Netbooks Impacting the Mainstream Market

Netbooks

Joe Wilcox, editor of Microsoft Watch, has put together an in-depth article about the impact netbooks are having on the traditional, or mainstream, laptop/notebook market.

Netbooks are cannibalizing the low-end part of the market and driving some margins down (in the so-called “race to the bottom”). Just how much they are is up for debate – I think once we’ve seen another quarter or two, and factor in the MSI Wind U100 and Acer Aspire One launch during the first half of last year, then we’ll have a better idea on just what kind of impact they are having. eWeek considers this a huge problem for the overall PC market, and they believe the Microsoft must be a part of anything that addresses this. They mention the first quarter 2009 shipment information that was just released by both Gartner and IDC, and PC shipments declined by 6.5 percent over this time last year, while netbooks/sub-notebooks sales were strong. I think some of that is being alarmist – even if netbooks didn’t exist, shipments would probably still be down. Companies are cutting back, and within the last few years, laptops have reached a point as far as cost versus computing power, where the benefits of upgrading fairly often for consumers has dropped substantially. It’s one thing if you are going from an old Celeron or Pentium 4-based laptop from 5 years ago to a Intel Core 2 Duo-based system, it’s another if you are already on a Core Duo or Core 2 Duo-based system. I think we’ve reached the point where people aren’t going to be compelled to upgrade as often. On top of that, you have Microsoft Windows 7 which is going to perform as well or better on existing systems that were sold with Vista (and it performs just fine on Intel Atom-based systems).

I think that it is a problem for manufacturers, but at the same time, the damage is done. It’s very clear that these devices are something that consumers are very interested in, and in many cases, they are being bought by people who may not already own a laptop for one reason or another. I can also see the fear that the NVIDIA Ion platform inspires in some – a low-end netbook/ultraportable, perhaps powered by an Intel Atom (or a VIA Nano), capable of HD graphics (even just 720p). That would absolutely impact the traditional 15″ (and now 17″) budget market. Netbooks with their current, outdated graphics systems, are already impacting the market – the demand was there, and the products to fill it simply didn’t exist, at least at a pricepoint that was affordable by mainstream consumers. As we go forward, you’ll find more people willing to forego the 15″ laptops for something in the 13″ and below range.

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