Netbooks Cause Worry in PC Industry?

MSI Wind PC The New York Times has a two-page article by Matt Richtel covering the rise of netbooks and other smaller PCs and notebooks, and the dramatic impact they are starting to have on the PC industry.

In an article entitled “Smaller PCs Cause Worry for Industry”, he writes that they are a cause for concern among some of the larger manufacturers and retailers because of the smaller profit margins and the dominance by smaller manufacturers.

They mention that Dell, Acer, and HP, among some of the largest overall producers have plans or are in the process of carrying them out:

In a tale of sales success breeding resentment, computer companies are wary of the new breed of computers because their low price could threaten PC makers’ already thin profit margins.

The new computers, often called netbooks, have scant onboard memory. They use energy-sipping computer chips. They are intended largely for surfing Web sites and checking e-mail. The price is small too, with some selling for as little as $300.

The companies that pioneered the category were small too, like Asus and Everex, both of Taiwan.

Despite their wariness of these slim machines, Dell and Acer, two of the biggest PC manufacturers, are not about to let the upstarts have this market to themselves. Hewlett-Packard, the world’s biggest PC maker, recently sidled into the market with a hybrid of a notebook and netbook that it calls the Mini-Note.

It’s a very interesting article, because it mentinos Fujitsu’s and Sony’s decisions not to compete in the netbook / sub-notebook market at this time:

“When I talk to PC vendors, the No. 1 question I get is, how do I compete with these netbooks when what we really want to do is sell PCs that cost a lot more money?” said J. P. Gownder, an analyst with Forrester Research.

Even as some PC vendors are jumping into the fray, others say they are resisting. Fujitsu, one of the world’s top 10 personal computer makers, said that it believes the low-cost netbook trend is a dangerous one for the bottom line.

“We’re sitting on the sidelines not because we’re lazy. We’re sitting on the sidelines because even if this category takes off, and we get our piece of the pie, it doesn’t add up,” said Paul Moore, senior director of mobile product management for Fujitsu. “It’s a product that essentially has no margin.”

Stan Glasgow, chief executive of Sony Electronics, said, “We are not looking at competing with Asus.” But he said the company is investigating what consumers want in a second PC.

Read: NY Times