Netbooks forcing notebook revenue down

The rise of netbooks is having a corrosive effect on the financial health of the rest of the notebook business, a DisplaySearch study asserted on Thursday. The mini PCs represent 22.2 percent of all notebooks shipped but only account for 11.7 percent of revenue and are thought to ultimately be dragging revenue downwards for other categories as buyers skip more expensive systems they would have bought otherwise. Where netbook revenue has shot up from $845 million in spring 2008 to $3.07 billion in spring 2009, the rest of the notebook industry actually lost $3.74 billion of revenue in the same period, revealing that netbooks have actually cost the industry money.

The decline is blamed partly on a much more rapid decline in the average price of a netbook versus a full-size notebook. Notebooks themselves only saw their average selling prices drop 10 percent to $781, but the price of the much smaller systems fell a sharp 29 percent to just $361. As such, even the increased numbers of netbooks aren't enough to offset drops in the number of regular portables sold.

With the exceptions of Acer and ASUS, which thrive on netbook sales, PC and component makers have increasingly tried to steer sales away from the systems for the same reasons mentioned by DisplaySearch. Intel in particular has tried to push sales of systems based on its CULV (Consumer Ultra Low Voltage) processors, which are more profitable both for itself as well as for builders than the Atoms usually found in netbooks; the costlier parts can increase profit margins both through the base parts as well as by encouraging upgraded features in other areas.

Only a handful of firms have consciously avoided netbooks so far and are highlighted by Apple. It has regularly dismissed netbooks as being too slow and often of poor quality and instead has focused its attention on the high-end, $1,000 and up category where margins are more secure.

By Electronista Staff