Is the ‘Netbook Era’ Drawing to a Close?

According to a report from CNET, an IDC report this week will show that sales of Intel’s Atom processor – which is dominant force in the netbook space – represent a smaller overall share of the company’s mobile processor space. The implication in the article is that since the Atom powers most netbooks, netbooks themselves are on the demise. The obvious question is … what does it all mean?

Here are the basic details:

In the first quarter of this year, Atom processors as a percentage of Intel mobile processors fell to 20.3 percent, compared with 24.3 percent in the fourth quarter of last year and 23.5 percent in the third quarter, according to Rau, citing figures to be published later this week. “Pretty much all of last year, it was in the 23, 24, 25 percent range. So, 20 percent coming into Q1–that’s a noticeable change,” he said.

Interestingly the CNET article points to the ascendancy of ARM based devices such as the iPad … even though the device didn’t launch until after the close of the quarter. The problem is with the article at CNET, I think – it seems that the IDC report was speaking to further erosion of Atom’s dominance rather than the assessment of the current situation.

If you are CrunchGear, the report is a vindication of your opinion that netbooks are crap:

Dear people who yelled at me when I said netbooks were garbage: I was right. IDC is reporting that sales of netbooks running the Atom platform are flat. Why? Well, first off people have a little cash so they want to buy something nice for themselves instead of a $350 junkbook.

So yeah, you can argue that you’re doing all kinds of crazy work on your netbook, but that doesn’t mean your next laptop will be a netbook. It will be actually usable.

Which shows one of two things: the author is blinded by his distaste for netbooks to the point of being unable to read a simple article, or he just wanted to take a pot-shot at netbooks. Either way it is not a very helpful article.

While I was writing this up I noticed an article at Liliputing that does a much better job of looking at the big picture associated with these numbers. Here is a relevant quote:

If we never use the word netbook again, I don’t think it will really change things very much. What did change things was the introduction of a new class of low cost ultraportable computer. A few years ago a 3 pound computer with a 10 inch display would have set you back a few thousand dollars. Today you can get one for a few hundred bucks.

That is EXACTLY the point. As someone who has been a ‘primarily laptop’ user for 20 years, I can attest to the expense of such a choice. I still have my HP Omnibook 800CT (with the pop-out mouse) and Toshiba Portege 3480CT, both of which fit into my netbook bag. But neither of them was remotely an affordable choice. In previous years, getting a ultralight computer meant not only compromising functionality, it meant paying a heavy premium!

When the first ASUS EEE-PC devices labeled as ‘netbook’ appeared in late 2007, they were a revelation: reasonable performance at simple tasks in an ultraportable package with no frills. The company sold their entire manufacturing run in just a few months and struggled to meet demand. Of course, every other manufacturer took notice.

Soon after, the ‘normal computing rules’ began to take hold: people wanted the small devices to have bigger screens (the ASUS had 7″), more memory and storage, a standard operating system, and so on. Some people even wanted to be able to play games on them!

Eventually the industry seemed to settle on a format: 10″ screen, 1.6GHz Intel Atom, integrated Intel graphics, SSD or small hard disk, and so on. The price was higher than the original ASUS, but still under $300 for most base configurations. These netbooks were usable for much more than what was originally envisioned, and quickly began to erode market share in the notebook space.

Throughout 2009 netbooks performed extremely well in the marketplace, fueled by the poor economy and the desire for greater portability.

Over the same time period a couple of other things happened: first off, the iPhone had only arrived a couple of months before the EEE-PC, and the overall smartphone space has really exploded ever since. Folks are doing more and more using smartphones such as the iPhone, Droid, Nexus One and so on.

Also, the netbook space has become more and more confusing: notebook makers have cut prices frantically in a race to compete. One article in early 2009 showed that the average laptop in 2007 cost ~$750 whereas in 2008 it had dropped below $500! Consumers had a more and more difficult time figuring out what was right for them in the low-price arena.

While notebook prices dropped, netbook prices actually increased: the $199 market was pretty much gone, with most major vendors starting out at ~$300 and a decently equipped netbook costing ~$400. Not only that, but some netbooks started taking on ‘high end’ features: for example the HP Mini-Note 311 *still* costs over $600 reasonably configured, because it offers a solid graphics processor (ION) chipset that allows much improved video playback and gaming possibilities.

Now in 2010 we have reached a point where the portable computer market is more of a continuum than distinct markets. I spent more for an 11″ computer than we spent for my wife’s new laptop she’ll use as her main system (mine was the Alienware m11x). The $400-500 price region is still full of confusion, but folks working at retail stores are more knowledgeable about capabilities of netbooks … or the lack thereof.

So what does it matter if the Atom chip has plateaued? Did it really concern many folks when the Atom chip came on strong and destroyed the Via C7 in the marketplace? Should we really fret that with the ever increasing capabilities of ARM processors and Apple’s A4 powered iPad, there will be more players and the market share between basic tablets, smartphones, smartpads, netbooks, and low-end notebooks will get more and more fragmented?

I for one, welcome any new device that offers me the ability to do new things or look at old things in a new way. Netbooks did that, and so do smartphones, and so now does the iPad. And I can’t wait for whatever comes next.

Source: CNET via CrunchGear