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Are Netbooks killing the Notebook Market?

Apr 21 2009, 12:00pm CDT | by , in News | Notebooks and PCs

Are Netbooks killing the Notebook Market?
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I read a story yesterday at eWeek that claimed the netbook is killing the notebook market. As I read the story, I started to wonder where the proof in that is. We all know that the global economy is bad; people are losing jobs and have much less money than they had to spend only a year ago in many instances.

The netbook category only sprang up in late 2007 when Asus rolled out its first Eee PC. At first, the netbook had too many strikes against it to really hit a chord in the market. It ran Linux, and alternate OS that most mainstream users simply aren’t interested in. Couple the OS choice of early netbooks with the tiny 7 or 8-inch screens and miserly performance and consumers pretty much stayed away from early netbooks.

Once 2008 rolled around Microsoft decided that the netbook market might be ripe for picking and started offering XP Home on netbooks and the market boomed. Along the same time netbook screens started getting larger and one the combination of Windows XP and 10-inch screens were on the market consumers were suddenly very interested in the netbook and the category quickly began posting growth numbers and sales that other categories of the computer market couldn’t match.

The massive sales increase at the same time sales of more expensive and profitable notebooks dropped quickly led analysts and journalists to declare that the netbook was cannibalizing notebook sales and was horrible for the industry. The eWeek story I am talking about went so far as to say that the netbook is killing the notebook market. Yeah right.

I have yet to see any definitive proof that the netbook is killing anything in the notebook market. What the netbook has done is level the playing field for some of the world's smaller computer makers like Asus and MSI. The netbook allows these smaller firms to compete with the HPs and Dells of the world, and compete they are. The larger computer firms may be looking at their profits on so-called luxury notebook sin the $100 and over range and bemoaning the fact that profits are not as high as they were before. Even HP admits it doesn't have enough information to set a metric yet.

I think what lots of these manufacturers and people claiming netbooks are the scourge of the notebook industry are missing is the fact that if it wasn't for netbook sales, would these companies have any sales at all. Sure they would sale some notebooks, there are always going to be some people looking for a new computer in any financial circumstances. However, the masses of people buying netbooks are buying them because the little machines selling for $300 to $500 are what they can afford. If you didn’t have machines in this price range I believe what we would be seeing with notebook sales would be the same thing but rather than buying a netbook more people would be on eBay or Craigslist buying used notebooks.

I believe in the current economy if there were no netbooks people simply wouldn’t be buying notebooks in the amount we are seeing netbooks selling. I believe that the netbook revolution has shown consumers that you don’t really need the latest and greatest notebook to do 99% of what your average computer user wants to do. The netbook is here to stay and moaning about lower margins isn't going to help computer makers. They simply need to adjust their operations to meet the new realities of the economy and consumer wants rather than blaming low margins and falling sales on netbooks.

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