In less than a week, Hewlett-Packard, Dell and Lenovo have all rolled out new low-cost, ultraportable notebooks. The move by three of the world’s largest PC vendors shows the growing impact low-cost laptops have had on the overall PC market, especially as these companies look to increase sales in a slowing market.
While these low-cost notebooks, or “netbooks,” were originally envisioned as laptops for schoolchildren or cheap alternatives for users in emerging markets, these notebooks have actually helped the PC industry keep its sales going as enterprises continue to hold off on refreshing their PC fleets.
Recent reports from IDC and Gartner show that these low-cost laptops helped overall PC shipments grow by about 15 percent in the third quarter of 2008, despite the looming financial crisis and the worry that businesses, especially in the financial sector, will begin to curtail hardware spending in 2009. Earlier in 2008, IDC revamped its estimates, and it said it now believes shipments of low-cost notebooks could top 10 million units by the end of 2008.
The release of low-cost notebooks from HP, Dell and Lenovo the week of Oct. 27 also shows how the three companies are adjusting the form factor of these laptops to meet the needs of all types of customers. Dell offers a 12-inch screen and HP and Lenovo now offer netbooks with 10-inch displays, which makes these laptops ideal companions for workers who travel several times a week and do not wish to drag a full-sized, 5-pound notebook through the airport.
At a Gartner symposium earlier in October, analyst Leslie Fiering told eWEEK that the first crop of netbooks, such as Asustek Computer’s Eee PC, had 7-inch displays that limited the laptops’ business use. These newer notebooks offer larger screens-8.9-inch to 10.2-inch-that allow for a full Microsoft Windows experience.
“When the first Asus came out, people were attracted to that small, small price but they felt it was not practical for them,” Fiering said. “So now you are seeing a lot of the new products come out with a 10-inch display. When we talk about where the natural break points are when it comes to screen size, 10-inch and a possible 8.9-inch is the lowest screen size where you can comfortably use a full desktop Windows [image].”
The HP Mini 1000 series, which debuted Oct. 29, offers users a choice of either an 8.9-inch or a 10.2-inch display, which should allow for the full Windows or Linux experience. The revamped Lenovo IdeaPad S10e also has a 10.1-inch display and offers the choice of either Windows XP or SUSE Linux Enterprise.
The Power of the Atom Processor
The other trait that all these notebooks share is the Intel Atom processor. While not as powerful as the type of CPUs Intel and Advanced Micro Devices make for full-size notebook PCs, the Atom does allow PC vendors to offer a range of new form factors and better battery life.
While the Atom chip does mean users lose some performance, Fiering believes current netbook performance is similar to what full-size notebooks offered three to four years ago. When Intel eventually updates its Atom line, there will be room for additional performance improvements.
“When you start to look at the potential of a dual-core [Atom processor], it means these notebooks can perform multiple functions and the notebook won’t come to a full stop when you try to print a document,” Fiering said.
The HP Mini 1000 and the Lenovo S10e both offer the Intel Atom N270 processor, which has a 1.6GHz clock speed. Previously, HP used a Via Technologies processor with its $499 Mini-Note notebook that the company introduced in April.
Dell also decided to tap an Intel Atom processor-the Atom Z520, which was originally intended for MIDs (mobile Internet devices)-for its Inspiron Mini 12. The use of this Atom processor meant that Dell could offer a 12.1-inch notebook that weighs less than 3 pounds and measures less than 1 inch thick.
With its 12.1-inch display and $600 price, the Dell Inspiron Mini 12 may not be considered a typical low-cost netbook, but the company’s use of the Atom chip does mean the Inspiron Mini 12 has a lot in common with what HP and Lenovo are offering. At the same time this particular Dell notebook is blurring the line between netbooks and typical, full-size laptops that retail between $600 and $700.
Not Everyone Sold on Netbooks
While there is potential for these low-cost notebooks, not everyone is sold on the idea. Apple CEO Steve Jobs, whose company has enormous influence on how notebooks are designed and marketed, indicated recently that Apple will not offer one of these laptops any time soon. If users want to access the Web and send e-mails, Jobs said he believes the Apple iPhone is more than adequate.
“The iPhone is a pretty good solution for that, and it fits in your pocket. But we’ll wait and see how that nascent market evolves, and we have some pretty good ideas if it does,” Jobs said.
Then there is the issue of price.
While lower prices are good for consumers and business buyers, they also mean that companies such as HP and Dell are sacrificing margins to keep shipments high. At the same time, however, these companies have opened up whole new markets with potential new customers.
“There was a lot of speculation about this space just a few months ago and you had a lot of the manufacturers worried about cannibalization and getting into a pricing game, and they were somewhat lukewarm about the opportunity,” said Richard Shim, an analyst with IDC.
“I think some of them do remain lukewarm but you can’t ignore the aggressive growth that Asus and Acer are experiencing in this segment,” Shim added. “I think the bigger players have had a chance to think about it and they don’t just want to compete on price. That’s why you see these players getting involved but they are trying to formulate a better strategy around their products.”
HP is selling the Mini 1000 series for $399 and Dell’s Inspiron Mini 9, which came out in September and has an 8.9-inch display that places it squarely in the netbook category, sells for about $350. The updated Lenovo IdeaPad S10e notebook, which is only available through the company’s education channels, will sell for between $400 and $500. The first IdeaPad S10, which came out earlier in 2008, sells for about $399 in retail stores.