Netbook popularity could hurt notebook sales after all?

Industry insiders have tried to spin the growth of netbooks as a way to grow the overall market for notebooks – and consequently make more money for companies like Intel, Acer, Asus, and HP. But there may be another side to the story: Netbooks are cheaper than notebooks and they typically have lower profit margins. An Intel Atom CPU costs less than $40 and has a 45% margin, while a Core 2 Duo chip sells for closer to $200 and has a margin of 56%. In other words, Intel has to sell an awful lot of Atom chips to bring in the kind of money it would make on a Core 2 Duo CPU.

And while some people are certainly picking up netbooks as second or third devices, there are probably at least a few folks out there who view netbooks as a viable alternative to a full sized notebook. After all, why spend $800 on a machine with a blazing fast processor that weighs 6 pounds when all you need to do is check your email and surf the web on the go, and you can do that with a 2.5 pound, $400 netbook?

According to Barron’s, ThinkPanmure analyst Vijay Rakesh says netboks are taking a bite out of notebook sales. And that’s not just hurting chip makers like Intel and computer makers like Acer and HP that could theoretically be cannablizing their own sales by offering cheap notebooks. If you look at the top-selling notebooks on Amazon, you’ll notice that they’re almost all netbooks. And only 2 of the top 10 are from Apple.

That could indicate that netbooks are so hot right now that people are buying them in addition to laptops and in such great numbers that they top the sales charts. But it’s much more likely that they’re displacing at least some sales of traditional laptops.

via Electronista

Posted on Wednesday, September 24th, 2008, 2:49 pm by Brad Linder

DougC3

I think netbooks stimulate computer interest in general and bring new people into the market who will eventually get desktops or use larger notebooks as their power computers and multimedia machines.
Allen

I don't believe that at all. Netbook's profit-margin can't be any lower than traditional 15.4″ notebooks with Celeron, AMD, or slower Core processors that Dell, HP, Acer, and others are selling for $399.

Netbooks are all basic, and all the companies are using like components that probably come from one source, therefore economy of scale. For example, all cheap 8.9 and 10.2 LED screen are made by LG's, all using Atom N270 w/ GM945 express chipsets. Yet, these mini computers are selling for $399-899, the same price range as full-sized budget laptops that offers much more in term of specs.
mike

Netbooks are probably starting to hurt general notebook sales. On the surface this seems like bad business for Intel … However, if not for Atom, VIA could have dominated the netbook market. Intel needs to put them out of business first then worry about how to make more money off Atom.
markntravis

I never thought of buying a notebook/laptop but jumped on the original Eee PC and now have a 1000H. I also have a pretty new desktop. The desktop is my main computer and my Eee PC is one of my toys.
StevenE

I don't think netbooks are interfering with notebook sales. I have used notebooks with work, etc. and have no intention of ever buying one for personal use. I pretty much stick with desktop/tower PC's for my main work machine.
However, I am thinking about buying a netbook (one of the smaller 7″ screen sizes) just for the extreme portability. I would have no problems carrying something about the size of a paperback book around that weighs around 1 pound for doing web surfing and possibly as a device to play some older games that do not need the overpowered processors and graphics. Think of it as my own variation of a DS/PSP.
StevenE

I don't think netbooks are interfering with notebook sales. I have used notebooks with work, etc. and have no intention of ever buying one for personal use. I pretty much stick with desktop/tower PC's for my main work machine.
However, I am thinking about buying a netbook (one of the smaller 7″ screen sizes) just for the extreme portability. I would have no problems carrying something about the size of a paperback book around that weighs around 1 pound for doing web surfing and possibly as a device to play some older games that do not need the overpowered processors and graphics. Think of it as my own variation of a DS/PSP.
Steven522

I don't think netbooks are interfering with notebook sales. I have used notebooks with work, etc. and have no intention of ever buying one for personal use. I pretty much stick with desktop/tower PC's for my main work machine.
However, I am thinking about buying a netbook (one of the smaller 7″ screen sizes) just for the extreme portability. I would have no problems carrying something about the size of a paperback book around that weighs around 1 pound for doing web surfing and possibly as a device to play some older games that do not need the overpowered processors and graphics. Think of it as my own variation of a DS/PSP.

Netbook popularity could hurt notebook sales after all?

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