Netbook growth to slow down in 2010

The rise of netbooks has almost uniformly damaged the entire notebook industry's performance this year, a new DisplaySearch study shows. While shipments of notebooks more than doubled to 33.3 million, their lower prices actually dragged down revenue for the entire notebook industry by 12 percent to about $109.4 million. The revenue for netbooks themselves was also disproportionately lower and increased a relatively soft 72 percent.

Findings from the researchers also suggest the mini portables, combined with the economy, may be eating away at the pricing and shipments of full-size systems. Shipments of conventional notebooks were up 5 percent to 136.3 million this year, but the average selling price of these computers fell rapidly compared to 2008, ranging from 12 to 13 percent for desktop replacements and regular notebooks to a sharp 23 percent for ultraportables.

The industry may still lose about 1 percent of revenue in 2010 but, based on estimates, should ultimately be healthier precisely because netbook shipments will have slowed down. The maturation of the field could have its shipment growth slow to just 19 percent and its revenue drop just a tenth of a percent. This may have an unusual positive effect on the rest of the industry: while most notebook categories are still expected to face single-digit revenue drops as their prices decline further, the desktop replacement class could have its revenue jump 21 percent and shipments for non-netbooks increase by 16 percent.

The shift is explained as the result of an increasing gap in notebook designs. As notebooks with screens over 16 inches become more affordable, they're increasingly likely to replace both desktops and smaller notebooks as they become fast enough for the price. At the same time, those who want smaller, cheaper systems are now more likely to simply pick a netbook instead of a smaller but traditional design. In 2010, ultraportables should get a boost as Intel's CULV (Consumer Ultra Low Voltage) processors become more popular and put many systems at or below $500, or within striking distance of netbooks.

The calculations may help justify decisions by companies like Apple to avoid entering the netbook space, as it has earned record revenues while keeping relatively high profit margins and average prices. Competitors like Dell in the meantime have seen plummeting income as their willingness to sell netbooks and shift to budget notebooks has sent many buyers away from higher-end PCs. Among Windows PC developers, only companies that base large portions of their business on netbooks, like Acer and ASUS, have normally profited from the current market.

By Electronista Staff

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