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Are netbooks dead? The prognosis is grim

Loyd Case | Feb. 22, 2012
Remember netbooks? Those inexpensive, highly portable, long-battery-life laptops made primarily for lightweight tasks like Web browsing? Netbook sales have declined. In the United States, sales have dropped precipitously since 2010, and the trend in the rest of the world is starting to follow.

Netbook Decline Due to Many Factors

The most important thing that happened over the past couple of years was the release of Apple’s original iPad in April 2010. By the launch of the iPad 2 in the first quarter of 2011, netbook sales had started falling more sharply.

It’s unlikely, however, that people who might have bought inexpensive netbooks ran out and bought pricier iPads instead. “The fast decline of the netbook has been the result of many factors," IDC’s Daoud suggests. "First is mainstream consumers' lack of interest in a product that features tiny screens and keyboards. This was at the same time Apple released its first generation of iPads, shifting consumer attention to the tablet. Meanwhile, the PC industry has been refocusing its efforts on higher-margin systems that produce better profits, such as the Ultrabook and upcoming releases of new classes of tablets. All these factors and many others are currently conspiring to bring the netbook into a tiny niche market.”

In other words, users became disenchanted with the sluggish performance and poor experience that netbooks offered, and Apple’s shiny new toy--with its emphasis on responsiveness and ease of use--exacerbated the flaws of the netbook in the eyes of potential buyers.

What’s more, netbook margins were very low, so manufacturers abandoned them. Brian Pitstick, who runs the marketing effort for Dell’s consumer, small, and medium business laptops, notes as much: “The netbook category has declined because netbooks did not deliver on the overall user experience, but rather addressed the category on a price basis.”

Even Asus, which still offers a broad netbook-product portfolio, acknowledges the reality of the market. “Clearly, demand for netbooks is declining and many think this product category is all but dead," Asus's Kevin S. Huang wrote in an email exchange. "Asus created the netbook category, and I think netbooks today still provide the most cost-effective computing product solution servicing certain user segments--i.e., the K-12 education market.”

Manufacturers Turn to Ultrabooks

Intel was one of the prime beneficiaries of netbook growth, with its first-generation Atom processors powering most of the netbooks sold. Intel’s Kathryn M. Gill told us that the company is aware of the decline of the netbook, but remains bullish about its prospects in other markets. “From Intel’s perspective, netbooks, tablets/hybrids, and Ultrabook devices each provide distinct and unique value propositions. The worldwide landscape for computing devices will continue to grow, not decrease. In other words, for the foreseeable future, we see devices coexisting and serving different market segments as well as different user needs, and spanning a wide range of system price points. We believe our 32nm Medfield, Clover Trail, and Cedar Trail products offer winning lineups for 2012.”


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