Hewlett-Packard, Acer, Dell and other companies are making so-called netbooks, or mininotebooks and low-cost laptops, for consumers and enterprise buyers looking for less expensive computing solutions. However, some within the IT community are questioning whether the netbook trend has been cannibalizing market share from higher-end, pricier laptops. HP CEO Mark Hurd addressed the issue during HP's conference call with financial analysts.
Even as Hewlett-Packard,
Dell, Acer and other companies have gravitated
toward "netbook" production in the last 12 months, fear has arisen
among certain segments that these low-cost laptops are cannibalizing market
share from higher-end, pricier laptops.
Netbooks have existed for a relatively short time within the
portable-computing spectrum, but already their impact is being felt. In the
current economic doldrums, consumers and some enterprise buyers have turned to
netbooks as a way to pinch pennies while fulfilling their connectivity
On Feb. 19, Dell
announced its newest low-cost laptop in the Mini line, the Inspiron
a follow-up to its Mini 9 and Mini 12. Retailing at $399, the notebook
PC allows Dell to continue to compete in this particular market space.
The Inspiron Mini 10, like many netbooks, utilizes Intel
's Atom processor.
The Atom processor, paired with netbooks' popularity, is one of the reasons why
Intel has managed to gain market share in the face of stiff competition from
Advanced Micro Devices and Via.
In turn, this has led to media headlines such as "Netbooks: Cheap Young
Cannibals of Laptop PCs." But how real is the threat of netbooks to
higher-end laptops' market share?
The issue is one that HP CEO Mark Hurd
felt he needed to address during a recent conference call with financial
analysts to discuss the company's latest quarterly results. HP, which remains
the world's leading manufacturer of PCs, has recently launched a number of
netbooks and mininotebooks, including the HP Mini 2140 and the 2133 Mini-Note
For Hurd, the issue requires further study.
"I've seen in print, from people who claim expertise, that 80 percent
of netbooks is new [sales] and 20 percent is cannibalization of the bottom part
of the notebook market," Hurd said during the Feb. 18 conference call.
At the same time, Hurd claimed that this relatively recent launching of HP's
own netbook line meant "we have some time before I can give you a good
metric and good consumer data back" as to whether netbooks are truly
eating into the market share of other laptops. But he said he thought the
available signs pointed to other factors.
"It's not the move to netbooks that's cannibalizing," Hurd added.
"What you have is someone buying a more thickly configured notebook, who's
now buying a more thinly configured notebook, and that's what's adjusting the
ASP [average selling price]."