Netbook Sales Rise, but will that hurt the Overall PC Market

[Apoptosis]

Netbook Sales are on the Rise, but will that hurt the Overall PC Market?

PORT WASHINGTON, NEW YORK, JANUARY 22, 2009 – Netbook sales are on the rise, but is it really a good thing? Do consumers know what they are getting? And is the PC industry really benefiting from this wave of new found netbook momentum?

According to leading market research company The NPD Group’s retail tracking service; laptop unit volume increased more than 23 percent in December to 1.9 million units. That growth was propelled by netbooks. Without netbooks sales laptop PC growth would have been just 9 percent in December. For the full year laptop sales growth was 21 percent with netbooks and 16 percent without them.

Netbook sales ramped up during the year. In the first half of the year, netbooks accounted for less than 1 percent of laptop sales. While that number rose in third quarter it remained less than 2 percent. Only in fourth quarter, as products became more available and began to reach the shelves of the major U.S. retailers, did sales become significant. By December, netbooks accounted for 12 percent of unit volume, their highest total of the year. Nearly 50 percent of all netbook sales for 2008 occurred in December. The impact on overall laptop ASPs was significant. In January, laptop ASPs were $861, by December they had fallen to $740. Without netbooks price erosion in 2008 would have been much smaller as non-netbook ASPs were $795 in December compared to the $861 at the start of the year.

So are netbooks cannibalizing the market or just making a commotion?

“Without netbook sales, the laptop market grew 16 percent in 2008,” said Stephen Baker, vice president of industry analysis at NPD. “That 16 percent non-netbook growth likely indicates about 50 percent of all December netbook sales were incremental and about 50 percent were cannibalistic.

But according to a new NPD report, A Snapshot Report on Netbooks, consumers really are confused about the functionality of a netbook. About 75 percent of consumers surveyed had never even heard of a netbook, and of the 25 percent of consumers who said they might buy a laptop in the next year, 70 percent said a netbook sounded like a good alternative. Memory (76 percent), operating system (69 percent), and processor speed (73 percent) were all high on the product attribute wish list for consumers who own, or are interested in, a netbook.

“Those figures are a clear indication that consumers are confused about netbook capability. If consumers see netbooks as an alternative to a laptop instead of an additional PC we could see cannibalization occur very quickly,” said Baker. “New features are already being introduced which may blur the line between netbooks and laptops even more. The netbook market is being redefined before it’s been fine tuned and that may cause even more consumer confusion.”

Methodology
A Snapshot Report on Netbooks study was conducted online among 755 consumers from NPD's Online Panel. The field work was conducted December 14-17, 2008.

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit http://www.npd.com

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[Apoptosis]

I found this line interesting:

If consumers see netbooks as an alternative to a laptop instead of an additional PC we could see cannibalization occur very quickly,” said Baker. “New features are already being introduced which may blur the line between netbooks and laptops even more.

[FZ1]

Netbooks are only good for light computing on the go...email, internet (hence the name), etc. Anyone with needs beyond that will likely own another machine to handle those other tasks. I don't think it will cut into the overall PC market much if at all. I think a lot of teens get these as cheap alternatives...sorta like starter machines and will eventually upgrade as their needs increase.

[geokilla]

Only reason I'd buy a netbook was if it was cheap, and I needed something to bring to school and on the go that was light and fast to use. Manufacturers are releasing like $500 netbooks now. Why not spend a bit more and get a laptop that has a dual core CPU, 2GB RAM, at least 250GB hard drive, and if you're lucky, a dedicated GPU.

In short. I don't see myself buying a netbook. Only one I'd ever consider was the Acer Aspire One and probably the ASUS 9" series.

On a side note, my sister wants a netbook cus it looks cute. Maybe some of these netbook sales are driven by the fact that they look cute.

[Apoptosis]

I know a ton of people buying netbooks as their one and only PC, so I agree with the press release that it will hurt the PC market in general.

[Alathald]

I know at Radioshack we have the Acer Aspire ONE with an AT&T aircard builtin for $99 w. a 2year contract or $500 otherwise and we haven't sold a single one since we got them in at the beginning of December. I don't think they pose a huge threat because most people realize they need something more but for those few that only think of computers as "those internet machines" then a netbook is a good alternative.

Then again, they are the latest geek chic...

[geokilla]

I know at Radioshack we have the Acer Aspire ONE with an AT&T aircard builtin for $99 w. a 2year contract or $500 otherwise and we haven't sold a single one since we got them in at the beginning of December. I don't think they pose a huge threat because most people realize they need something more but for those few that only think of computers as "those internet machines" then a netbook is a good alternative.

Then again, they are the latest geek chic...

I heard about this. Didn't you have to play like $50/month or something to be eligible for that special pricing?

[Alathald]

I heard about this. Didn't you have to play like $50/month or something to be eligible for that special pricing?

Yeah, for the aircard service. Is the main reason we haven't sold any yet(because it is a ripoff)

Is a pretty cool little laptop though and a lot of people like the idea but then not having a CD drive usually kills it for the type that shop at Radioshack...