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You are here: Home / Tech Trends / Netbooks Grow in a Stagnant Market
Netbooks Expected To Grab 20 Percent of World Market
Netbooks Expected To Grab 20 Percent of World Market
By Jennifer LeClaire / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
In what may be a sign of the economic times, low-cost netbooks continue to gain momentum in a struggling PC market. Nearly 33 million netbooks, also known as mini-notebooks, will ship this year as penetration into the PC market grows to 20 percent worldwide, according to NPD Group subsidiary DisplaySearch's Quarterly Notebook PC Shipment and Forecast Report.

Traditional notebooks -- described as laptops with displays of 12.1 inches and larger -- are expected to see flat year-over-year sales for the first time.

As display sizes of netbooks have moved quickly from seven inches to 8.9 inches to 10.1 inches -- and now with the emergence of 11.6-inch and 12-inch products -- it's clear that buyers want a lightweight device, but they also want a bigger display, said John Jacobs, director of notebook market research at DisplaySearch.

"While these devices have certainly created a new market," Jacobs said, "our research indicates that they are predominantly used as secondary PCs by consumers, and are not replacing notebooks."

Are Carrier Subsidies Helping?

Telecom providers have been offering subsidized netbooks for several quarters in many regions. AT&T, Sprint Nextel, and Verizon Wireless are all aggressively marketing the devices with service plans. DisplaySearch said telecoms are looking for their next revenue stream in anticipation of slower smartphone subscriber growth.

"I'm not sure how much that carrier subsidies are actually driving sales right now. The fact of the matter is if you are looking for a secondary or tertiary PC for your home, netbooks are cheap. They fulfill that purpose well," said Avi Greengart, an analyst at Current Analysis. "They are not good for video or playing heavy games, but for surfing the Internet and doing some light word processing, you can get a really nice machine for $349 from HP, ASUS, Acer or Dell."

Although U.S. consumers are steadily adopting netbooks, penetration rates for mini-notebooks in other regions are also strong. Penetration will exceed 26 percent in Latin America and 22 percent in EMEA (Europe, the Middle East, and Africa), with the lowest penetration rates in Asia-Pacific, North America, and China, according to DisplaySearch.

In emerging markets like Latin America, the low prices of netbooks offer a more affordable product. In 2008, 45 percent of all netbooks were shipped into EMEA markets. While this figure is forecast to drop to 40 percent this year, it's well in excess of the region's total share of the notebook PC market.

Laptop Rebound Expected

Despite the quick growth of netbooks, DisplaySearch reports that's just one factor that appears to be negatively impacting the flat year-to-year demand for traditional notebooks. Another factor is the decline in demand from enterprise customers. Enterprise cost-cutting measures, specifically IT-related costs, have been well publicized.

DisplaySearch believes there is significant pent-up demand in the business-to-business market as many enterprises did not upgrade from Windows XP to Vista. The launch of Windows 7 in October, if combined with economic recovery, could lead to a rapid recovery in enterprise notebook PC demand. However, DisplaySearch doesn't expect this to occur until 2010.

In the meantime, netbooks are still growing strong. Even without carrier subsidies, netbooks are meeting a need for a PC that is highly portable with basic functionality using Windows XP.

"You can put iTunes on it. You can put a Web browser on it. You can put QuickBooks on it. You can put Microsoft Office on it and you can get work done. You can check your e-mail, you can surf the Internet. You can balance your checkbook from anywhere in your house and it doesn't cost very much," Greengart said. "Connected netbooks are also very compelling for road warriors and some students."

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