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Sure, Psion may have dropped its trademark claim to the word “netbook,” but now Microsoft doesn’t want you using the word. Not because the big M is claiming some sort of stake in the trademark. But because it’s just not very descriptive. That’s something I’ve been arguing for the past year, but which Microsoft and computer makers haven’t always seen eye to eye with me on it.

Look at it this way. When you call something a netbook, you’re kind of making it sound like it’s a web browser with a keyboard and not much else. But mini-laptops are actually capable of much more. They can run a variety of operating systems ranging from Windows XP to OS X, from Ubuntu to Mandriva, and even Windows 7. And they can handle a wide variety of applications, including office software, web browsers, multimedia applications, and even audio or video editing applications (although don’t expect blazing speeds when it comes time to render video).

For much of the past year or so, the computer makers putting out netbooks were in something of a pickle, though. Because they wanted to convince customers that these little laptops offered enough features to be worth shelling out some cash for. But they didn’t want you to buy a netbook as your only PC, because they’re cheap and computer makers, software companies, and pretty much everyone involved makes less money on netbooks than larger laptops.

So what’s changed, and why does Microsoft want you to start thinking of netbooks as “low cost small notebook PCs?” It could be so that Microsoft can try to push PC makers to install Windows 7 Home Premium on most upcoming netbooks instead of the lower cost Windows 7 Starter Edition. But I think there may be another factor at play here: ARM.

Today, the vast majority of netbooks use Intel Atom processors and are capable of running Windows. But starting very soon we’re going to see a flood of mini-laptops sporting ARM processors, which aren’t x86 compatible, and which therefore don’t run Windows XP, Vista, or 7. Instead they’ll most likely run Google Android, Linux, and other operating systems. And many of these devices will probably be distributed by telephone companies who will bundle them with long term wireless broadband service contracts, much the way they do with cellphones.

If this new class of mini-laptop really takes off, and I have my doubts (largely because those wireless carriers want to charge as much as $60/month on top of whatever you’re already paying for phone service), these ne devices could take a decent chunk of market share away from Intel and Microsoft.

So Microsoft’s new strategy is to highlight the fact, finally, that netbooks are really just small, low cost notebooks that are faster and more capable in many ways than ARM powered mini-laptops (although they may not be as portable or get the same kind of battery life).  Small notebooks might  not have all the bells and whistles of larger, more expensive machines. But maybe they don’t need their own name which pigeonholes them inappropriately.

On the other hand, Qualcomm recently came out with a cute new name for ARM-based mini-laptops: Smartbooks. The name is an indication that these low power little laptops are a cross between a laptop and a smartphone. But it also rolls off the tongue a lot easier than “low cost small notebook PCs.” Maybe Microsoft shouldn’t insist on retiring the “netbook” name so quickly.