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Emerging markets to prolong netbook longevity

Although falling prices for full-featured laptops are eating into netbook market share, the latter will continue to have future in emerging markets that have low IT penetration rates, say industry watchers.
Written by Kevin Kwang, Contributor on

As long as netbooks retain their attractive pricing and manufacturers continue to innovate and introduce new features, these mobile devices will retain their relevance in the PC market, particularly in emerging markets with low IT penetration rates, industry watchers noted.

Sameer Bhatnagar, a senior analyst at Springboard Research, said claims that netbooks have run their course is "not justified". Rather, improved technological features and interest by specific demographics such as students will continue to boost the adoption of these lightweight and portable devices, Bhatnagar told ZDNet Asia in an e-mail.

"There will be a continuous growth of netbooks in emerging economies, such as India, for specific groups like people looking for a secondary device and students. We don't believe that laptops will replace netbooks completely," said the analyst.

His view is backed up by Lenovo Singapore's country manager for home and small business, Eugene Liew, who noted that in emerging markets, many first-time buyers have yet to own their first PC. Netbooks, with their attractive entry price and utilitarian features, would make a "good starter machine" for consumers in these markets, Liew said in an e-mail.

Furthermore, he added that the continuous evolution of netbooks will see such devices offer better performance and additional functions, which can only command more interest among users such as "kids and the elderly". These user segments will not require the "complexity of full-featured notebooks", he said.

However, a Dell Computer excecutive provided a different perspective to the netbooks-versus-notebooks debate.

Walt Mayo, vice president and general manager of Dell Consumer Asia, said in his e-mail to ZDNet Asia: "[The real debate revolves around] consumer demand for computing solutions that balance portability, performance and battery longevity at the desired levels of affordability."

He pointed out that users may prefer full desktop replacements to serve as the nexus of a next-generation media hub or pick a simple but highly portable device to support on-the-go Web browsing and basic word processing.

"Different users will have different requirements and performance...[and] technology vendors need to continue to deliver products that enhance and fit into consumers' lifestyles, however vast and different their needs may be," said Mayo.

Netbook market growth settles
The debate over the relevance of netbooks comes as some industry experts observe that this market segment, once the golden child of the PC market, may be plateauing as consumers turn to notebooks made more attractive by dipping prices, offering better value for money.

According to a report by ZDNet Asia's sister site, CNET News, Intel CEO Paul Otellini said: "I think we suggested that netbooks seem to be settling out at about 20 percent of the mobile form factors, and on an annual basis, that looks to be about right."

Illustrating Otellini's comment, the article cited IDC numbers which indicate that Intel's Atom processor shipments have fallen in proportion to the chipmaker's total mobile chip shipments. Intel dispatches most of its Atom processors to netbook manufacturers.

IDC analyst Shane Rau said in the report: "With the market recovery, I think end-users are going to be looking for more value than just low-cost devices. This is an opportunity for higher-end mobile PCs, for example, that have better performance, bigger screens [and] bigger hard drives."

AsusTek Computer CEO and President Jerry Shen agreed with the assessment that shipments of Atom processors will see weaker growth. However, he noted in his interview with Digitimes that despite falling shipments, market estimates forecast chip shipments to increase from 32 million units in 2009 to between 35 million and 40 million units this year.

In another report by the New York Times, Avi Cohen, managing director of financial firm Avian Securities, reiterated the point made by Rau. "There is a gradual shift in the consumer space from netbooks to mainstream laptops," he was quoted as saying.

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