I've been a long advocate for laptop systems. Let's see some easilly recognizable advantages:
Laptop Pro's:
- They come complete and ready out of the box
- Low power consumption
- Built-in screen (or video card that allows at least VGA out, sometimes S-video or composite too)
- Small in size
- Easilly powered and have internal battery for standby needs
- Shock-resistand hard drives
- Easy to add hardware
- Easy to remove the whole system
- Less worrying about overheating
Laptop Cons
- Hard to fix, rare spare parts (although not so with modern laptops)
- Won't let you do major upgrades like CPU or video card (let's face it, is that even a factor when chosing your system?)
- Easier to steal
- Usually inferior sound/video cards (but personally I hardly feel any difference)
Let's say you're on a budget. You need a simple system to play your music and do some GPS navigating. Do you chose to spend time and educate yourself on the ins and outs of building, powering and setting up a desktop (or those mini board things) or would you buy a cheap Pentium III laptop for $250? I'd chose the latter, so much easier.
One more thing you're forgetting. Tablet PCs have even bigger advantage:
- Small size
- Built-in touchscreen
- Same advantages as a laptop
Tablets are so easy to install and use, they are small enough that you don't even have to remove the housing, just use the whole thing as your screen. Or if you want to fabricate it into your dash, nothing is easier! OK, higher end tablets are expensive. But if you're like me, and don't need to watch DVDs or play Half Life 2 in your car, then you can easilly afford $300 on a Pentium II tablet, it will do most things you need.
My current setup cost me $90. Yes, you heard that right, includes shipping. It's a Pentium 166 with 32 mb of RAM and 7 GB hard drive. It runs Windows 98SE, has USB ports, Winamp is my front-end. I can listen to music and use GPS at the same time, I can use steering wheel controls with it. I can browse the web and wardrive with it. Wifi is there. I can put my main 2.8 GHz laptop on the back seat and remote control it from a touchscreen tablet in my dash via either LAN or WiFi. It's the ultimate budget pc, not to mention it sounds great and is incredibly stable and fast for what it is.
Oh, and my LCD is 10 inches, not 7

Bigger is better, if you ask me