Intel says that netbook sales aren't eating into notebook sales yet and appear to be add-on devices. However, the data is far from conclusive so far.
On the chip giant's fourth quarter earnings conference call (Techmeme, my analysis), Intel CEO Paul Otellini was asked the question most of the tech industry is wondering about. Are netbooks--arguably the only PC niche that's growing--eating into laptop sales? More importantly, how will netbooks affect margins?
I think very little of it was cannibalization from netbook. And we've done surveys now of buyers to try to triangulate on that. And while there is some cannibalization, the data suggests that the vast majority of netbook sales are incremental, and by the time we get to the analyst meeting, we'll share that data with you.
On the notebook side, I think what you see is that it takes longer to slow it down. Much of our desktop business is through the channel, which is the configured to order model. And so the channel adapts very rapidly. They have little inventories to begin with. It adapts very rapidly to demand changes, and in fact, if anything, our channel inventories and desktop products are a little light right now as channel sales stabilize in the second half of December.
Notebooks for the most part are assembled in China and Taiwan and then shipped, most recently, in the last six months or so, on boats. So the supply line actually lengthened as people fought to save money on shipping as the air transit prices went up with the gas going up. So, that all started to contract.
And I think that there probably was more inventory contraction in classic notebooks than in desktops as a result. And we'll know a little bit more as we go into the quarter, but that seems to be the picture.
As a netbook user I'd have to agree with Otellini. There's no way these little devices will replace a laptop. However, netbooks will be a replacement for some folks. And as netbooks morph they become more of a notebook threat. In other words, the netbook fallout is far from being resolved.