A key differentiator between netbooks and notebooks is that notebooks, by and large, provide a lot more internal storage than netbooks.

Western Digital, with an announcement today, may be pushing that delta yet wider.  The company rolled out its WD Scorpio Blue 640-GB hard disk drive in industry-standard 9.5mm, two-disk form factor.

This is a big deal, given the ever-growing need for capacity as the universe of available, high-quality digital media continues to expand.   While it's true that manufacturers could find a way to build netbooks with these drives, the price tag set by Western Digital is $149. That's not much for a drive of that capacity, but it's probably too expensive to be economically realistic for netbooks which, to be competitive, can't usually be priced at more than $350 or $400.

Predictions of a continued explosion in netbook sales have been dominating discussion in this area. But as the economy rebounds, and the market's taste for more graphics and media expands, so will the need for on-board storage.

It's difficult to see how netbooks can keep up with that -- especially when vendors like Western Digital are providing weapons to OEMs and system builders like their 640-GB capacity drive. If we see more high-capacity, mobile drives, it will help notebook sales and hurt netbook sales -- unless storage pricing somehow craters. There are no signs of that happening.

Western Digital's announcement is a good sign for notebooks.

Advanced Micro Devices reports quarterly earnings this week, and there is already conversation that the company will be hard-pressed to match Intel’s better-than-expected, quarterly numbers.

That’s correct, but it’s also misplaced. AMD doesn’t need to keep pace with Intel this quarter. It should have its own, unique criteria for success including:

- Credibility with the channel. That means keeping supply strong, hitting its release targets and delivering stable, reliable product;

- Keeping margins strong. AMD has made a strategic decision to avoid the very attractive netbook space -- Intel saw 65 percent growth in its Atom business last quarter -- and focus instead on delivering into the less flashy notebook, desktop and server spaces;

- Growth in its ATI graphics business, which differentiates itself from Intel and which could be a stronger foundation for growth in AMD's custom system business going forward.

Traditionally, AMD does best when it sticks to the basics, focuses on its partners and stays out of the headlines. Headlines, like the kind it made 18 months ago with its Barcelona troubles, are generally the kind AMD likes to avoid.

The decision to sit out the netbook play eliminates pricing complexity that AMD didn’t need anyway, in a segment that is still trying to find its legs.

The question tonight: Can AMD find its legs for the second half of 2009?