It’s no secret that I’m a big fan of the Netbook, an emerging new product category of low-cost and ultra-portable notebooks. But it seems many in the PC industry aren’t.
Initially targeted at the education market or those wanting a third machine, Netbooks are resonating with a much broader market — and not just because of their lower price point compared to more traditional and higher specced sub-notebooks. Despite years of industry propaganda, consumers are wising up to the fact that they don’t have to step on to the processor upgrade treadmill. Instead, in an age where more and more of our applications and data resides in the cloud (on remote servers, rather than stored locally), a machine with Internet connectivity and one that is powerful enough to run a modern web browser – that’s a Netbook by the way – is often all that we need.
This has put the industry on the back foot, reports The New York Times, since the sale of Netbooks produce significantly smaller margins and could unintentionally cannibalize existing and much more profitable product lines. Although the Netbook was pioneered by smaller players such as Asus and Everex who have a lot less to lose, many of the industry’s major PC manufacturers, but not all, have since released or announced their own Netbook efforts, notes the report. Acer, Hewlett-Packard and Dell are in, while Sony and Fujitsu are sitting it out for now.
“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,” Fujitsu’s Paul Moore tells the Times. “It’s a product that essentially has no margin.”
The problem for Fujitsu and Sony, along with companies who have jumped on board, is that the Netbook pie could get pretty big. Market research firm IDC has predicted that the category “could grow from fewer than 500,000 in 2007 to nine million in 2012 as the market for second computers expands in developed economies”, while Intel is being much more bullish. The company estimates that 40 million units will ship a year by 2011, which makes it all the more curious that last week Intel was heard talking down the version of its Atom chip designed specifically to power Netbooks.
During a conference call with analysts and the press, Intel CEO Paul Otellini was quoted as saying: “(Atom) is less than a third the performance of our Centrino (processor). You’re dealing with something that most of us wouldn’t use.” This is from the company who, along with the Taiwan-based Via, has done the most to define the Netbook category.
A product it now seems that Intel, along with many in the PC industry, would rather you didn’t buy.