Future of the netbook market looks increasingly bright

The popularity of ultra-portable low-cost devices is re-energising the PC market, writes Ciara O'Brien

THE LATEST addition to the PC market, the ultra-portable, affordable "netbook", could be the driver of the PC industry in the coming months.

The netbook, or mini notebook, is designed for web browsing and word processing, and the sector has been given a boost by the launch of Intel's low-cost Atom processor, which is made specifically for use in mobile internet devices. With solid-state memory, low prices and extras such as built-in webcams instead of space-hungry DVD and CD drives, netbooks are moving out from the shadows and on to the high street.

The inclusion of Windows XP on some machines has no doubt attracted more customers to the sector, giving users an interface they are more familiar with than the Linux variety.

The devices have already re-energised the PC market, with the most recent figures from International Data Corporation (IDC) indicating that the additional momentum created by netbooks contributed to a 27 per cent increase in PC shipments in the Europe, Middle East and Africa (Emea) region in the third quarter of 2008.

What started with Asus's Eee PC is becoming an increasingly crowded market, with most major PC makers, including Acer, Lenovo, Samsung, Dell and HP, unveiling their own versions of the netbook.

Carphone Warehouse began stocking the Asus range this summer and sold its initial stock of 1,000 units in a short period. It has since begun offering its own netbook, made by Elonex.

"While the retail shelves were dominated by Asus in the first half of the year, the competition heated up over the summer months, with Acer deploying a strong push across the region," says Eszter Morvay, senior research analyst for IDC's Emea PC tracker. "Mini notebooks are clearly shaking up the competitive landscape, which is likely to get even more fierce in the pre-Christmas season, with several vendors launching products from October and potentially pushing mini notebook volumes in Emea towards the four million range in the fourth quarter of 2008."

Netbooks are aimed at a range of consumers from students to travellers and they are viewed by the industry as a complementary device to a PC or laptop, or as an introductory computer for those who have not yet made the leap to a laptop. "It has proved to be quite a popular niche," says Ben Cranks, of HP Ireland. "It's certainly not a laptop replacement, it's more of a companion device."

The appeal to the student sector is already apparent. "Mini notebooks saw a surge during the back-to-school season, with IDC estimating over two million units shipped in Emea in the third quarter," says Morvay.

Key to the success of these netbooks appears to be the availability of mobile internet access through Wi-Fi or broadband services. Vodafone, for example, has signed a deal to provide Dell users with built-in broadband access with the Dell Inspiron Mini 9.

Lenovo, which has moved into the netbook sector with its IdeaPad range, is targeting both consumers and commercial customers."The expectations we have . . . are very high," says David McQuarrie, of Lenovo. "It's an interesting market. You've literally got everyone going in who has got a PC product."

The future of the netbook market looks increasingly bright. "We can see a lot of casual users moving to netbooks rather than regular notebooks. The price point is there for them, and they represent a high degree of portability for the user who is really just looking for a mobile internet device but is uninterested in iPaqs or your iPhone-style devices," says Cranks.

However, it is not all positive news for the industry. Netbooks, while filling a gap, are low-cost devices - which means profits for both computer and component makers will not exactly be swelled by increasing sales of mini notebooks. There are also concerns that the devices may cannibalise the PC market, with users forgoing more expensive PCs for the portable low-cost devices.

Users, meanwhile, may find the smaller keyboards and screens anything from a minor annoyance to a major deal-breaker. Screen sizes range from about seven to 10 inches, with smaller resolutions unsuitable for viewing some webpages. However, increasing the screen size would affect the device's portability - one of its key selling points.