Mini-Notebooks Lowering Overall Laptop Prices

Analysts say netbooks are luring customers away from more expensive standard notebooks.
Mini-laptop sales are booming, luring consumers away from more expensive standard notebooks and driving down overall prices, a market research firm said Thursday.

Mini-laptops, also known as netbooks, accounted for a majority of the increase in overall mobile PC shipments to U.S. retailers in December, according to the NPD Group. The number of laptops shipped rose 23% to 1.9 million units, with 14% of that growth attributable to mini-notebooks

For the full year, laptop shipments grew by 21%. Without netbooks, that number would have fallen to 16%, the research firm said.

Most mini-laptop sales occurred in the second half of the year. In the first half, the small systems, which have displays of 10 inches or less and are priced lower than standard laptops, accounted for less than 1% of laptop sales. In the third quarter that number rose to 2%, so netbooks' biggest impact occurred in the fourth quarter, when the systems started reaching retailers' shelves in large numbers, NPD said.

By December, netbooks accounted for 12% of shipments, and nearly 50% of all netbook sales at retailers for the year occurred in the last month of the year.

The impact of the low-cost systems on the average selling price of laptops was significant, NPD said. In January 2008, laptop ASPs were $861. By December, that number had fallen to $740. Without the price erosion caused by mini-notebooks, the ASP would have fallen much less, to $795.

The sales percentages of mini-laptops indicate that systems are drawing sales away from standard laptops. NPD analyst Stephen Baker estimates that about 50% of all December netbook sales were "cannibalistic."

Many consumers buying netbooks, however, do not know what they are getting, an NPD survey found. Of the 25% of consumers who said they might buy a laptop in the next year, 70% said a netbook sounded like a good alternative.

In general, mini-laptops are slower and less powerful than standard systems and are best suited for browsing the Web and checking e-mail on the road. The lightweight systems with small keyboards make many tasks, such as document and spreadsheet creation, difficult.

With such a large percentage of potential laptop buyers seeing netbooks as an alternative rather than as a second, more portable notebook, the PC industry could see cannibalization of standard laptop sales occur very quickly, Baker said.

"New features are already being introduced which may blur the line between netbooks and laptops even more," Baker said. "The netbook market is being redefined before it's been fine-tuned, and that may cause even more consumer confusion."

Indeed, computer makers already are starting to change the definition of netbooks. Hewlett-Packard, for example, is edging its Mini system toward business use with larger and faster hard drives, more memory, and other features. With the added features comes a larger price tag of from $499 to about $1,000.

Sony, on the other hand, is hoping GPS and other features it packs in its new 8-inch Vaio P Series Lifestyle PC will be attractive enough to convince people to spend about $900, far more than a typical netbook. The system is scheduled for availability in the United States next month.

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