Pervasive : Netbooks are a growing market, but the best is yet to come. It is set to see a quantum leap in the next two years

DQW Bureau
New Update


The evolution of netbooks into a key segment in the PC space has defied all

expectations. Initially called sub-notebooks, PC major Asus created a totally

new segment called netbooks. While in the last two years, almost all PC vendors

have jumped onto the netbook bandwagon, it is by and large polarized between

players like Acer and Asus who clearly have the early mover advantage.

The year 2009 can very well be called the year of maturity for the netbooks,

and players like Asus and Acer further perfected the netbooks and made it more

functional. But in terms of processors, it remains predominantly Intel centric.

Market Dynamics

According to estimates and company sources, Acer tops the netbook charts

with 50,000 netbooks shipped in FY 10. Pretty impressive numbers and Acer

achieved this due to its aggressive pricing, positioning and design of its

netbooks which have gone well with the users. When netbooks were launched couple

of years ago, it was predominantly positioned as a commodity product meant for

PC buyers whose computing needs are basic. But surprisingly with time, netbooks

have become essential gadgets for travelling executives and it dented into the

commercial PC segment as an ideal secondary portable device. This has been the

key market driver for the growth of netbooks in India and a global trend as

well. In addition, netbooks offer great value to certain user categories like

education and insurance.


Experts say that in India, the netbook has met with a fair amount of

acceptance among users which has led to the growth of this category. Says Mahesh

Bhalla-Executive Director and GM, Consumer Division, Dell India, “We are

positioning our netbooks for specific categories of users in the consumer,

commercial and education segment. We see netbooks as a companion device for

digital content consumption and running an application or two. In India, we will

continue to launch new products in the netbooks product range, offering

consumers a wide array of options in terms of the utility of computing at

affordable price points.” For instance, Dell adopted a vertical strategy and

positioned its netbook models like Inspiron Mini for travellers and Latitude

2100 netbooks for school-going students. Dell says that Latitude 2100 is a

'student-rugged' machine with 10.1 inch screen specifically meeting the

requirements of school students.

Clearly, a space like netbooks offers very limited innovation as all vendors'

offerings boast of a minimum five to eight hours of battery backup and most of

them use Intel Atom. The areas in which they can innovate are in aspects like

keyboards, screen, color and making the netbooks more apps friendly; so that it

can run two or three tasks simultaneously without any hitch and not have

hardware compatibility issues. As we look at the netbook market leader, Acer, it

has brought in industry's first 11.6 inch screen and a better keypad. Says S

Rajendran, Chief Marketing Officer, Acer India, “Netbooks are a good growth

category. We can see brisk numbers and there is a QoQ growth. But, we are not

seeing a surge like demand yet. There was a small inflection point last year,

but the market potential remains bullish.” Acer is the one that needs to work

towards deepening the netbook market and make it popular with its offerings.

Meanwhile as we look at Asus, the company that pioneered the netbook space, it

has also made many innovations in design and form since the last year and topped

its netbooks with unique power management features leading to eight plus hours

of battery backup.


Looking Ahead

There is a consensus in the industry that netbooks will see good growth in

the future; but at the same time, the extent to which they can sustain, time

will tell. Moreover, in the last one year, netbooks as a segment is getting more

defined. From the initial days of 'who is the typical netbook buyer', today

vendors are able to position their netbooks better for the consumers and

commercial segments. As we look at the evolution of this device, initially, it

was aimed at basic computing users and secondary PC buyers who already had a

mainstream computing device. But, now the trend indicates first time PC buyers

opting for netbooks.

In India, we will continue to launch new products in the

netbooks product range, offering consumers a wide array of options in terms

of utility of computing at affordable price points

Mahesh Bhalla

Executive Director and GM, Consumer Division, Dell India

We can see brisk numbers and there is a QoQ growth in the

netbooks space. But, we are not seeing a surge in demand yet



Chief Marketing Officer Acer India

Recently in an investor meeting, Paul Otellini, CEO, Intel remarked that

netbooks growth will be powered by consumers looking at it as a primary PC and

suggested that it can contribute up to 20 percent of the global PC shipments.

Also, it looks like netbooks will transform the PC consumption patterns of

emerging geographies and as per IDC in Q4 of 2009, 53 percent of the notebook

purchases in Mexico were netbooks. This trend can very well be replicated in

places like India.


So clearly there is great optimism regarding netbook market growth. An

iSuppli report recently stated that netbook volumes are forecasted at 34.5 mn

units for 2010, and this is a

30 percent growth compared to 2009. Yet another indicator that reaffirms the

netbooks' growth and its potential is that of Intel's mobile PC processor

shipments in Q1 of 2010 in which about 20 percent came from its netbook

processor, Atom. Intel is also pushing its Atom processors to other areas like

tablet PCs.

Analysts believe that 2010 in many ways will act as a springboard for

netbooks in emerging markets like India. As primary netbook buyers' population

increases, there will be a surge in volumes. The netbooks satisfying the

requirements of primary PC buyers is a development that stems from the fact that

netbooks are not compromised computing devices, and so there is a realization

that it can very well satisfy the requirements of SOHO and SMB users' computing

tasks. Further, netbooks running Windows 7 basic versions have brought in a

degree of credibility to its hardware.

Clearly, all vendors have not got their netbooks strategy right because it's

an extremely price sensitive market. As a matter of fact, the user segment that

looks at netbooks as a secondary computing device predominantly go about their

purchasing decision by looking at the price with a basic minimum configuration

consisting of Intel Atom processor N450 with 1.66 GHz and 160 GB HDD. Hence,

vendors who are able to deliver the best possible balanced configuration with

better screen and keypad win in this segment. While netbooks can run Windows 7,

the market right now in India is still Windows XP.

Despite the fact that all PC vendors have a footprint on netbooks, it will be

polarized predominantly between two players in India, Acer and Asus; and other

vendors have to compete with these two vendors. In the next two years, the

current trends indicate that the market will see a quantum leap in volumes.

Hopefully, such a trend manifests and makes way for pervasive mobile computing.

Shrikanth G

Source: DQ