Alarms bells are ringing here. The netbook boat is said to be strong and yet it might already be taking on water if what I think is happening is true. Sascha spotted an Acer Aspire for a (converted) 150 Euros in Taiwan recently ($195) and speculates that there’s a price war going on. Quite how you can gain an advantage on price where there are no profit margins beats me and as a result, I can’t help but think that resellers are shifting stock before sales dry up or buying trends change. It’s loss-cutting. The resellers are planning for a change. Imagine how brutal it would be if resellers are left with thousands of pre-ordered netbooks.
The price drops are happening all over. In the US you can pick the Aspire One up for under $300. In England it’s under 220 pounds and in Germany, one of the netbook sales hotspots (there are over 130 netbook SKU’s on the market right now,) 177 Euros buys you the Aspire One A110 that was selling for 289 Euros only six months ago. This is exactly what happened when the netbook market shifted up from 7″ to 9″. Resellers ended up with a lot of 701’s on their hands at that point and had to sell them at what must have been a loss.
So what’s happening. Are the resellers expecting a sales dip, a change in trends or just a wave of new models in the traditional netbook style? The most likely scenario is a dramatic change in trends.
New netbook models are coming in every week and there’s an obvious shift up to 10 and 12″ devices. There are now twice as many 10″ models as 8.9″ models on the market in Germany and standard 12″ models have just breached the 400 Euro mark marking another new trend, at least in Europe. The VIA-based 12″ Samsung NC20 is doing well to highlight this new cheap laptop segment. In addition to this drift towards 12″, the push from the ARM camp at the low-end of the market is becoming more real every day. The change appears to be happening right in the core of the traditional netbook segment between 8″ and 10″ screen sizes. 8.9″ is going the way of the 7″ netbook and tailing off quickly.
As I check my local price comparison engine I don’t see sub-11″ netbooks in the top-10 any more (Upgrade items such as hard drives and CPUs seem to be popular at the moment however) and where netbooks were one of the top three categories, they are now down at number 9. It’s interesting too that the only laptop in the top 10 most viewed devices is a sub 400 Euro 12″ with a dual core Pentium.
If the market does split over the next 12 months with the ARM ecosystem taking over the smaller and low-end price market and pushing devices out through their efficient carrier channels. and the traditional netbook technology moving up to larger devices then resellers will want to remain ready and having stocks of old devices won’t help them at all.
Intel may have a problem too. If the trend shifts up to 10 and 12″, netbooks become notebooks and will have to compete directly against the cheap standard 12″ laptops. Atom at 1.6Ghz with Windows 7 is going to disappoint many in this comparison. Intel either need a dual-core or higher clocked Atom for cheap notebooks or they will not be able to supply the right balance of power and value that VIA and ARM already have with their higher-powered, low-cost notebook platforms that will work well in 1.5KG laptops and might well hit the 2009 low-cost laptop market spot on. It has been obvious since the early days of VIA’s Nano that they were aiming for low-cost Windows 7 notebooks so it’s likely that Intel have already noticed this gap in their portfolio.
Predictions for netbook sales are up to over 20 million now but if that means 7-10″ devices, it sounds like its going to be way-off. Ill stick with my prediction of 15.6 million. The worst news though is that, as many many people predicted, netbooks would cut right across notebook sales by setting new pricing expectations. The margins are going to be down across the board all the way up to the 12″ laptops and beyond. [More thoughts on the crossover from netbook to notebook here.]
What does it mean for UMPCs and MIDs? For UMPCs, it’s quite the nightmare scenario. Repurposing the low-end, sub-1KG, Atom-based netbooks as productive UMPCs was never a problem but if the market shifts, we’ll only be left with expensive dedicated devices because the netbooks will be bigger and less energy efficient. Windows 7 will bring in higher licensing costs anything based on Intel’s Moorestown or ARM platforms won’t be able to run your favored desktop OS anymore. On the other hand, it’s good news for MIDs. As the ARM-based devices push through and get traction, we should see a range of dedicated MIDs that will satisfy most consumers with internet, media and entertainment which, funnily enough, is exactly what Microsoft wanted to do with XP and Origami exactly three years ago today.
Netbook price cuts Signals Dramatic Change in Netbook Market. http://tinyurl.com/cstyf7
It`s also interesting to see what netbooks have done to (sub)notebook prices.
You can get a 12″ Laptop with a Core2Duo running at 1.8GHz, 2GB of Ram etc. from fujitsu for under 400€. And it even has a non glare display! So why would anyone want to buy a 12″ Netbook?
that is indeed interesting!
Which fujitsu model are you referring to? Thanks.
you can get the one 110 linux now in switzerland also – for chf 299.- (about eur 199.-) at interdiscount. a month before brack.ch kicked out his last 500 eee900 20gb at the same price.
btw, a norwegian tech news page seems to nail these two articles together:
http://www.digitimes.com/NewsShow/MailHome.asp?datePublish=2009/2/23&pages=PD&seq=203
http://www.engadget.com/2009/02/06/intel-80gb-ssd-price-cut-by-one-third-still-very-expensive/
as a indication that its about ssd vs hardrive netbooks, and people wanting more storage space…
Great post Chippy,
If all of this turns out to be the way that the market is developing, doesn’t it almost mean the end of netbooks as we know them? I mean if they are just becoming small screen budget laptops then surely the traditional netbook market will be forced to dissapear. Most people i know including myself bought one of the early generation netbooks 7″/9″ mostly for their small sizeand portability, now, if we are to see a future where these same devices are sporting 12″ screens does that not mean that they will now be inherently less portable? (less productive?).
The other problem is, as you state about umpc’s becoming more dedicated devices, well, umpc’s are already a pretty niche market anyway and this growing trend in larger netbooks will only serve to make umpc’s more expensive and less available.
I for one do not understand this trend that seems to be growing just like the screen sizes.
My ideal world would contain the 1st and 2nd gen netbooks (ie 7″-10″ screens) also have umpc’s AND have a separate market for these 12″ so called netbooks that might as well be full sized laptops.
And to end my rant “BRING ON THE MIDS ALREADY” where are they all hiding? It seems that from 100 annouced devices only 5 are available.
your not alone on the screen thing…
i keep seeing people wanting 12″+ and 1280+ resolution…
ugh forgot to add, i suspect that what both we, and the manufacturers, are seeing are a vocal minority. the same minority that set up forums and stuff about hacking all kinds of things into their devices, just because they could (and it was so relatively cheap that if they fired one they could just grab another).
thats the problem of the net really. what we see are the tips of some very silent icebergs, where most of said icebergs could not care less what the part that sticks up of the sea is doing.
I’m sort of in both camps, i like the devices to be what they are, and i do like the occasional hack, but for me the hacking is to improve what is already out there, ie adding 3g to my existing devices or increasing storage capacity.
Like right now for exaple i plan to add 3g to my Gigabyte M704, but this is mostly because i just cannot find an Aigo/Compal/Gigabyte MID for sale (IN STOCK) anywhere right now.
i always wanted something like a netbook. my last 2 notebooks are or were 12.1 inchers. with netbooks and small devices i can get what i always wanted: a good and high performance desktop and a portable device. the 12.1 inch was always a compromise.
yeah, we could say the netbook market will kill us all, since prices are low, nobody earns and manufacturers and everbody else will cut jobs etc. in the shop i’m happy about a sub 200 USD device, because it’s cheap, but if you think about the “forecast”… or are we finally seing a revolution were we actually get something for the money.
not long ago i spent 2000 euros for a desktop and 1800 for a notebook where i thought there must be diamonds or other jewellery available in the same box – they were powerful yes, but today you get in relation the same power for half of the price or less.
so DO we actually think it’s a revolution or is it how it should have been in the first place?!
Excellent article by @chippy about some of the macro-developments in the netbook market these days http://is.gd/kG22
I always wanted a laptop that could give me 6 hours of online use. When the 9″ Atom devices with 3G finally came, I got one (one with a just big enough battery and a small enough display).
This was only a couple of months ago, just before Christmas of 2008. Now you’re telling me this class of devices is being phased out entirely?! What is happening?
The 10-12″ netbooks might be a usable niche for those who absolutely need slightly bigger keyboards and are ready to sacrifice the portability and some battery life due to the larger screen (while still not getting a higher power sub-notebook while they’re at it), but they are outside my criteria. It is starting to feel like there won’t be any replacements for these 9″ laptops if one is ever needed. I guess I just have to hope this 901 Go never gives up the ghost…
Then again, most consumers don’t know or come to think of that balance and just go for something cheap with a large screen, even though there’s only one model out there that actually uses that extra inch for a higher resolution.
Anyway, here’s hoping the MID market survives this without the prices rising to UMPC prices of three years back. Then I would have no hope of affording a pocketable, long lasting device for a couple of years…
I think part of the problem is that no-one has yet come up with any compelling things that a MID enables that isn’t answered as effectively by a smartphone, whereas people can easily find use cases for more portable laptops. (There was a post from kornel last year about how he couldn’t find anything to actually do with an HTC shift and changed to using a MacBook Air because for the things he actually ended up doing, it was the better choice.) Since I’m carrying a backpack anyway the difference in volume between (8+1)in (if you included screen bezel) netbook and a (10+1)in or even (12+1/4)in netbook is not particulary significant to me, what I care about much more is (1) weight (very, very much) and (2) price (my common refrain “has to be cheap enough to risk damaging situations”).
I’m not worried about the hardware side of MIDs suffering economic problems, I think they’ll vanish if no manufacturer can come up with interesting things users can do best with that form factor. (I don’t twitter, don’t mobile video blogging of my trip to the supermarket and I very rarely watch You-Tube so maybe the use cases are there and they just don’t appeal to me.)
I guess it all stands and falls with the avaible OSs.
If there would be one OS avaible that combined all the features of a normal Windows System and the portability, instant access and ultra long battery runtimes, the netbook size would be a fixed format for a long time.
As with mobilephones nowadays, there would perhaps be a new Netbook every two months from every manufacturer.
Windows 7 should have become just that: A ultraportable full-size OS. They missed the point again and thats why the masses wont buy as much netbooks as when the hype was on its peak.
Perhaps they will combine Windows mobile and Windows 7 (snap vue?) with windows 8.
It remains exciting.
When these things get up to 15-20 hours of battery use per charge.
Stand back, the flood gates will open and people will flock thru. Why? Because, every kid in school will want a battery that goes all day.
Because, every grown up kid who works on the road, yep long battery use too.
Because, every library that gives out notebooks with 2 hours of battery all day.
Because, every portable sales device in stores, long battery is good.
Because, when then with long battery and a cell phone inside, that when the device is put into suspend WITH THE CELL PHONE STILL ON… hooked up to a bluetooth mic/ear/remote control part, well… story still the same.
Netbook, MID, UMPC, whatever you call it, the key will be long life… and folks will know that value when they see it, and everyone will want one too.
Netbooks could drive production of even crazily cheaper, lighter-weight computers. “If everything you’re doing is online, then the netbook becomes a screen with a radio chip. So why do you need a motherboard?” OLPC designer Mary Lou Jepsen says. “Especially if you want the batteries to last. Why not just make it a screen and a really cheap $2 to $5 radio chip?”
ARM based laptops are going to take over the market starting this year: $100 = 7″ screen $150 = 10″ screen $200 = 13″ screen $250 = 15″ screen
All will be running Google Android or Ubuntu for the ARM Cortex processors produced by Texas Instruments, Freescale, Samsung, Qualcomm, Marvell, Nvidia and others.
Companies going out of business this year: Intel, Microsoft, AMD, HP, Apple and Dell. Sell your stocks while you still can. Those companies are about to tank.
Brands that may survive if they can adapt to the cheaper lower power ARM architectures: Asus, Acer and MSI, but only if they do find a way to make money selling $100 laptops and controlling all the steps of production to sale, which is unlikely.
Those ARM based laptops will have a better, cheaper screen by Pixel Qi that is sunlight readable, even usable to read ebooks (thus Kindle-killer as well), they will have 10-20 hours of battery life at least depending on the 3-cell or the 6-cell battery models used.
Processing power all that will be completely irelevant. All ARM laptops boot Android or Ubuntu Linux instantly, all launch browsers and other user-friendly embedded applications instantly. Storage can be expanded by SD cards or using any 2.5″ or 1.8″ hard drive using an empty removable hard drive compartment that the cheapest ARM laptops can come shipped with.
In the matter of only a few months, Intel processors will be rendered completely useless, ARM will take over 80% of the market in a year especially cause the whole developing world will use ARM instead of Intel. Windows 7 will never manage to reach the cheapest laptops, Microsoft will remain the king of bulk until they go bankrupt.
Only survivor from Silicon Valley will be Google but only if Google makes those $100 laptops and calls them Google laptops running Google OS, now is not the time to play neutral Internet service provider, you have to pick your sides.
How about no?
ARM cannot run most of today software.
Don’t forget the MIPS platform, which already is the cheapest (the all-Chinese Alpha 400 at $170 from Geeks.com).
I have a blog on all the cheapest MIPS, ARM, whatever is currently the cheapest — at http://www.alpha-400.com.
We are heading for computers sold on blisterpack cards in drug stores, children’s stores, and everywhere for a few $20 bills.
That is my personal project: Blisterpack PCs.
ugh, blister packs. do you really hate the world that much? blister packs are customer hatred distilled…