There’s no denying Apple’s MacBook Air has been a solid hit with consumers: In March, reports indicated the company had sold 1 million in the two months following the major Oct. 2010 upgrade. And sales don’t seem to be slowing down, which begs the following question: Is the MacBook Air the peak of notebook design?

It’s pretty close, given the device’s almost-impossible thinness, solid-state drive and an entry price of $999. But with ultrabooks — basically Windows-based interpretations of the Air — hitting store shelves from the likes of Acer, Asus and others, Apple’s design must continue evolving to compete. Where will Apple go next? And for Apple’s competitors: Can they innovate on design or new input methods without following Apple’s lead or without prompting from third parties?

The current notebook market

Apple has already telegraphed what it sees the notebook evolving into: the iPad. That device already outsells the Mac, and one day all tablets will outsell the PC, Apple CEO Tim Cook has said. In the meantime, people are still going to do the vast majority of their work on PCs.

Apple hasn’t made a major change to the MacBook Air in over a year. It most recently introduced the 11-inch and 13-inch models that were faster, thinner and lighter than the original and much cheaper, starting at $999 and $1,299, respectively. Its combination of size, weight and ultraportability has been a hit: Apple said recently that the Air was one of the main factors in the company’s selling more computers than ever, at 4.89 million Macs during the past quarter.

Meanwhile, competitors are just starting to ship Macbook Air look-alikes. Those include the Acer Aspire S3, for $900, and the Asus Zenbook, at $999, with Lenovo and Toshiba planning their own models for later this month. So far, sales are not off to a particularly inspiring start: Both Asus and Acer are said to be shipping about 100,000, fewer than the 200,000 to 300,000 originally forecast. The combination of pricing and features may not have found its sweet spot yet.

Form factor: How small is too small?

Based on our computer usage modes, the notebooks can’t get much smaller. The biggest hindrances to downsizing are the two elements that make a notebook a notebook, said Robert Brunner, the founder and partner of San Francisco-based industrial design firm Ammunition. That’s the width of the keyboard and the screen. And the general feedback is “the more display area the better,” he said.

Gadi Amit, the president of San Francisco’s New Deal Design, said another issue is the thickness of the keys, which, on a MacBook Air, adds 3 or 4 millimeters. As he said, the keys are “basically the difference between a MacBook Air and an iPad.”

As far as the width of the keyboard — well, people are prickly. Remember netbooks? “Touchtyping is nearly an innate behavior today because kids are acquiring it at third or fourth grade. The ergonomics of that requires the spacing of the keypad, which creates a certain width of a keypad, typically keys are spaced 18.5 to 19 millimeters” apart, said Amit.

In other words, there’s a reason the form factor has remained largely unchanged. Brunner, who was the director of industrial design at Apple for seven years, noted, “What’s interesting to me, since we came up with the PowerBook back in 1990, the fundamental configuration hasn’t changed really.”

That’s true for everyone. The big PC makers like HP, Dell, Lenovo, Acer and Samsung churn out notebooks with the same basic and traditional designs. That could be because they work with huge retailers like Best Buy and make computers it wants to sell. But if ultrabooks become a product-specific term that mainstream computer shoppers can identify — like what the Air has become for Apple — they could be great Windows-based, alternatives to the Air.

Rethinking user interaction

Designers know you either have to keep the keyboard as is or think of new ways to input information while maintaining productivity.

Take voice. Apple has already made a splash with Siri, the new voice-assistant technology included in the iPhone 4S. While voice might be an ideal way to execute brief activities like checking the weather, it may not feel natural as a way to write reports or website code. “Even if voice gets really good, in all my experience people don’t like talking to stuff,” said Brunner.

Then there’s touch. Does that mean a multitouch keyboard like the iPad and iPhone? Not quite. People are resistant to doing intensive touch-typing on an iPad; the keyboard isn’t the right size and you can’t touch-type as well if you can’t feel the keys. Enter: haptics. Haptics provides feedback when you hover over or hit a key so you know you’ve hit the right one. This is probably the easiest way to get rid of the traditional keyboard and make the MacBook Air’s and ultrabooks’ profiles even thinner. And yes, Apple has already filed a patent on a haptic keyboard.

That’s not to say touch hasn’t been done in notebooks. Acer has the best-looking example of the touchscreen notebook with the Iconia 6120. But as you might suspect of a 14-inch device with two LCD touchscreens, the battery life is not awesome and its form factor is pretty bulky. It has a configurable virtual keyboard but no haptic feedback.

Of the different nontraditional user interfaces being tested right now, haptics has the most promise in regard to productivity. But according to New Deal Design’s Amit, unless there’s a breakthrough in an area, little else in terms of overall form factor will change.

What you don’t see: the internal factors

So how else do you advance the notebook? It has to do with what isn’t visible: battery size, CPU speed and heat dissipation, all of which dictate form factor and design.

The battery also prevents major form factor changes in notebooks, and is also the reason why most notebooks are heavy.

There is “a huge tension between battery, CPU performance and heat dissipation,” said Amit. If you want a fast device, it will throw off heat, which typically means you need a fan. You will also need a bigger battery for a processor that’s going to consume a lot more power. “In theory, if you get power consumption down and processor speed down you could use a smaller battery, and this is how you get to the MacBook Air,” says Amit. But as Brunner says, for the next few years, innovation in that area “will climb between making stuff more efficient and making batteries better.”

Apple claims its MacBook Air has from five to seven hours of battery life, though for typical usage (turning on Wi-Fi, running multiple apps, watching video), it’s not quite that high. Sony makes a good-looking, superthin and light notebook, the Vaio Z, but its solution for better battery life is to sell an optional power dock. Samsung has Power Plus charging technology, which is designed to keep a seven-hour battery working efficiently on each charge and also over the life of the battery.

What about other ways to advance the internal components? Apple is trying to integrate wireless antennas more seamlessly into the structure of the notebook itself. The company was granted a patent last week on a microstrip cellular antenna, which would be so thin it could build cell and Wi-Fi connectivity into the case itself. Wireless is crucial to everything portable, and having already taken out the Ethernet port on the Air, Apple is showing that it is thinking about wireless in ways that no one else is, much like it has done with the iPhone.

How to compete with the MacBook Air

There are plenty of ways over the next few years to innovate on the technology outside, with new input methods, and on the inside, with more efficient batteries, thinner wireless antennas and chips that require less power but are capable of decent performance. But the biggest “inside factor” is software. It’s hard to make any leaps in battery life or input methods without changing the operating system that’s running on these devices.

It’s not a coincidence that the iPad runs iOS and not Mac OS X. The lighter the software, the more efficient the device and the more it is able to move away from a mouse and physical keyboard. Microsoft’s solution for tablets is Windows 8, which, when it debuts, will combine both mobile and desktop OS elements. But it will also include its traditional productivity apps (Word, Outlook, etc.) that require fast processors, a lot of memory and a physical keyboard.

To compete with Apple, the Windows-based competitors need to consider the following:

• Stop competing on price alone.
• Think outside traditional notebook design paradigms.
• Push Microsoft to deemphasize the need for full-blown Windows programs like Outlook on lightweight notebooks.

If the competitors don’t step up their game, they’re destined to simply follow Apple’s notebook designs rather than lead with their own innovations.