In the middle of the worst economic crisis in decades, many observers saw netbooks as the devices that would fundamentally reshape the PC industry. Today, that expectation is being laid upon the media tablet, such as Apple iPad. While many feel that media tablets will bring about the death of netbooks, a new International Data Corporation (IDC) forecast shows that a viable market will continue to drive growth for these highly portable computing devices.

"IDC does not expect media tablets to bring about the death of netbooks, although there is no question that the focus of attention has shifted to these newer devices. Given the range of capabilities and price points, it is very likely that consumers will acquire these devices in various combinations, simply delaying the purchase of a new notebook, for example, to add a media tablet or netbook as a companion to their main computing device. Similarly, the arrival of media tablets has done little to diminish the demand for netbooks in the educational market, particularly in developing countries where large government initiatives are gaining steam in the post-recession economy," said Bob O'Donnell, program vice president of clients and displays division at IDC.

While originally manufacturers positioned netbooks only for Internet browsing and emailing, they quickly realized that a lot of people were getting netbooks for consumption of various multimedia, reading, etc. As a result, they introduced netbooks with larger storage, better displays, improved graphics engines and so on. However, given the fact that keyboards are not needed for consumption of content, those users interested in multimedia netbooks will now switch to tablets, which are easier to carry and which are more comfortable to use than systems in clamshell form-factors. In general, it is not surprising that sales of netbooks are slowing down.

In response to the market shift caused by the introduction of the media tablet form factor this year, IDC expects the netbook category to continue growing but at a somewhat slower pace. Worldwide netbook shipments are forecast to be 37.8 million units in 2010, up 10.3% from 2009. Over the next four years, the compound annual growth rate (CAGR) for the worldwide netbook market will be 4.3%, topping out at 42.4 million units shipped in 2014.

On a regional basis, Latin America, Central and Eastern Europe (CEE), and Middle East and Africa (MEA) represent the strongest potential markets for netbooks. The five year CAGR in these regions will hover near or above 20%, as many of the governments in these regions follow through on large educational initiatives to bring mini notelbooks into the classroom. In contrast, the market for netbooks in the United States will experience growth in the low single digits over the forecast period while the Western European market is expected to decline by 11% from 2009-2014.

Both leading chip vendors - Advanced Micro Devices and Intel Corp. - are about to release new platforms for netbooks that will enable thinner models with richer functionality. What remains to be seen is whether those third-generation netbooks due in early 2011 will impact sales of tablets of fully-fledged notebooks.

The leading netbook vendors continue to be Acer and Asustek Computer: combined, these two vendors captured 42.6% of the worldwide market in 2009 and grew their share slightly in the first half of 2010 (1H 2010). HP continues to be the number 3 netbook vendor worldwide for the past 18 months. Meanwhile, the number 4 vendor in 2009, Dell, slipped to the number 5 spot in H1 2010, overtaken by Samsung.

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