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Netbook pricing may be getting desperate to combat iPad

updated 11:40 pm EST, Mon December 27, 2010

Netbook upgrades, cuts not enough to stop tablets

Netbook prices are dropping to the point where cost is increasingly the only factor in trying to stave off tablets like the iPad, industry observers said Monday night. Using prices in the netbook field's Taiwanese home turf as an example, a 10-inch, single-core ASUS Eee PC had been cut to a relatively low $288 to create a wider price gap with tablets while most others were down to $339. Even attempts by ASUS to keep features up weren't working in Digitimes' checks, as the dual-core Eee PC 1015PEM was still down to $407.

Sources claimed that end user demand was low enough that more netbook designers were going go to carrier bundles, where the price was subsidized even further. As providers were themselves turning to tablets, however, the entire netbook industry was at risk of a shakeout. Predictions were such that even major netbook builders like MSI might be forced out of competition while only dominating companies like Acer and ASUS were going to survive in the category.

Tablets of various kinds were nonetheless still expected to keep growing, moving up to 20 million in 2010 alone and as many as 40 million in 2011. The estimates may themselves be conservative, as analysts were initially expecting less than half as many tablets in estimates from the spring.

Many of the tablets cutting into netbook sales will be Apple's for the foreseeable future and see the iPad hold on to its lead through at least 2011. Companies like Acer, ASUS and MSI may eventually get sales back if Android gains significant share, but many of these firms won't have the option of using a truly optimized Android interface until Honeycomb arrives, which might not be earlier than March.



By Electronista Staff
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  1. JeffHarris

    Fresh-Faced Recruit

    Joined: Oct 1999

    +5

    Race to the Bottom!

    So-called netbooks have already claimed the bottom of the barrel. There's nowhere they can go but DOWN from where they are now. If they want to improve sales, maybe they should stop producing complete JUNK. Oh, but that's not an option because they probably make next to zero profit on these things now.

    Do their makers really think they can compete with the iPad and the entire iOS/iTunes ecosystem? They're completely different types of products.

    I know a couple of people who thought an iPad could replace a laptop for travel, but turned out to be not capable enough for their needs. They bought MacBook Airs and sold the iPads. Netbooks weren't even considered.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +3

    Over the edge of the low-margin cliff

    The running dog netbook makers' only innovation is cutting corners. And for what? What's the point of pushing all the other netbook makers off the low-margin cliff when your margins will stay close to zero anyway?

    Soon the highest-cost component of netbooks will be Windows, if they aren't all running Linux. There won't be any need for One Laptop Per Child because netbooks will be disposably cheap.

    Greenpeace will hate the surviving netbook makers for creating e-waste grade hardware. And not even impoverished countries will accept them because the trailing-edge hardware will train their children to use antiquated physical keyboards and pointing devices.

  1. iphonerulez

    Fresh-Faced Recruit

    Joined: Nov 2008

    0

    How the heck does this benefit these companies

    by slashing their prices to the point where they're making about $1 profit on every product they sell? Their whole premise is to sell the cheapest junk they can to consumers and I honestly don't know why they think the majority of consumers want that. How long will these products even last? How can companies that are selling that cheap stuff deal with customer support which would be needed even more since they're using low-cost components?

    Yeah, the highest cost component of those netbooks will be Windows and they shouldn't have even been running Windows in the first place since netbooks were originally designed for Linux. They'd better wise up and cut Windows out of the loop to get more profits. I'm sure that ARM is going to muscle in on those low-end netbooks and cut both Intel and Windows throats.

    Before the iPad, the Wintel netbook was going to reign supreme for mobile users. The Wintel netbook market is likely going to end up in shambles. Analysts last year were crying for Apple to build netbooks or be forced out of business. Apple paid no attention to them and now will probably force the netbook companies out of business. There goes millions of those low-end OEM Windows licenses up in smoke along with any chance of MS Office sales.

  1. Foe Hammer

    Fresh-Faced Recruit

    Joined: Feb 2005

    +2

    Don't Panic ...

    ... unless you make Netbooks.

    To quote the sperm whale in The Hitchhiker's Guide To The Galaxy seconds before an incredible horrific splat "And what's this thing coming toward me very fast? So big and flat and round, it needs a big wide sounding name like 'Ow', 'Ownge', 'Round', 'Ground'! That's it! Ground! Ha! I wonder if it'll be friends with me? Hello Ground!"

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