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Neat and natty netbooks a dilemma for makers
By Dan Zehr |
February 22, 2009, Sunday
|
Print Edition
Print Edition
THE mini-notebook poses a dilemma for computer makers. Increasingly popular netbooks are too large a sales opportunity for most companies to ignore. Yet the low price tag that makes them such a hit these days means less revenue and profit for PC makers than their full-size counterparts produce.
Many netbooks sell for less than US$400, and none produce a hefty profit margin. Companies, investors and analysts are asking: as netbooks get more popular, will customers buy them instead of, or in addition to, laptops?
Computer makers are rooting for the latter option, of course. They like the heftier profit margins on full-size notebooks, and they will enjoy them for a while.
Netbooks accounted for just 7 percent of all the portable personal computers shipped in the fourth quarter of 2008, according to Gartner Inc and IDC, two leading research firms.
But with the smaller models getting more popular, analysts expect the cheaper and less-profitable machines to eat into mainstream laptop sales. IDC expects netbook shipments to double this year, to 20 million from 10 million in 2008.
"There's definitely some cannibalization going on," said Mika Kitagawa, an analyst at Gartner. "But we don't know the depth of it yet."
As the performance of these smaller models improves, they could take an increasingly large bite. Intel Corp is beefing up its Atom processors for netbooks, and Nvidia Corp this year is expected to roll out its Ion chipset, which is designed to improve graphics and video processing.
Web-based storage and software companies can improve mini-notebook performance further by taking some of the storage and processing load off the computer and pulling it into "the cloud."
All indications suggest netbooks will continue down the well-trodden path of disruptive technology, said tech consultant Roger Kay, president of Endpoint Technologies Associates. A lower-performing product settles into a niche market at a lower price, and as its performance increases, so does its market. It's good for consumers - but not always good for tech companies. "Today's netbooks may still be a little underpowered," Kay said, "but it's only a matter of time before what's being offered ... is actually good enough."
But good enough for what, he and others ask. Netbooks have their limits. By definition, they're small: they top out at 30.48-centimeter screens, and keyboards are squeezed on many smaller models. Despite technology improvements and the rise of Web-based options, they carry less storage capacity and use lower-performing processors than the chipsets found in mainstream notebooks.
Those limits will help keep netbooks from eating too much into overall laptop sales, said John New, senior manager for global product marketing at Dell Inc.
Although they work nicely as an easily portable entertainment machine, he said, they're tough for creating content or for long work periods.
New sees the mini-notebook as a bridge between smart phones and larger laptops, the former a good three-minute Web session and the latter for indefinite work or play.
Many netbooks sell for less than US$400, and none produce a hefty profit margin. Companies, investors and analysts are asking: as netbooks get more popular, will customers buy them instead of, or in addition to, laptops?
Computer makers are rooting for the latter option, of course. They like the heftier profit margins on full-size notebooks, and they will enjoy them for a while.
Netbooks accounted for just 7 percent of all the portable personal computers shipped in the fourth quarter of 2008, according to Gartner Inc and IDC, two leading research firms.
But with the smaller models getting more popular, analysts expect the cheaper and less-profitable machines to eat into mainstream laptop sales. IDC expects netbook shipments to double this year, to 20 million from 10 million in 2008.
"There's definitely some cannibalization going on," said Mika Kitagawa, an analyst at Gartner. "But we don't know the depth of it yet."
As the performance of these smaller models improves, they could take an increasingly large bite. Intel Corp is beefing up its Atom processors for netbooks, and Nvidia Corp this year is expected to roll out its Ion chipset, which is designed to improve graphics and video processing.
Web-based storage and software companies can improve mini-notebook performance further by taking some of the storage and processing load off the computer and pulling it into "the cloud."
All indications suggest netbooks will continue down the well-trodden path of disruptive technology, said tech consultant Roger Kay, president of Endpoint Technologies Associates. A lower-performing product settles into a niche market at a lower price, and as its performance increases, so does its market. It's good for consumers - but not always good for tech companies. "Today's netbooks may still be a little underpowered," Kay said, "but it's only a matter of time before what's being offered ... is actually good enough."
But good enough for what, he and others ask. Netbooks have their limits. By definition, they're small: they top out at 30.48-centimeter screens, and keyboards are squeezed on many smaller models. Despite technology improvements and the rise of Web-based options, they carry less storage capacity and use lower-performing processors than the chipsets found in mainstream notebooks.
Those limits will help keep netbooks from eating too much into overall laptop sales, said John New, senior manager for global product marketing at Dell Inc.
Although they work nicely as an easily portable entertainment machine, he said, they're tough for creating content or for long work periods.
New sees the mini-notebook as a bridge between smart phones and larger laptops, the former a good three-minute Web session and the latter for indefinite work or play.
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