ms logoSure, netbooks are by definition low cost computers that have lower profit margins than many other computers. But that doesn’t necessarily mean that they’re going to kill profits at the major computer, processor, and software companies. Intel’s Mooly Eden and Microsoft CEO Steve Ballmer have both recently come out swinging with claims that netbooks aren’t cannibalizing the sales of larger machines and won’t eat into profits long-term.

Of course, Microsoft does claim the popularity of netbooks is one reason the company experienced its first ever drop in revenue during the last quarter. But in the long run, Ballmer says Microsoft sees a lot of opportunity in the growing ultra-thin laptop space. This would cover laptops from 11 to 13 inches, possibly with Intel CULV processors or other CPUs and graphics processors that offer better performance than Intel Atom-based netbooks, but which come at a higher price and which will include more expensive versions of Windows.

Meanwhile, Intel mobile platform director Mooly Eden has been busy explaining how the vast majority of people buying netbooks are picking them up as secondary machines, not as replacements for higher end systems. That’s despite the fact that many of you have already made it clear that you think netbooks are good enough for use as an everyday computer.

What do you think? Are these guys right, or just trying to convince themselves (and their investors) that they are?

It’s also possible that tech companies will be able to make up revenue another way. While netbooks may be driving down overall prices for computers and software, they’re cheap enough that they could sell far better in the long run. If you can pick up a computer for around $300, not only might you be more likely to buy one as a second or third machine, but you might be more willing to replace your computer every year or two instead of hanging onto it for three years or longer.

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6 replies on “Intel, Microsoft, claim that netbooks aren’t hurting business”

  1. I can see two main reasons to buy a netbook – the first is for a very cheap Windows machine to use as my primary machine e.g. if I am a student on a low budget. The second is not based on price but based on form factor – small, lightweight, quick to boot up or always on, network connectivity everywhere. This second reason can be for a secondary machine, and since I would likely already own a primary Windows or Mac machine, this market is open to alternative platforms like Linux, iPhone OS, Android, WebOS, Symbian, Chrome OS. For this secondary machine I would not necessarily be doing MS Word, MS Excel or Adobe Photoshop. I would likely be wanting to read my email, update Twitter and Facebook, browse news and RSS feeds, control my TV and stereo system, view YouTube content etc. I would basically use it to keep up with my daily dose of content. I want it to be always on and have a very very lightweight OS! I want to use it while sitting on my couch watching TV, while lying in bed or sitting on the throne, or in the kitchen. For me a tablet like the possible upcoming Apple Tablet would be perfect. I do not think this second machine market will be dominated by the netbooks of today – this market will be shared by the netbook form factor, tablets and smartbooks! One thing I believe is almost certain – this second machine market will NOT be dominated by Windows or Mac OS platforms!

  2. MS stated that Netbooks were hurting their figures in he last set of accounts they released. Intel would like to think people have the cash to buy a second PC.

    The fact is Atom powered Netbooks can easily cover 90% of the typical userbase out there and in many respects is a better product for those users.

    My concern is that they are being short minded and are trying to push the price back up again i.e. CULV processors.

    We don’t need more power. Have a look at the ssd tests on where netbooks with standard disks were tested against the same netbook with an SSD (from Runcore). The Netbooks was blisteringly fast. This proves powerful CPU’s are completely unecessary for many users.

    Once the screen resolutions get to a desktop type stage there would be very little reason to go back to the bad old days of power hogs just for the sake of powerful CPU’s that most people don’t need.

    I like the poster above who stated that if Netbooks continued to succeed then users may buy replacements more often.

    This is great for software manufacturers i.e. MS as they stand more chance of their OS being adopted. However the hardware manufacturers want to manufacture as little as possible whilst maximising their margins and getting the cash early. If they can produce a laptop three times the cost of a netbook and users buy them then they don’t have to manufacture three netbooks to get the same profit.

    I do hope Netbooks stay in the low price bracket but am fearful they will slowly become close to current laptop prices.

  3. If they thought that netbooks don’t cannibalize their sales, then why did they put so many restrictions to meet netbook requirements? I don’t believe any one bit of the garbage that spews out of their mouths.

  4. microsoft is hurting all computer sales with that dud OS. I hope all the rumors are true about 7, so we can start to see some movement in this sector again.

  5. they keep on dreaming as they did a year long now … spreading lies only they believe

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