Because they want a bigger screen, and would rather have a touchscreen than a keyboard. (Each of which alone makes sense; the combination -- less so.)

Actually, I haven't seen any convertibles on the market yet that reasonably qualified as netbooks. The distinguishing factor between a netbook and a subnotebook/umpc/etc. is that a netbook is dirt-cheap, and that it's slow, not only by today's standards, but by yesterday's as well. These are only just now coming out, and will indeed be competition for this.

Current and recent convertible tablets are uniformly higher-performance and higher cost (and some are thicker, some not). But if you go back a bit farther (and thus look at used devices), there are some tablet PCs (convertible and slate) that would be close matches to this. But they're not netbooks, just old.