While laptops such as the Asus Eee PC have gained a lot of attention, IDC says most such notebooks will become secondary devices in mature markets.The market
for low-cost PCs such as the Asus Eee PC and the OLPC's XO could reach $3
billion in worldwide revenue by 2012, according to an IDC
report released May 8.
However, most of these notebooks will find not find a home in
developing countries but as secondary notebooks in mature markets such as
the United States
and Europe, according to the report.
The research company is defining these notebooks as costing less than $500,
with displays measuring between 7 and 10 inches diagonally, and as having a
full operating system, support for some third-party applications and wireless
broadband connectivity.
The market for low-cost PCs, the report predicted, will grow from
fewer than 500,000 shipments in 2007 to more than 9 million by 2012, with
revenues of about $3 billion.
However, the report found that while companies like Asustek Computer and
organizations such as One Laptop Per Child have said these laptops have a
natural home in developing nations and emerging markets hungry for PCs and
Internet connectivity, the numbers do not support that notion. Instead, these
notebooks are seen more as secondary laptops in more mature markets,
especially in education and for younger students, said Bob O'Donnell, an
analyst with IDC.
One reason for this disconnect is the price compared with the value of the
technology. Since most low-cost PCs cost about $500 and offer an operating
system and some third-party applications, most buyers would rather spend a
few hundred dollars more for a full-function laptop with a larger screen and
more capabilities, O'Donnell said.
"It's about the capabilities of the laptops and the value they get when
they buy a PC," O'Donnell said. "The issue for people, even those
people in developing regions, is that they want a fully functional machine and
not something that they view as cheap or not a real PC."
One area where these types of notebooks can have an impact, according to IDC,
is as way for school-age children to perform simple tasks and have access
to the Internet. In April, Hewlett-Packard
introduced its own product for this market called the Mini-Note PC, which
starts at $499. Intel is also offering a notebook of this type called a
Classmate PC.
Another reason that IDC does not see
low-cost notebooks taking off in developing areas is that in many potential
users in these countries don't have ready Internet access or the
networking capabilities to make these laptops viable. O'Donnell also noted
that the organizations and companies making these laptops promised one price,
but have been forced to increase that price.
While the number of shipments of low-cost PCs will increase in the next four
years, the prices for these laptops will mean that vendors will not make much
of a profit on their sales, O'Donnell said. However, that is not stopping
vendors such as Dell
from moving toward entering the market.
Intel has signaled that the low-cost PC would be a major focus for the
company in the next few years with its Atom processors, especially the version
of that processor called "Diamondville," which should begin making
its way into the market later in 2008.
In a talk before analysts in March, Intel CEO
Paul Otellini said the low-cost PC market was one of four different markets
that the company estimated could one day be worth $10
billion in worldwide revenues.
Desktops & Notebooks 
