They are "a plague" for hardware manufacturers. For the ordinary user - a great many of who only really use their computers to read email, access facebook and watch youtube clips - I suspect they are ideal.

Translation: "those consumers! We used to force them to accept a bundle of all the unnecessary extra features of a laptop with their netbook-level compute needs. Now the sneaky bastards are un-bundling it and ruining our sweet scam! The cads!"

I don't agree with this snippet, at least it doesn't apply to me. I bought netbook, but I wouldn't buy "real laptop" if netbook didn't exist, so no cannibalization happened.

Moreover, I am not sure about that distinction. What exactly is the difference between netbook and co called "real laptop"? Missing DVD drive? Is there any principal difference?

As I see it, what happened was that Asus was able to create cheap small size laptop, and many people realized that this thing is really useful.

have margins on hardware ever been that high in the world of the commodity PC?

Given that most netbooks now run XP, (and shortly should be shipping with Windows 7 given the focus on performance) how can they be "cannibalizing Windows PC sales". The whole quote makes no sense, unless the low margins on netbooks are being passed on to Microsoft.

edit: despite the title the actual premise of the article is that Apple are declaring war on Windows 7. Given that netbooks will shortly be running Windows 7, how are they a disadvantage for Microsoft - in reality, mass produced, low-margin cheap netbooks must surely be a huge worry for a high margin retailer like Apple.

Does this sound an awful lot like the pleadings of car companies building SUVs when oil hit $150 and those sneaky foreigners started importing subcompacts ?

OK, the source of my confusion was not knowing what "cannibalizing" meant in this context. Turns out they mean Netbooks are taking sales away from PCs.