“If (the Eee PC from) Asus starts to do well, we are all in trouble. That’s just a race to the bottom.”

– Mike Abary, senior vice president of Sony’s IT product division, February, 2008

If the netbook market is a race to the bottom, then Sony is bringing up the rear. Not a year after Sony execs disparaged netbooks as undeserving of its premium brand attention, the company announced its token entry into the market: the Vaio W.

Outfitted with a 10-inch screen, an Intel (INTC) Atom processor, 1GB of memory, a 160GB hard disk drive and Windows XP, the machine prices out at $630 in Japan, $499 in the U.S. That’s quite a bit more expensive than rival netbooks. Which is odd since the market for these machines is fairly price-sensitive. Still, Sony (SNE) feels the W is good value for the money, given its design, cheery color palette (white, brown, pink!) and screen resolution–at 1366 by 768 pixels, the W’s display is clearly better than that of its rivals.

Said Vaio chief Nicolas Barendson, “We believe that this screen resolution and design offers our customers a better experience, and that it will be popular with both newcomers to the netbook market looking for a quality portable PC at a netbook price point, and customers wanting to improve their existing netbook experience to date by upgrading their screens.”

Sony’s announcement leaves Apple (AAPL) as the lone major computer manufacturer without a netbook offering, a designation it’s likely to keep for the foreseeable future, according to company execs. “When I look at netbooks, I see cramped keyboards, terrible software, junky hardware, very small screens,” COO Tim Cook said back in April, noting that it’s “a stretch” to call a netbook a personal computer. “It’s just not a good consumer experience and not something we would put the Mac brand on…it’s not a space as it exists today that we are interested in, nor do we believe that customers in the long term would be interested in. It’s a segment we would choose not to play in.”

So why is it we need one of these things again?

No one seems to be sure, really — not even the PC vendors making them.

“At this point, you can expect all the major players to get into this market,” IDC analyst Richard Shim told eWeek. “The question is what is there level of commitment and what is their target audience and how much do they expect it to grow. A lot of the companies I talk to say, ‘We’re doing this as a defensive measure and we’re concerned about the success of some of the more aggressive players that have entered this market.’”

So why is it we need one of these things again?

No one seems to be sure, really — not even the PC vendors making them.

“At this point, you can expect all the major players to get into this market,” IDC analyst Richard Shim told eWeek. “The question is what is there level of commitment and what is their target audience and how much do they expect it to grow. A lot of the companies I talk to say, ‘We’re doing this as a defensive measure and we’re concerned about the success of some of the more aggressive players that have entered this market.’”

Unfortunately, every attempt at this concept has included too many compromises to justify their often surprisingly high prices. I’ve been testing the latest effort at such a device, the Eee PC, from a Taiwan-based laptop maker called Asus. It does better than some of the earlier contenders in certain respects, such as text entry and price. But it still is likely to prove unsatisfying for many road warriors.

Asus doesn’t even call the Eee a computer, referring to it as a “mobile Internet gadget.” Instead of using Microsoft Windows as its operating system, the Eee uses a specially designed version of the open Linux operating system, and comes preloaded with a variety of open-source programs for Web browsing, performing office tasks, playing music and videos, running games and managing photos.

The Eee has a much smaller footprint than even the subnotebook category of laptop, such as the much-publicized MacBook Air unveiled by Apple this week (which I’ll review after I have thoroughly tested it), or subnotebooks from Sony and Lenovo. It weighs a mere two pounds, is just under 9 inches wide and just over 6 inches deep. It is thicker than the new Apple and some other subnotebooks, ranging from 0.79 inches at its thinnest point to 1.26 inches at its thickest. The overall effect is small, but stubby.

The Eee’s price is only a fraction of what typical subnotebooks cost — from $300 to $500, depending on configuration. The model I tested, called the Surf, is the base $300 entry. With its pastel blue lid, and tiny size, it looks like something Barbie might use. But it can perform real work, even though it comes with only 512 megabytes of memory and a scant two gigabytes of storage space.

One reason the device costs and weighs so little is that there is no hard disk. Files are stored on memory chips. It is possible to add storage by popping in a flash memory card or by connecting a USB drive to one of the three USB ports.

Unlike some computers in its category, the Eee isn’t a tablet. It takes the clamshell form of a traditional laptop and, when opened, reveals a full, if very cramped, keyboard. By including a real keyboard and charging so little, Asus has overcome two of the problems that plagued Samsung’s Q1 ultramobile computer awhile back.

Asus Eee PC

The user interface on the Eee is simple and clear. It consists of tabs labeled Internet, Work, Learn, Play, Settings and Favorites. Each tab contains large, colorful icons. For instance, the Work tab includes icons for Documents, Spreadsheets and Presentations. These tabs lead to various modules of the free OpenOffice suite, a competitor to Microsoft Office.

The Internet tab has various icons, such as Web Mail, Web and Wikipedia, that open the Firefox Web browser. You get to this tabbed screen by just pressing a Home button.

In my tests of the Eee, I was able to use all manner of Web sites, send and receive Web-based email, compose and open Microsoft Word documents from other computers, play music, and view photos.

So, with a low price, a small size, a real keyboard, and a clean user interface, what’s not to like about the Eee?

Well, for starters, its tiny 7-inch display is just too stingy for serious work. You can make up for a small screen size with high resolution, but the 800 by 480 resolution on the Eee — which can’t be changed — is so wimpy that very few lines of text can be seen at any one time. This means you’ll have to do so much scrolling, it’s likely to drive you crazy.

Also, the lack of a hard disk, and the relative paucity of truly simple Linux software, means that most nontechie users will be stuck with the included programs, which can’t be removed and which don’t include a calendar or contacts program, or even an email program. You can only use Web-based email.

And just below the Eee’s simplified user interface lurks the complicated terminology and software design characteristic of Linux. Some error messages I saw were indecipherable.

Beyond that, many of the Linux programs included were far cruder and harder to figure out than, say, Microsoft’s Photo Gallery or Apple’s iTunes. The Eee wouldn’t automatically reconnect to a known wireless network, and it wouldn’t recognize my Kodak digital camera.

Some of these problems can be solved if you install Microsoft Windows XP on the Eee. Asus includes instructions on doing so. But you have to supply your own copy of Windows.

The Eee is a valiant effort, but it still has too many compromises to pry most travelers away from their larger laptops.

Email me at mossberg@wsj.com. Find all my columns and videos online, free, at the new All Things Digital Web site, http://walt.allthingsd.com.