Is 'Netbook' Market Cannibalization a Real Threat to the Likes of HP, Dell? - Page 2

According to a number of analysts, the fear of netbook cannibalization of the laptop market is overblown-but that doesn't make the rise of netbooks as a low-cost alternative any less remarkable.

"In just over a year, they've evolved from these Linux-based, solid-state devices into fully [Microsoft] Windows OS-based, 120GB hard drive systems, which are very similar to traditional notebooks," said Richard Shim, an analyst with IDC. "So we've had a dual effect here, with many netbooks becoming more robust and expensive, while notebooks have come into the same price range."

The market-share percentage lost by traditional laptops to netbooks, Shim said he believes, "is a lot lower than many are worried about-maybe 10 to 15 percent."

IDC has forecasted sales of 10 million units for netbooks in 2008, or less than 10 percent of an overall notebook market of 142 million. Other players in the notebook market such as Acer, by making an aggressive push into netbooks as a way to gain market share against larger competitors such as Dell and HP, have contributed to the low-cost laptops' rapid growth and evolution.

"A year ago they [the PC vendors] were hardly in the market, and so the gross rate is pretty exceptional," Shim said.

Another factor contributing to netbooks' growth has been the recession, which drives consumers toward IT gear with a cheaper price tag.

Shim said, "There's been a natural price decline for PCs; then you layer on top of that these mininotebooks, which appeal because they're lower-priced, and the concern for a lot of people becomes, long-term, what's this do to consumer perception of value?"

Given that netbooks have provided a much-needed boost to hardware sales, however, it's unlikely that any PC makers will give up producing netbooks-especially as the economy continues through its current rough patch.