Netbooks became pinched from several directions. First, smartphones functionality increased to the level of small (if difficult to functionally use) computers. The first nail in the coffin came with the release of the iPhone, followed shortly by phones based on a Linux derivative, Android. The iPhone met with fabulous sales across the planet and gave much needed software boost. Each smartphone operating system was the derivative of a mature desktop and notebook operating system—slimmed of extraneous items to form a core of applications to suit the form factor—and added features of Internet access and GPS systems. Conveniently, smartphones from Apple and Google were initially released on GSM mobiles platforms, opening a world-wide market.
HP countered their lack of a smartphone-class offering by acquiring Palm, then announcing a new web operating system. Microsoft bored the world with the ever-so-slow release cycle of their smartphone, based on a new version of Windows Mobile. And while the world had seen several Linux-based smartphones, Google took a Linux basis, and evolved the Android platform on their own to suit smartphone hardware makers—and to allow them to compete with Apple.
Laptop/notebook counters to the netbooks also arrived on the scene quickly. Apple released the MacBook Air, a sub-three pound, SSD-based machine at a price initially nearly eight times the inflation-adjusted OLPC price ($1,799). Dell countered with the M1330—light and feature-packed—to be eventually replaced by a genuine netbook, the Dell Inspiron Mini 9.
Another squeeze came from a different angle: the Apple iPad. With an entrance point at only double the inflation-adjusted price of the OLPC (at $499), here was another SSD-based device—but without a pesky keyboard, that used what was still another cut into the netbook—an evolved software application ecosystem, based on iTunes as a delivery portal that already existed for the iPhone. The iPad could use much of the software developed for the iPhone creating an instant ecosystem.
In the interim, the OLPC development groups struggled, and finally delivered the XO-1 model, rapidly followed by other OLPC models and sold them to governments across the planet. The OLPC machines, and netbooks in general, have no inherent operating system-based software ecosystem, and as download sites specific to operating systems, the iPhone/iPad/iTunes combination has proven to be a strong asset and competitive edge in terms of motivation towards purchasing Apple equipment. To an extent, the same is true of the Google (and Amazon) Android "app stores" (Apple is trying to trademark "App Store", so it's uncertain how long this term will apply generically).