The thing that dictates the precise size of every laptop is the screen. Pixels are relayed to us through a static piece of glass, and we carry this rectangle around with us.
But I had a thought after seeing the following on Instagram: What if the screen wasn't a rectangle at all, but a thin rod and a hub? This type of display technology already exists:
Sure, the resolution is primitive, but conventional monitors once had the same problem. (Also note that in person you would not see the rotating bands of darkness; that's an aftereffect from the shutter of the camera recording the video.) It would be interesting to see a "laptop" design that consisted of a spinning LED bar for a screen, and some equally compact form of input device, like one of those laser-based virtual keyboards.
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Admittedly a circular screen might take some getting used to, but I'd be very curious to see what talented UI/UX designers might come up with to make a round screen advantageous to use.