What Will 2009 Bring For The Computer Industry?

Posted: Dec 22 2008, 7:52am CST | by , Updated: Aug 11 2010, 12:17pm CDT, in News | Notebooks and PCs


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The technology industry has been hard hit in 2008 with the rapidly worsening economy. The technology market is like a small ecosystem where the fortunes of many companies are intertwined. When the notebook market dips, the Dell's and HP's see fewer sales of their notebook models. This in turn results in less purchasing of CPUs, which leads to reduced earnings for AMD and Intel. Software companies are in the food chain along with CPU makers and fewer shipments of notebooks and desktop computers means less sales of Windows and other software for Microsoft.

With all of these companies so intertwined it's easy to see the rationale behind stoking the netbook market fire. Traditional notebooks aren’t selling well because money is tight for consumers. This leads consumers who might have bought a traditional notebook in the past to purchase a netbook. As netbook sales grow, pressure is placed on CPU makers to produce lower priced CPUs. The pressure for cheaper CPUs at times leads to new products coming to market like the Intel Atom or the VIA Nano. However, this often leads to older parts that were nearing the end of their life cycle getting a reprieve and hitting the market in force once again.

We will see this on several fronts in the computer market in 2009. One good example is the netbooks and nettops that are being offered with the older Intel Celeron processors. Many of the Celeron parts were seeing sales drop and nearing the end of their life. Asus has begun offering the Celeron in its netbook and nettop systems as a cheaper alternative, which also offers more performance than the Atom N270 that dominates the netbook market.

In 2009, I think we will see many computer makers moving to processors that may be considered obsolete in an attempt to market even lower priced systems. This is also the reason we see Microsoft extending the end of life for Windows XP. The netbook market has spoken and Windows XP is the OS of choice for these diminutive systems. Return rates for netbooks running Linux are said to be considerable higher than Windows based machines so it makes financial sense for Microsoft to keep XP on the table.

Some predict that Windows 7 will hit market in mid-2009, but even if that doesn't happen I think we will see Windows XP availability run until Windows 7 is available as a replacement in a market where Windows Vista simply can't compete.

In a world where the economy is doing poorly and is predicted to get worse yet, many would expect prices to drop. In many categories, that expectation will play out. However, at some point in 2009 I think we may see prices of things like notebooks begin to go up as key component makers like DRAM suppliers, NAND makers and LCD makers get a hand on their production and cost issues that have driven prices so low in 2008. While higher prices are not a good thing for consumers, getting prices up is a life and death matter for some technology firms.

Another factor to consider with pricing in the market moving into 2009 is that there are many places in the U.S. and abroad where the poor economy has yet to hit home and may not be a factor. Some states in America where the cost of living was always low, home values haven’t plummeted, and where the local economies weren't based on technology, big industry or automotive manufacturing are still thriving and there is money to be spent.

To meet the demands of these consumers I think we will still see a number of premium products hit the market in 2009 meaning Apple should continue to perform well. I am no Apple enthusiast and I don’t follow Apple and Mac rumors closely. I do know that Steve Jobs has said that Apple could get into the netbook market once the market has matured. Netbooks may not be that old, but the market is booming and many computer giants are finding that the netbook isn’t really cannibalizing the market for their more expensive and higher profit margin computers.

Apple has yet to be really affected by the economy at home and abroad the way Dell and other computer makers have been. However, Apple's profit increases and climbing market share have tapered off. I think that this may lead Apple to enter the netbook market in 2009. Certainly, consumers and Apple fans are clamoring for a low-cost Apple netbook. When Apple profits were on the rise and consumers were feasting on a steady MacBook diet, a cheaper netbook may not have made much sense. I think that perhaps it wasn't waiting for the netbook market to mature as much as it was waiting for the time when Apple saw the need for a netbook. That need may come in 2009.

I have always been a Windows user. I purchased a MacBook in 2006 because I am intrigued by Mac OS. However, as an ardent and long time user of Windows I quickly found that making a change to Mac as my only mobile platform cold turkey simply wasn't going to work (at least not without greatly impacting my productivity until I learned to use the new OS). That meant that I was running Windows Vista on a Bootcamp partition and basically using the MacBook as a Windows machine. I decided quickly that what I wanted was a Mac for a second computer to play with and learn on, not for my main machine. With a limited budget that meant my new MacBook lasted only weeks in my hands before I sold it and went to a much more portable Windows-based machine.

What I want is a Mac system that is cheap enough that I can grab one as a second computer to play with until I decide that the Mac OS is indeed better FOR ME than Windows. OS X may be better for me, but at the price a Mac demands I'll never know. If Apple had a netbook running a stripped down Mac OS for say $500, the price of a Mac Mini, I would be all over it. When/if I found the OS to be easier to use and more appealing than Windows, I would certainly move up to a more powerful Mac system and drink heartily from the Apple Cool-aid. A Mac netbook could very well be the gateway drug for a new generation of Mac addicts.

I also think we will see even more compact netbooks in 2009 than we have right now thanks to the new NVIDIA Ion platform. Not only will the netbook in 2009 be much more powerful thanks to Ion, it will also be much more compact. I see netbooks in 2009 offering consumers a MacBook Air style profile with a netbook size screen of 10-inches or even less.

At the same time, I also think we will see the netbook grow in 2009. There are already several 12-inch netbooks coming to market, and more are sure to come. I wouldn’t be surprised to see even larger netbooks come to market in 2009. I have had several netbooks in my hands recently. When I show them to friends, they are impressed with the price and performance, but the inevitable comment is the screen needs to be larger. Even a 10-inch netbook is too small for many users and 12-inch netbooks aren't much better.

In 2009, I think we will see netbooks get even larger screen sizes to the 13-inch and maybe even 15-inch range. These netbooks wouldn’t be able to run Windows XP, unless Microsoft eases the restrictions on XP's use. However, using the Ion platform, which takes up half the space of the traditional Intel Atom platform, it would be easy enough to shoehorn more RAM into a small netbook. This would open the possibility for a netbook with a larger screen that could actually run Vista with something close to usability. A cheap 13-inch to 15-inch system with netbook parts running Windows Vista with 2GB of RAM would suddenly be very appealing to many who overlooked the netbook market before. If this were to happen, the line between netbook and notebook would be very hard to distinguish.

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The Author

<a href="/latest_stories/all/all/3" rel="author">Shane McGlaun</a>
Leading our review center, Shane McGlaun (Google) knows technology inside out. His extensive experience in testing computer hardware and consumer electronics enable him to effectively qualify new products and trends. If you want us review your product, please contact Shane.
Shane can be contacted directly at shane@i4u.com.




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