Netbooks have been one of the only areas of the PC industry to see increased sales over the last year or so. That has a lot to do with their low cost. You may not have noticed, but there’s a global recession going on, and if you’re worried about losing your job, watching your stock portfolio plummet, or tightening your belt for other reasons, a $300 computer might look mighty attractive when you compare it to a larger, fuller featured $1000 PC.

While some analysts have predicted that netbook sales will continue to increase over the next few years, Information Week is running an article that shows you can find analysts who will say anything. This time, they’re suggesting that sales of low cost mini-laptops will drop as the economy begins to recover, which could happen as soon as next year.

That position makes some sense. After all, if the poor economy is one of the reasons that netbooks are doing well, then a better economy could hit netbook sales hard.

But this idea ignores what I think is one of the larger reasons that netbooks have taken off recently. They hit the sweet spot of price, performance, and portability. A few years ago you could find 10 inch laptops that were light and small and which didn’t take up much size in your bag. But they cost $1500 or more, which made them a non-starter for many price conscious shoppers. You could also find stripped down handheld devices running Windows CE, EPOC (the precursor of Symbian) or similar operating systems. But these were also high priced gadgets, and they didn’t provide all the functionality users expected of a computer.

Some people will argue that netbooks don’t offer all the features of a computer either because they have slow processors and small screens and therefore can’t handle some heavy duty tasks like playing video games, editing videos, or performing major tasks in Photoshop or Excel. But what netbooks can do is run Office software, web browsers, media players, and perform 90% of the tasks that most people expect of a computer. And they do it for about $300 to $500.

Sure, some people are going to want larger machines with bigger screens and keyboards and faster processors. But you can already find those for under $500. The reason netbooks have taken off is because they offer many of the same features at an affordable price point. And that’s not going to change next year. What you will probably see though, is a wider range of devices selling for $500 or less, including laptops both large and small. And you’ll also probably see a wider range of high performance machines with 12 inch or smaller screens and higher price tags.

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22 replies on “Will netbooks die off as the economy recovers?”

  1. I’m going on record as saying that netbook sales will not fall when we pull out of the recession. I expect that sales will even take off again as more money becomes available to spend on the much wider variety that will
    continue to appear. Also, as long as new children keep being born, the market will not become saturated.
    —Self-anointed analyst/oracle ๐Ÿ˜‰

  2. The world is changed. This was inevitable. You can’t just make everything faster and smaller while having software continually requiring all that power for basic functionality forever. Something had to give, and with CPU tech moving more quickly, there would come the point where we could no longer parrot the old adage “Intel giveth, and Microsoft taketh away”.

    Windows XP may well be remembered as the single most successful, beloved consumer operating system of all time. It hit all the right buttons, lodged itself in an entire generation as the usage paradigm of Personal Computing. It doesn’t help that Microsoft(And I don’t completely believe rightly) got dragged through the mud by naysayers and reviewers on Vista.

    Enter the Atom. Sure, power-wise it’s about a Mid-high level Pentium III, but the thing is that’s all we needed. It runs XP. It runs a web browser, which means it runs the internet by and large. And for so many, that’s all we’ll ever need, the internet, some light, simple games, and of course the occasional bit of light entertainment.

    They didn’t expect it to work as well as it did, or where it did. One wonders how well they even know themselves to come up with such a response. Of course people are looking for cheap, capable devices. Recession or no, everyone loves a deal.

    And that won’t change. Hell, it’ll only get worse. They’ll only get better at cramming more power into small form factors. Newer technologies will overtake what we have now…who knows, Atom 2 might even allow me to play Hulu 480p videos in full screen…

    It’s commoditization. It’s inevitable. Eventually you it just gets too cheap, to easy to do a product well. I’ve waited for this for a long time. It’s happening in all form factors, at all parts of the market. Outside of specialized machines, you can build a very capable machine for $400(I should know. I just built one for my girlfriend, and she’s able to enjoy Oblivion and Source Engine games very well, thank you).

    This doesn’t end. It just gets more interesting. And even if Intel doesn’t do it, the idea’s out there. The market is proven, the customers are there. It’s only going to get more interesting, and I’m happy to be able to watch.

    1. You know what – we need to start making it clear what netbooks can do because the list is a lot longer than the list of stuff it can’t do.

      I know names stick but we are relatively early in the game and when you say netbook to someone who doesn’t have one they look at you like a puzzled dog (head sideways). So lets change the name to …

      ProductivityTop it can do all the productivity stuff and play multimedia no problem just can’t do high computational stuff or render powerful game images (yet). What happens when NVidia ION starts delivering that ?

      Who really runs Montecarlo type modelling on their laptop?

      How about 99Laptoptop?? Meets the needs of 99% of the population??

      1. That might be confused with the PC99 standard.
        But something along those lines.

  3. Netbooks ain’t going anywhere. People know they can exist now and the genie can’t be stuffed back into the bottle.

    The problem was Windows. It was adding over a hundred dollars to the MSRP of every notebook or desktop sold. Carrying that sort of dead weight meant there was a bottom to how low spec a system it made sense to offer. For example a $400 notebook vs a $500 one would have had to cut a lot of computing power for what consumers would see as a small price difference. Because for the manufacturers the fixed cost of Windows meant everything else had to cut a lot to shave that extra hundred off the final delivered, marked up ticket. On low end machines Windows was the most expensive component in the bill of materials and it the price was not open for discussion. Super large and loyal OEMs got a better price but never different prices based on final selling price of the system.

    The EEE changed that because of the power of the Penguin. And to get back in the game Microsoft was forced to the one thing it had NEVER thought it would have to do, discount a Windows license, now all the way down to $15. Once Windows was cheap whole new types of computer became possible, the netbook as it was. Note that these new $500 ‘netbooks’ will be possible even after 7, they will just become $575, or more likely refreshed models with slightly different specs for $600. But the $300 pricepoint has been opened up and something is going to stay in it. Likewise the 1KG form factor isn’t going away and no, $1000 Sony stuff will no longer be the only offerings.

    And the ARM invasion is going to forever open up the $200 price point unless ALL of the models in this first wave suck so hard nobody tries again for years.

    1. I have this sinking feeling that the first wave of ARMbooks are going to “suck so hard” and cost too much. The good news is the weak companies will drop out and the strong ones will hopefully get it right the second time around. I want my 9″ sub 2 lb. basic ARMbook for when my 10″ 3 lb netbook is just a bit too much.

  4. I remember as a small child (1996) my mother told me that computers would one day cost 300 to 500 USD. I shrugged my shoulders and figured that computers would get smaller, more powerful, lighter, etc. I couldn’t see how prices could drop with all of this breakneck innovation in hardware and software.

    We’re not quite at the end of innovation in hardware and software with multi-touch, ever smaller manufacturing processes, etc. (although I do think year-to-year performance gains in CPU power are not quite what they used to be…I could be wrong…)

    However, Microsoft wanted to get their lovely OS into more market niches…hence the Origami UMPC project. After a few iterations of new processors for the UMPC/MID platform, Asus (likely leveraging their good relationship with Intel) decided to use the processor in a small, cheap netbook. Everyone knows the rest. I do wonder if Intel was outraged at Asus’ move.

    I think the industry has gone in a direction from which it can’t return. With dirt cheap HDs and RAM, and Intel’s cheap Atom platform, the industry has committed “original sin”. The dirt-cheap laptop is here to stay. It will see pricier iterations, such as Intel’s CULV processors, and higher-end SSDs, but the tiny cheap laptop is here to stay.

    I think others have had similar experiences as myself: because of the low price and small size, I don’t mind traveling, hiking, or boating with my netbook. I even play my iTunes from across the bathroom while in the shower. I wouldn’t dare do that with my 2,000 USD production tablet, or a 2,000 USD MacBook Pro.

    Low cost and small size isn’t ideal for anyone’s profit margins (memory manufacturers, Intel, Windows, netbook OEMs) but I think it is ideal for the consumer. Since the consumer is always right, and the industry (thanks to Asus) has committed original sin, the netbook is here to stay, come hell or high water!

    1. Netbooks haven’t even begun to take off. Wait 2-3 years from now when the next generation multi-core ARM processor just about anything the Intel Atom can do now, except in a machine of half the weight and half the cost and with twice the battery life (at identical screen size). They’ll be jumping off the shelf in Walmart, widely deployed in U.S. elementary schools, and reaching millions of new customers in India and China.

    2. In my opinion Barret has hit the nail on the head the price point of these devices has taken us to a point where the public will no longer accept heavier, less portable, more battery power hungry devices even at or near the netbook price range. They are here to stay.

      The key to how significant a slice of the laptop market they will take now and going forward is dependent on their rise before the recission is over for when that happy event happens the meteoric rise of netbooks will definately slow down. For supporters of netbooks (I being one of them) the ideal situation is that netbook growth goes as far as possible before the recession fades into distant memory. I say distant memory because regardless of what people say when the recession is technically over it will be widespread consumer confidence and secure employment that will then drive the move back to big retail spending and that my friends will probably take some time. For some who were part of the fallout of this recession the impression and their behaviours may be affected forever just like those from the second world war, they valued everything they had and didn’t buy into the big retail spend generation. That came a whole generation later.

      Netbooks here to stay and down with the old clunkers I say!!

      This will probably leave two segments in the market, the high end laptops and the netbooks. The current cheapo laptops will probably be replaced by netbooks as they are now producing 12″ models.

  5. I belive that the Highpoint will be reached at October 2009 and than it falls. The Cristmas Business as we had 2008 will not be. But it is all in the definition of a Netbook, is it 10 or 11 or 12 inch? justmy2cents ๐Ÿ™‚

    1. Naw, the NetBooks CAUSED the recession!

      (About the only stone still on the ground after MS, Intel, Apple, et al have had their turns.) ๐Ÿ˜‰

  6. netbooks are growing as they are filling a till now unserviced market. there were small machies but they were often twice the price of a standard system and had small niche markets. now there are cheap alternatives people are jumping all over them.

    for some it is the small choice but for me and many other commuters like me we value the small compactness as well as the cheapness.

    at the mo i carry 2 netbooks. an aspire one for use at work (must add ubuntu 9.04 to it soon) and an olpc for when i need something that will last all day which it does. no one laptop would match the versatility that both give me for the price i paid for both. i would like to ditch the aspire one and get an arm based netbook with a touch screen.

    the laptop manufacturers i suspect would like to eliminate the netbooks as they are destroying the market for their more expensive devices.

  7. You can get a nicely equipped Netbook for around $300, I don’t think the demand for these will drop because the economy recovers. Sounds like wishful thinkng for those who still lug their $1000+ 6lb notebooks around because they want to play video games on the train.

  8. You forgot weight and battery life. Two more reasons netbooks will be around for a long time. I would much rather tote my NC10 around all day instead of my Thinkpad…and it’s charger.

  9. As/if the economy improves, high-end netbooks at over $500 will become more common. But I think there will be a greater price spread than today with $150 ARM-based computers also common.

    1. You can manage your household finances in Excel just fine on a netbook, but doing advanced Monte Carlo analyses or complex regressions will take 4x the time that it does on my 2006 Core 2 Duo laptop, or 10x the time that it does on my desktop Core 2 Quad 9300.

      Compiling software has the same slowdown.

      1. Thankfully, you can leave your Core2Quad 9300 desktop running at home, and in an unlikely event of needing to perform advanced Monte Carlo analysis or a complex regression (?) you can remote-desktop to it, and run all power intensive tasks on it, while using your netbook to retrieve and display the results. Easy ๐Ÿ™‚

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