RealTime IT News

Netbooks Growing Twice as Fast as Notebooks

Netbooks are beginning to really eat away at the notebook market and are showing their greatest strength outside the U.S., according to a new report by market researcher DisplaySearch, a subsidiary of NPD Group.

In its new Quarterly Notebook PC Shipment and Forecast Report, DisplaySearch found netbook sales had surged to 38 million units during second quarter, with 40 percent quarterly sequential growth -- better than the 22 percent sequential growth for notebooks.

Of course, notebooks are a mature market while netbooks are still finding their footing. Plus, netbooks have been positioned as a second or third computer, ideal for someone who already owns a laptop but wants something smaller and lighter to more easily carry with them.

Netbooks' share of the market has soared from 5.6 percent in the second quarter of 2008 to 22.2 percent last quarter. There has also been a corresponding loss for notebooks, from 94.4 percent of the market in 2008 to 77.8 percent in 2009.

Equally notable is where netbooks are growing. When the product category first emerged on the market, experts widely assumed they would take root in emerging and poorer countries. Instead, the opposite happened: They initially took off in the U.S. and Europe.

Since then, however, things have been changing. Latin America grew the most year-over-year, by 64.8 percent. Right behind it was China, with 59.7 percent growth, while the wider Asia-Pacific region saw 53.2 percent growth.

The U.S. became netbooks' slowest market for growth at 6.9 percent year-over-year, followed by Europe, the Middle East and Africa (EMEA) in aggregate, with 14.8 percent growth. Japan gained 20.9 percent year-over-year.

DisplaySearch said that the low prices of netbooks makes them more affordable for emerging markets, and these regions have many first-time PC buyers, who are less likely to require all the bells and whistles available on a larger mainstream notebook PC.

In the U.S. and western Europe, many communications companies have begun promoting netbooks -- a trend that may ultimately have some impact on the market. For instance, some have adopted the mobile phone model by fully subsidizing the price of a netbook in return for requiring subscribers to sign up two a two-year data plan.

However, these plans have not been in place long enough to provide an accurate picture, the report said.

In any event, netbooks' continued growth isn't guaranteed if PC makers persist in taking steps that might erode the reasons for their success, DisplaySearch said. For one thing, the research firm noted that there is a limit to the size of the screen that customers are willing to buy, something that has proven to be an issue before.

"Some panel makers and brands are promoting 11.6-inch 'mini-note' displays, leading to an overlap with ultraportable notebooks," John Jacobs, DisplaySearch's director of notebook market research, said in a statement. "However, the higher prices of these larger netbooks diminish their cost advantage."

"In addition to many other key players in the supply chain, Microsoft indicated it is their desire to increase the ASP [average selling price] of mini-notes," he added. "A significant increase to the ASP of mini-notes may deter consumers that are predominantly using mini-notes as secondary PCs."