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Will Wal-Mart Blur Notebook/Netbook Lines?

With Wal-Mart's planning aggressive discounting and marketing around notebook PCs, hardware vendors may be facing an unpleasant situation: The line of demarcation between notebooks and netbooks may be blurring at the point of pricing, perhaps for good.

That's because the retail giant is poised to begin selling a full-featured notebook PC for the cost of a low-end netbook -- a move that has industry observers worried.

But Wal-Mart (NYSE: WMT) is committed. It has remodeled a third of its stores to provide better computer sections and beginning this Sunday, July 26, it will offer the HP Compaq Presario CQ60-419WM notebook for just $298, about half its usual price. Quantities are limited and when the laptops run out, the deal ends.

The Presario is a 15.6-inch widescreen laptop with a full keyboard plus keypad, widescreen monitor, AMD Sempron 2.1GHz processor, 3GB RAM and NVIDIA GeForce 8200M graphics. It also has a 160GB hard drive and a 8X DVD SuperMulti burner plus WiFi 802.11b/g.

Many of those features are standard-issue in laptops, but not in netbooks -- which typically carry a price tag similar to that of the upcoming Presario.

Their low prices have been a key reason that netbooks have become so popular in recent months. But netbooks don't have optical drives, let alone a DVD burner, nor do they have 3GB of memory or dedicated GPU.

"We know all students need solutions that integrate work, entertainment and portability,” said Gary Severson, senior vice president of entertainment for Walmart U.S. in a statement. "Our increased assortment delivers more targeted offerings from great brands at dramatically affordable prices."

Perhaps, but full notebooks at a netbook price is not necessarily good news, noted Richard Shim, an analyst with IDC.

"This is what the industry has been worried about," he told InternetNews.com. "We're seeing the impact of mini notebooks in that the consumer will think they should be spending $300 for a regular notebook. This offer further solidifies the thinking in the mind of a consumer that they should be spending $300 for a notebook."

But, he added, the deal isn't necessarily bad. "We'll have to see if this turns into a more consistent strategy. These types of things pop up from time to time when there's excess inventory in the market or a vendor wants to get in closer to a retailer, and Wal-Mart is an important one," he said.

Wal-Mart, after all, is a company with a lot of leverage and knows economies of scale very well, as does the computer industry.

[cob:Special_Report]HP (NYSE: HPQ) officials did not return inquiries from InternetNews.com by press time.

For Wal-Mart, the discount is part of a wider effort to drive PC sales. The company has renovated the computer sections in a third of its 3,600 stores to make them easier to navigate, and plans to renovate more, along with increasing selection and doing what Wal-Mart does best: selling for the lowest price.

In addition to the Compaq laptop, Wal-Mart will offer the Acer 15.6 inch AS5810-4657 All Day Computing Laptop for $548 -- $50 off what it had been selling for online. The laptop boasts an eight-hour battery life, comes with a 1.3Ghz Intel ultra-low voltage processor, 3GB of memory, a 320GB hard drive and Windows Vista, with an option to upgrade to Windows 7.

In August, Wal-Mart will introduce HP's Mini 110-131NR 10.1-inch netbook as well as a high-end laptop, the 17-inch Toshiba L355-18.3. Dell (NASDQ: DELL), which first entered the retail market by selling in Wal-Mart stores, will also introduce new machines in August.