News Watch: Netbooks – Industry Friend or Foe?

Netbooks of all shapes and sizes have been hot sellers, filling up many of the top 10 spots on’s electronics sales rankings and even being worthy of a review in the latest Consumer Reports magazine. My partner in crime Bill Calder has a good post on netbook basics.

Recently, there’s also been a lot of debate on whether netbooks are an incremental growth opportunity for the high-tech industry, or if they are taking a significant bite out of laptop sales.

We have our view, but two recent analyst reports sum up the opinions. A note published on December 3, by Uche Orji with UBS Investment Research includes this analysis:

“We expect netbooks – – – to be a PC semiconductor growth driver. (And we) expect limited notebook cannibalization. We believe netbook silicon largely reflects incremental revenue for the PC semiconductor industry and expect the cannibalization of netbooks’ brethren, PC notebooks, to be limited.”

Yet, the day before, in an Oppenheimer Equity Research note, authors noted that “the Netbook category remains a relative area of strength, though we believe there is growing evidence that consumers are trading down to these sub-$500 offerings.”

So here’s the question – are these cute little netbooks typically a second or third computing addition — or are they a replacement for a fully-loaded Core Centrino laptop?


5 thoughts on “News Watch: Netbooks – Industry Friend or Foe?

  1. Netbooks only cannibalize Notebook sales when priced between $450-$550 and so overlap Notebook price range – with the offer of more portability.
    Netbooks in the $250-$350 range are incremental. Especially when loaded with Linux OS and Open Office, SSD, and long battery life. These can run a projector for a sales meeting (powerpoint files or impress presentations) and use at the airport terminal to check mail. Think through syncing with office or home desktop (browser bookmarks, email, storage) and these make more sense to more people as a second device.
    Get the price low enough and people will have several. Keep the price high competing with regular Notebooks and people will substitute Netbooks for more portability.
    And get back in the game of easy performance comparisons – check a Sunday flier and the average person cannot tell if one pc is better than another except for HDD and screen size – which doesn’t sell very many CPUs.

  2. For myself at work I’d appreciate a virtualized console giving access to two or three VM (desktop XP, devt Linux and devt XP), an ideal for work (even with dual screens !), and a sidekick 10in netbook to carry around in my briefcase, for note taking and email reading. Ideally it would turn into a tablet for recording sketch drawings. This would naturally require an efficient synchronization for common data between the netbook’s disk and the network storage data.

  3. My old notebook died and I replaced it with an Asus 1000. Replaced the Xandros with eeeUbuntu.
    I spent 500 bucks including, RAM upgrade and tax.
    I am a professional Systems Administrator and this box is more than than enough for me to be able to my work on. I won’t be buying a replacement laptop as I don’t need one now.
    I hope these devices do take over the low end laptop market since the one I got is far more capable than devices costing $100s more. Go, go, go, little guys !!!

  4. Netbooks should absolutely be viewed as a replacement for full-power laptops for anyone who doesn’t intend to do gaming, Second Life, Photoshop, or other processor-intensive tasks.
    There are many people who fit into this category — folks who just want to do email and light Web surfing. The downturn in the economy has made the netbook proposition even more attractive. I am not in the least bit surprised that the sales of netbooks has soared, especially those models outfitted with Windows XP, which are more appealing to the majority of casual computer users.
    Ian Lamont
    The Industry Standard

  5. So if I want to run Second Life on a netbook, I will not be able to find one that can do that without troubles?

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