Netbooks Help PC Market Grow, but Prices Hurt Revenue, Says Report

Netbooks are once again a boon to a hurting portable PC market, states DisplaySearch in an Oct. 8 report on quarterly notebook PC shipments, though a reason for their success-low prices-is additionally encouraging a problematic trend.
“Mini-notes [also known as netbooks] have been a significant contributor to volume growth in the portable PC market as their very attractive price points make owning a secondary computer viable for many consumers,” said John F. Jacobs, director of notebook market research with DisplaySearch.
“However, the lower [average selling price (ASP)] of these devices are clearly having a negative impact on portable PC market revenue. For 2009, we expect continued ASP erosion across all portable computer categories, leading to the first [year-over-year] decline of portable computer revenue,” Jacobs added.
DisplaySearch expects these shipment and revenue trends to continue into 2010, with netbooks responsible for 21.5 percent of shipment volume but only 10.9 percent of total revenue for the mobile computer market. Netbook ASPs fell from $506 in the second quarter of 2008 to $373 in the first quarter of 2009 and to $361 in the second quarter, representing a 29 percent reduction year over year. ASPs of notebook PCs, however, fell at a rate of 10 percent, while overall portable PC ASPs fell by 19 percent year over year.
Netbook revenue, however-the single mobile PC category to show year-over-year growth-increased by 264 percent, with second-quarter 2008 revenue of $848 million increasing to $2.24 billion in the first quarter of 2009 and 3.07 billion in the second quarter.
Second-quarter 2009 revenue for ultraportable PCs was $1.48 billion, representing a year-over-year loss of 31 percent; portable PCs-those with 13- to 16-inch displays-brought in $19.73 billion but fell 13 percent year over year. Desktop replacement PCs earned $2.09 billion, falling 6 percent year over year, while notebook PCs-netbooks excluded-brought in $23.29 billion but fell 14 percent year over year.
DisplaySearch details the low-price appeal of the netbooks by explaining that their price points make them attractive to buyers seeking secondary PCs, as well as to first-time buyers in emerging markets, who often don’t require all the features of a mainstream notebook.
Telecom providers in all regions, which look to boost revenues by offering subsidized netbooks with two-year service contracts, are also responsible for rising netbook sales, along with U.S. cable TV providers, who also tie the subsidized netbooks to service packages.
The value of the total notebook PC market for the second quarter of 2009 was $26.4 billion, which was up 10 percent quarter to quarter but down 5 percent year over year.