Netbook Boom Likely To End With Better Economy - InformationWeek

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Infrastructure // PC & Servers

Netbook Boom Likely To End With Better Economy

The mini-laptops optimized for Web surfing and costing as little as $300 have experienced a boom for more than a year.

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As the economy improves, people will likely turn away from the low-cost netbooks that are driving PC sales in the current recession and opt for more powerful systems, a market researcher said Thursday.

The mini-laptops optimized for Web surfing and costing as little as $300 have experienced a boom for more than a year, with global shipments rising a whopping 2,424% last year and 68.5% this year, iSuppli said. Computer maker Asustek introduced netbooks to the market in 2007.

While the stratospheric growth rates are impressive, they're also expected to be short lived. Sales are likely to return to earth as the global economy improves. Many analysts predict an economic recovery in 2010.

"People are not buying netbooks because they are truly desirable platforms, but rather because as low-cost PCs, they offer a good mix of features at an acceptable price point," iSuppli analyst Matthew Wilkins said in a statement. "With financial motivation a key factor in many netbook sales, growth of the netbook platform is likely to slow down when the economy comes back and consumers have more money in their pockets."

Next year, global netbook shipment growth will decelerate to a less-astounding, but still impressive, 39.6% from this year, iSuppli said. That slowdown will continue at least until 2013, when the growth rate is expected to be 13.1%.

During the economic downturn, much of the growth of netbooks has come at the expense of contemporary PC categories, particularly desktops. Shipments of PCs are expected to drop by 9.5% this year, compared to 2008, according to iSuppli.

One troubling trend among netbook makers is the increasing performance and feature set in the systems, which started out as an inexpensive ultraportable for students and people looking for a second computer to take on the road.

Today, Intel is updating its netbook chips to handle high-definition video playback and display sizes are increasingly heading to the 10-inch range, up from the typical 7 and 8.9 inches, iSuppli said. Nvidia is boosting the graphics performance further with its GeForce 9400M chipset.

"While netbook capabilities and performance will inexorably rise in the coming years, the more powerful they become, the more threatening they become to regular notebook models -- through comparable performance but lower price," Wilkins said.

With a few netbooks today being as little as $100 less than some low-end laptops, manufacturers must be careful to keep the costs of the platforms down in order to maintain their market strength, iSuppli said.

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