IDC: Low-cost laptop no threat to PC

Stripped-down portable computers with low price tags will not take off in a big way, but even if they do, they will have little impact on the traditional PC market, says analyst.

Inexpensive, stripped-down notebook computers targeted at emerging markets are not likely to take off, but if they do, they will have no major impact on the "full-fledged" PC market, predicts a senior executive at IDC.

Bryan Ma, IDC's director for Asia-Pacific personal systems research, told ZDNet Asia in a phone interview that low-cost laptops--which are being championed aggressively by chip makers Intel and Advance Micro Devices (AMD), as well as several computer makers--are unlikely to take off for now.

"It's not something we expect to take off," Ma said. "We think that these products still have a lot of execution challenges ahead of them, not only in terms of physical distribution but [also in] boosting education awareness, and even the prices [the PC manufacturers] are rolling them out at."

He added: "They're going to be faced with a huge number of challenges, such that we don't think it's going to get big right away."

On whether the low prices of these inexpensive notebook computers will be attractive enough to prop up demand, Ma said: "Sure, price is a factor that will help and in that sense, it is better positioned than a PC, but that's not the only success factor here."

"If price was the only thing, then we can start stripping everything down and selling dirt cheap computers," he said. "At the end of the day, people in the emerging markets want value out of the product. They don't want a reduced version of the product; they want something that still shows them why they need to use these things.

Ma also highlighted other challenges from a vendor perspective, such as distribution and how to get the price of display screens down.

"Even though Negroponte's talking about the US$100 PC, the reality is [it is] closer to US$200 right now," he added.

Nicholas Negroponte and Massachusetts Institute of Technology are working on developing a Linux-based portable PC using AMD's Geode processors for around US$100, targeted at millions of children in the developing world.

Chipmakers Intel and AMD, as well as software maker Microsoft, also have similar initiatives. Intel's Classmate PC is a sub-US$400 notebook for school students in emerging nations, while AMD's Personal Internet Communicator (PIC) is aimed at providing Internet access to people in emerging markets. However, the PIC project was canned last year due to limited interest.

In October 2005, AMD teamed up with Indian computer manufacturer HCL to launch a low-cost PC in the country for 9,990 rupees (US$232)--which included an AMD x86 1600 megahertz processor, 128 megabyte RAM, 40GB hard disk, 15-inch color monitor, 52-X optical drive, keyboard, and scroll mouse.

The IDC analyst said that even if the low-cost PC does eventually take off, it will neither be a threat nor have a major impact on the traditional PC market, but a boon instead. "Theoretically, the low-cost PC could help the [traditional] PC market in the long run, because it's helping to boost IT awareness, which means that those users may eventually migrate to a full-blown PC," Ma said.

IDC excludes low-cost notebooks from its definition of a PC, as they do not run a full-fledged operating system and are not a fully-capable PC.

Based on this definition, Ma said the low-cost PCs do not compete directly with traditional PCs. "These products are going after a different target user--which is the education segment in the emerging markets that wouldn't have bought a PC anyway," he explained.