Despite of slowing PC market growth, netbook category grew at more than 160% quarter-over-quarter in Q3 2008 as most of the top tier PC brands have now entered the market. Asus, which had essentially created the market in late 2007, lost significant share as Acer surged to the top spot, capturing more than 35% of this market.
In its latest Quarterly Notebook PC Shipment and Forecast Report, DisplaySearch analyzes how and why the netbook PC market is contributing to the growth in portable computing and why these products are creating a new market, rather than taking share from an existing segment. Additionally, the report examines why early entrants into the space are struggling to maintain share, whereas later entrants have rapidly surged in volume.
Netbooks have been in the market for many years, but many of these products were significantly more expensive than mainstream notebook PCs. Asustek Computer threw open the door to the mini-note market with their late 2007 launch of their Eee PC. This product, and the many that followed, are small devices with prices that typically start at $300. In 2007, this market was less than 1 million units. By the end of 2008, DisplaySearch expects this market to surge to more than 14 million units. Unlike the ultra-mobile PC products which were launched with great fanfare but very little commercial success in 2005 and 2006, netbooks are distinct products that favor the traditional notebook PC clamshell form factor as opposed to the slate- or brick-style UMPC products.
While UMPCs have morphed into vertical market products with a variety of application-specific uses, the netbook market is poised for dramatic growth, propelled by low prices and a user experience that more closely mirrors a typical PC, as the majority of these devices run Windows XP or a Linux OS. Netbooks range from those based on philanthropic or subsidized business models for emerging markets (like the OLPC program), to devices targeted at first-time PC buyers, to consumer and enterprise users in developed regions that seek an very thin and light product to supplement their existing PC.
It is worth a notice that that Acer Group and Asustek Computer command roughly 70% of the netbook market on the globe. Shipments by others are considerably lower, whereas market share of OLPC’s XO laptop for emerging markets is negligible despite of the fact that those netbooks are aimed at governments, not individuals. Thanks to Acer’s higher number of sales channels as well as interesting Aspire One options, the company managed to become the leading netbook vendor in just one quarter.
“With the lone exception of Apple, all of the top 10 PC brands have entered the mini-note PC market, initially as a response to the competitive threat posed by Asustek, but also to satisfy demand from customers for low-priced, thin and very light (less than 3 pounds) products that provide at least a modicum of typical office software functionality and also enable greater mobility,” said John F. Jacobs, director of notebook market research and author of the report.
“The demand for greater mobility is especially evident in certain geographies as a number of mini-note PC brands are partnering with telecom providers to subsidize mini-note PCs, much like they do mobile phones. Worldwide demand for these products is forecast to grow rapidly over the next few years with demand from a variety of sources, including early adopters, consumer and enterprise PC customers seeking a smaller or secondary notebook PC, as well as new PC customers in emerging markets. We expect the mini-note PC market to settle at approximately 16% share of the notebook PC market by 2011,” Mr. Jacobs added.
Given the challenging economic climate, DisplaySearch has revised down its total notebook PC forecast for 2008 and 2009. While there are positive demand signs in the netbook sector, businesses are shedding employees, and even enterprises that are maintaining or growing are likely to stretch their PC replacement cycles out as long as possible. DisplaySearch expects that the dominant PC brands will continue to gain share in the mini-note PC market due to brand power and recognition, and lower cost structure.
Momentum within the industry currently favors mini-note PCs and some brands gained market share Y/Y on the strength of their mini-note PC shipments. However, this segment of the notebook PC market is still quite new and most of the brands are still fine-tuning their mini-note PC marketing and product strategies.