Thursday, April 02, 2009


Product of the Day: Netbooks

The era of a perfect Internet computer for $99 is coming this year. —Jen-Hsun Huang, chief executive of Nvidia, as quoted by Ashlee Vance and Matt Richtel in "Light and Cheap, Netbooks Are Poised to Reshape PC Industry"

In fact, netbooks may be "free" for those willing to sign an ISP contract in much the same way cellphones are offered to anyone willing to sign a wireless contract.

Of course we're used to hearing hype coming out of trade shows of what is to be the Next Biggest Thing, but I'm inclined to take this one more seriously than most—principally because of what the media are now acknowledging as "The Great Recession." There is tremendous deflationary pressure on the price of everything while the demand for entertainment can only grow. That makes a nice slot for the netbook to fit into.

Dare I suggest an analogy between the rise of the motion picture industry during the Great Depression and an explosion in the sale of netbooks today? After all, they're cheap and they offer diversion. One marketing study

gave free netbooks to a group of 14- to 20-year-olds and watched what happened. “They would use it for Internet access when eating breakfast or on the couch, or bring it to class for taking notes....”

Taking notes? Oh, right!

The cost savings in the newer netbooks are said to come from lower-priced cellphone chips instead of the higher powered chips in PCs and non-Windows-based operating systems such as Linux. No doubt shoddy workmanship will also figure in.

The reporters note that—

Most of the netbooks sold today run on an Intel chip called Atom, which is a lower-cost, lower-power version of the company’s standard laptop chips. And about 80 percent of netbooks run Windows XP, the older version of Microsoft’s flagship software.

The new breed of netbooks, built on cellphone innards, threatens to disrupt that oligopoly.

(You have to love it when words like "oligopoly" appear in the Business section of the NY Times.)

They continue—

In its last quarter, Microsoft posted the first sales decline in its history for the PC version of Windows. It blamed netbooks for the drop.

So here's the prediction—

... they are the big success story in the PC industry, with sales predicted to double this year, even as overall PC sales fall 12 percent, according to the research firm Gartner. By the end of 2009, netbooks could account for close to 10 percent of the PC market, an astonishing rise in a short span.

After watching sales of the Pet Rock take off, I'm willing to believe just about anything.


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