you want a NB205 in black.

There are bigger compromises, as well. Like almost all of the netbooks, this model’s screen has a 1024×600 resolution—too few pixels to run Photoshop on a Mac, amongst other applications—which leads to a truly cramped screen regardless of whether you’re using Windows or Mac OS X. It actually looks pretty awful when Windows XP is powering it with mediocre display drivers and stretched-screen visuals. Opening multiple windows is possible but not always easy, and some windows span just beyond the top and/or bottom of the screen. The 1.66GHz, single-core processor speed is well behind the standards of current-generation Macs, so though core applications such as Safari on the PC or Mac work just fine, you can imagine what gaming and more demanding applications might feel like. And the RAM is capped at 2GB with a single slot, so there’s not much room for this machine to grow, except in hard drive capacity; the RAM, hard disk, and a mini-PCI slot are all accessible through screw panels on the system’s bottom. This slot makes it possible to swap the included Wi-Fi card for one that would be recognized under Mac OS X, at a cost of under $30. Others have used USB-based Wi-Fi plug-ins for the same purpose.

 

Frankly, using the NB205 as a PC isn’t much fun—it was actually painful to go back to Windows XP after all these years; the hunger for an upgraded version of Windows literally becomes near-ravenous after turning it on. Working through the hacks to install OS X on it can be brutal; they more often result in failure than success, despite what appear to be very clear guides on the web. Trying to make the NB205 act like a Mac includes hours of everything from kernel panics to special driver installations for everything, and random, confusing errors that no average person would ever want to suffer through. But once OS X is working, this little machine can suddenly seem like something miraculous—a Mac, only with a smaller screen. Despite the issues mentioned above, it is a completely usable, and substantial if not complete replacement for a larger laptop—exactly what I and many other people have been wanting from Apple for years. (Sorry, MacBook Air.) The loss of Photoshop and other key applications means that it won’t be a primary computer, but for extreme portability and convenience when doing anything from web browsing to updating a web site, it makes a ton of sense. So much sense, in fact, that it’s hard to think of a reason not to get a little machine like this to carry on the go for photo storage and sharing alone. People were paying $300 or $400 for nothing more than screen-laden portable hard drives just a few years ago; this is in a completely different league.

There’s a serious, obvious question after using a computer like this: why can’t Apple just work its magic and create a Mac with similar specs, add its typical price premium, and offer it to those of us who want it? When asked, Tim Cook didn’t offer any sort of deep answers, but based on the insights I’ve gathered from using this machine, I’m willing to venture a few guesses as to the key pain points that have led Apple to hesitate here.

(1) Build quality. Actually designing a smaller version of the MacBook would be easy if Apple was the sort of company that just shrunk its older products or ripped off designs it found elsewhere, adding a logo in the process. But that’s really not how the company works; it’s basically certain that an Apple mini-laptop would use thicker plastics and other, better components than current-generation netbooks, along with a design that evolved at least a little past the current plastic MacBook’s. In any case, getting the casing right for a small plastic machine is a non-trivial challenge, and one that the company has surely been mulling.

 

(2) Screen resolution. If it’s running Mac OS X, 1024×600 is not going to work for a mini Apple laptop unless Apple improves its resolution-independent UI elements or makes some other changes. An easier fix would be a higher resolution display, however, the 1280×800-pixel MacBook screen might well start looking outdated as a consequence. To really do a small 10” screen right, Apple will probably need to be prepared to improve its bigger-screened laptops, as well. A better display would obviously add to the cost of the low-end model relative to less sophisticated PC competitors. It’s possible that some of the screens Apple has been testing and sourcing over the last 12 months have been intended for this purpose, rather than the more widely-discussed tablet it’s working on.

(3) Performance. A lot of talk regarding the impending Apple tablet-like device has focused on the “which OS?” question, starting with the presumption that the iPhone OS is probably too underpowered to serve as a full-time alternative to netbooks, and the Mac OS would need some big changes—a virtual keyboard, windows that could shift to accommodate that virtual keyboard, and so on—to lose its keyboard. Many, including us, think that Apple will use iPhone OS in a tablet for sure, along with either a full version of Mac OS X or some substantial modifications to iPhone OS that make it more Mac-like. But as soon as Mac OS X support is included in a device, the next question is, “what will this thing actually be able to run?” Intel’s Atom processors are inexpensive, found in most netbooks, and work for everything from full Windows installs to Linux and Mac OS X, with the aforementioned limitations due to a combination of low screen resolution and modest processing power. If the screen resolution issue is fixed, virtually any non-pro Mac app will run. The big question is whether Apple would release a device with enough CPU horsepower to run Mac apps, then cripple it with an OS that only runs iPhone-quality ones. If it does, the competitive disadvantage relative to low-end laptops could be huge.

(4) Pricing. Apple sells its least expensive Mac for $599, and apparently does not like to sell computers for less than $599. That machine, the Mac mini, is built to be solid, extremely well-equipped, and attractive. Yet these virtues don’t all have clear price tags by comparison with rattier PCs, and if Apple gets into the low-end computer market in any way, it is again going to face the sorts of direct price to feature comparisons that it has spent years trying to fight with Macs. Thus, if it enters the market, it faces the challenge of offering a product with strong value out of the gate, but not such strong value that it undercuts demand for its pricier Macs. The importance of doing this properly is huge, and may well be the single biggest reason Apple has not moved faster on a small laptop during a period of great economic instability. It also may explain why the company has for the short term continued to reap record or near-record profits on the types of products it does sell, but no company can continue selling products at price points far above competitors for long without seeing an impact on growth. Apple’s recent computer price drops were necessary, but perhaps not sufficient to fuel the next big stage of its market expansion.

The bottom line to all of this is that Mac users who crave a machine smaller than the low-end MacBook have an option—actually several—if they’re willing to go through a fairly unpleasant hacking process that Apple discourages in various ways, and accept a sub-Apple-quality piece of hardware in the process. Some users will be very happy with this compromise, but it’s my personal feeling that anyone who actually tries to use a netbook-class machine for PC and Mac apps will realize that there’s clearly room for Apple to enter this market, one-up the PC makers with a combination of better quality and performance, and reap a premium price from some users for doing so. This would be somewhat of a “haters be damned” strategy in the sense that Apple would once again fail to offer the cheapest, most popular device in its class, but succeed in selling a product that customers want, love, and are willing to pay a little extra to own. If it did this correctly, the company could easily dominate the low-end computer market as impressively as it is doing today with the high-end; until then, we wouldn’t be surprised to see the Hackintosh movement continue to gather followers.