Some analysts, PC makers express concern about netbooks

While some may say that netbooks have already jumped the shark, others in the industry are now expressing some real concern about the low-cost, low-power laptops and, as the New York Times reports, they're warning that they could cut into PC makers' already thin profit margins. What's more, that word doesn't only come from the expected doomsayer analysts, but from some top tier PC makers as well. That includes Fujitsu, who's senior director of mobile product management, Paul Moore, says, "We're sitting on the sidelines not because we're lazy. We're sitting on the sidelines because even if this category takes off, and we get our piece of the pie, it doesn't add up." That's a sentiment echoed by Sony, who's Stan Glasgow says simply that, "we are not looking at competing with Asus," although he adds that Sony is "investigating" what consumers want in a second PC. Even Dell, which is set to dip its toes into the netbook waters, seems a bit hesitant, with vice president of marketing Michael Tatelman saying he thinks the devices have "limited consumer appeal," and that they're good for a "30- to 90-minute experience," but not for more intensive tasks. Of course, that's all before any of them heard of the new world's cheapest laptop, so there's no telling how things may shake out now.

[Thanks, Penny]

[Khris @ Jul 21st 2008 1:16PM]

I think the race to the bottom has finally been won with the "world's cheapest laptop".

[Samboini @ Jul 21st 2008 3:19PM]

AKA the world's least functional.

In all fairness this article sounds like companies complaining about competition. If the likes of Sony et al. just sit on the sidelines whinging, it's totally there loss! There is evidently demand and they don't seem to want to cater!

[OneLove @ Jul 21st 2008 5:16PM]

...so the consumer should make up for everyone's loses by paying more? WTF? Sony, if you made reasonably priced computers that stood out from the rest we would buy yo shite. Just adding an X, Y Z or 1 to the model doesn't count. (keep sitting on the sidelines)

[I LOVE THE CAPS LOCK KEY @ Jul 22nd 2008 12:08AM]

The worlds cheapest laptop has been around for ages, it's a used one (PII?) that no one wants and can be found on ebay with a $2 buy it now and has about the same functionality as the current ePC fad.

[initialxy @ Jul 21st 2008 1:19PM]

i wonder what the latest EEE PCs' profit margin is.

[Tom G @ Jul 21st 2008 6:03PM]

You cant beat the Eee, i got the first 4GB model with an 8GB SD card and 2GB ram upgrade.
I use it as a secondary PC, when i am going out and i need a PC i take this and i would prefer it over a normal laptop!
When my main desktop PC was dead, i hooked my Eee up to my monitor, mouse and keyboard and it ran 90% of the things i needed to do perfectly and its great knowing i have such a cheap, small and surprisingly powerful Netbook by my side :)
This wasn't really relevant just the reason i think Netbooks (Eee in particular) are a requirement for most people nowadays!

[thedesolate1 @ Jul 21st 2008 1:20PM]

I understand why it's a cause of concern to them. Most consumers dont demand the kind of power mainstream pc's are coming with. Atleast the average joe who just does email and word processing ... they arent ideal for video though thats for sure. Im a total Firefox tab whore and that alone warrants me needing a higher end system. lol Not to mention casual gaming and my ADD doesnt help when im multi tasking... Photoshop here... pr0n video there... Cysis in the background... maybe running a server while im at it and a few dozen aim conversations.

[thedesolate1 @ Jul 21st 2008 1:36PM]

*Crysis... Arghhhhhh... oh and also it will slow down adoption of new technologies...

[JC @ Jul 21st 2008 2:52PM]

The point is, these guys have no appreciation of what the market for a "second PC" is.

My wife and I have a desktop together, and she has her $1000 Fujitsu Lifebook, which I bought because it had a nice touchscreen. But will I be carrying that with me when I travel? No, you can bet my EEE is going with me.

If these guys don't want to capture at least a small piece of the market IN ADDITION to what they're already selling, then that's their loss.

[bobartig @ Jul 21st 2008 3:47PM]

@JC, and they're saying after research and development, then introducing their product into an ever-diluting product market, their "gain/loss" is out of proportion to the expected risks, and thus bad business. That's loss they can live with.

[ThePerfectCompanion @ Jul 21st 2008 1:20PM]

This whole Asus thing is probably the dumbest tech fad I've ever seen...

[Dillon @ Jul 21st 2008 1:28PM]

So is your face.

[Ninjakamster (PS360 FTW!) @ Jul 21st 2008 2:59PM]

Damn, your a retard on Joystiq and Engadget. You sure have some strong opinions, too bad most of them suck. :)

[iansilv @ Jul 21st 2008 1:21PM]

I don't understand this huge need to "analyze" and 'investigate" and perform "market studies" on things like this. It's simple- most people- Joe Dumeasse- was a laptop to do email, surf the web, and type the occasional document. Those people will buy a cheap laptop to do that. Do I want one? No- I regularly use photoshop and other intensive applications. But if these people are actually confused by the diea that people don't want to spend 2K for a new laptop when they don't use all its power, they are idiots.

It's like the electric car- BMW is sending 500 electric minis over here to "study the market." WTF? How difficult is it to ascertain that if someone put out a mass-market car to showroom floors at a cheap price that was electric and met the average consumer's daily driving requirements, it would sell?

[N30 G30 @ Jul 21st 2008 1:42PM]

Exactly.

We needed software that runs more efficiently. We don't need more bloated software.

The average consumer doesn't need the strongest possible processor because their computer is too "slow". We need smarter conumers that can defrag their own computers, not download viruses, and junkware.

[BigD145 @ Jul 21st 2008 2:04PM]

Consumers buy what they want to buy based on their needs. All Fujitsu and others are saying is that their $1k+ laptops have higher profit margins than the little subnotes. "How dare consumers not give us more money!!"

[The Engadgeter @ Jul 21st 2008 2:08PM]

Well said...
Entire point of this article, from the manufacturer's point of view:
"How dare consumers not give us more money!!"

[Student Driver @ Jul 21st 2008 2:27PM]

Imagine if software vendors start catering to this new style of computer and tune (then advertise) their software as being "capable" of functionality on "netbook" and "netPC" style systems? That would be an interesting twist; efficient coding as a selling point. Who'd of thunk it? :-)

There will always be "advanced functions" that require faster systems, but the laptop I use in my living room rarely does anything beyond web surfing and a few little games that my 5 year-old plays.

[thedesolate1 @ Jul 21st 2008 2:51PM]

@N30 or maybe we need smarter operating systems that dont need to be defragged and wont catch malware/junkware and virus'. Not to mention wont hog resources and use them more efficiently... Oh wait we already have some but they aren't mainstream because of a certain monopoly...

[Cassini @ Jul 21st 2008 2:52PM]

I agree that this shouldn't be such a huge issue. Certainly, this is a new market segment and it's OK for the retailers/manufacturers to be curious about how people are going to respond, but they need to recognized through it all that most people only need to do the most basic things on a computer - communications and organization: internet, email, letters, spreadsheets, to do lists, and maybe a simple game or two - those types of things.

People do everything on their computers, but most people, at least I believe, don't do many of the advanced things that us geeks do, like photo editing, video, DVD authoring, advanced games, etc.

So based on all that, a widespread attraction to netbooks (if that ends up being the case), should come as no surprise and shouldn't be hard for companies to accept.

For me, I want two laptops (I don't care about desktops because I want portability). I'd want a very powerful laptop like an HP HDX loaded to the hilt for serious processing power for all the advanced activities I'd be dealing with: art, audio, photography, and video content creation, recording, and editing, 3D modeling and animation, gaming, university and robotics projects, programming, and simulations, astronomy and other hobbies, etc. Although many people will perform these advanced tasks, most will not.

But then I'd want a much smaller, very light, laptop like one of these netbooks that would allow me to do most of the simple things like online activities, email, simple organization and document creation, editing, and referencing, simple games, etc., as I mentioned in the beginning. Something I could take around anywhere due to its small size and weight, and remain connected. Something very inexpensive. You can't and don't always wish to carry around a ten or fifteen pound monster just to handle the simple tasks.

This is as simple as the reasoning gets, I think. So I too, don't understand why these companies would be so confused about the impact these may (or will) have. For most people, would you rather spend $300-600, or $2000-3000 just to do simple tasks? Doesn't seem complicated to me.

And no, it's not only going to be a 30-90 minute experience. How long you spend completely depends on who you are, and since they can't monitor how much people use their computers at any given time, this is nothing more than speculation based on nothing. In fact, the reality that the computers are so small and portable would tell me that people will use them even more. And even if it were 30-90 minutes, so what? If that's all people need to use their computers in a given session, then why spend thousands of dollars?

Companies complicate things too much. Tarzan want cheap price. Tarzan want small and light. Now adapt to it. The end. Bye!

[dramamoose @ Jul 21st 2008 3:01PM]

Thedesolate1, you had me there until your very last word. MS' control of windows, and Windows widespread appeal and usage is not because of a monopoly. It's because of good marketing and the fact that with windows, most companies can be sure all of their programs will work well without having to teach their employees how to run something as root

As for the article, I have a major problem with analysts and pc makers complaining about this. The netbook is a solution to a certain market. I don't think anyone knew how large that market really was until the eee. Many people need a laptop that can do email, use spreadsheets, and do some light web browsing. As an example, my mother has been using an old laptop with a P3 and running windows 2000 for all of her work-at-home stuff. A netbook would be ideal for her, because she doesn't run any processor or graphics-intensive aps.

(Disclaimer: I'm a tri windows/mac/linux user with a high-end PC and a medium-range laptop).

[servognome @ Jul 21st 2008 5:55PM]

The reason you need time to research the market is because people's tastes aren't easy to understand. There is some complexity in the psychology of people when purchasing products, the "what-if" scenarios, style, usage patterns, that go into customers buying decisions.
It's not just about the cheapest laptop with enough bells & whistles, people will often pay marginally more for power they never will use because they convince themselves they might need it. Many people have copies of photoshop and never touch 95% of the features.

Market analysis is about figuring out the marginal advantages of particular features. For example you can sell a $200 basic laptop, but might attract more customers if you sell a $250 laptop that has a slightly larger hard drive. Not because people will use it, but because it fills out a tech sheet.
Such buying patterns are what drives feature creep (ala EEE). Asus is doing all the hardwork pushing out different SKUs while those on the sidelines can use the data and figure out what people Really want.

[Apreche @ Jul 21st 2008 1:23PM]

We've reached a point where the average computer for sale to consumers is really a supercomputer. Outside of gamers and professionals, the amount of power really is excessive. The vast majority of people spend the vast majority of their computing time using applications that require very low power. People are also very cheap, and the economy is bad. It is only natural that a company will offer a very small and cheap computer that gets the job done.

For all the big companies selling the high end gear, they spend a lot of money on R+D that they have to make back. If people just opt to use the low end gear that gets the job done, it's very bad news for Intel, AMD, and NVidia.

[Ken @ Jul 21st 2008 1:24PM]

What they're not owning up to is the fact that most people want a computer to just surf the net. I have no idea why non-gamers and non-power users upgrade unless for convenience. Sub-notebooks give that convenience. Most people aren't concerned with raw power. If you improve the convenience of the product, they will migrate towards it. I think top-tier PC makers need to rethink their products if they feel that these subs are going to be second PC's. For most people I know, these subs can handle everything they need.

[AJP @ Jul 21st 2008 1:28PM]

The bottom line is these low margin laptops hurt their profits.

I own 2 laptops, one is a 15.4" widescreen Toshiba for business and pleasure.

When I travel I use a ASUS eeepc. It is great for, on the go, web browsing and e-mail. When I take digital pictures, I plug the camera and an external HD into it and it works perfectly. Plus, I don't have to carry a laptop with all my business documents through customs when traveling internationally not to mention how much lighter and less space it uses.

[digitallysick @ Jul 21st 2008 1:29PM]

I think you guys have it all wrong. Netbooks are the future, cheap, ultra portable. Asus ,msi, acer and dell are cashing in on the netbooks.

[Peter @ Jul 21st 2008 1:35PM]

I think the cheapo subnotebooks are mainly used as an additional computer. Many people buy them as a secondary computer (or third, fourth, fifth, whatever). Many of them also has a desktop or a 'real' notebook. So I think it can increase the number of units sold nicely. The bigger problem is that if you can buy a subnotebook for $300, it looks ridiculous to spend $2000 on a big one. What is visible already is that these cheap notebooks are pushing down the prices of the higher-end ones. And us, consumers, are happy all over :-)

[ChrisC @ Jul 21st 2008 1:43PM]

I dont think the executives sa Sony and Fujitsu get it... nowadays, people prefer small laptops like the Asus Eee, MSI Wind, Acer One cause they dont really do heavy work on these devices. (basic web browsing, check emails, view images/video)

Let me translate what these executives are really saying: "damn it! we cant rip off people as much now since Asus drove laptop prices so low damn you Asus!"

These people prefer portability and basic web browsing / office work... they have desktops at home/work for the heavy stuff.

Thanks to the Eee the era of ridiculous laptop prices is over.... why buy a $2,000 - $3,000 so so gaming laptop when you can buy a kickass desktop and a portable laptop for half the price? (yeah im talking about Dell XPS users)

[thedesolate1 @ Jul 21st 2008 1:40PM]

Second fail....

[ITRanger @ Jul 21st 2008 1:42PM]

The manufacturers are just worried that they won't be able to sell at the current price points.

Although netbooks don't currently have the cpu power, this will all change when the Nano (ISIAH) and more powerful chips appear. It's inevitable.

What will be the point of buying an average laptop at around £400/500 now, when a netbook will do almost the same as these for around £250 in a year's time?

I think £250-300 (in the UK) will be the new expected price point for a standard laptop.

The average consumer doesn't care which cpu is more powerful than another. As long as they can watch videos that playback at proper speeds and run multiple applications fast enough, there's no incentive for them to pay higher prices. Price is the only thing that matters.

[Jon Doe. @ Jul 21st 2008 1:45PM]

Its called a subnotebook. Having Engadget say it 3,000 times doesn't change that fact. It was a subnotebook 10 years ago, it was a subnotebook 5 years ago, and its a subnotebook today.

[initialxy @ Jul 21st 2008 3:56PM]

the term "netbook" is already coined by intel (not by engadget).
go complain against intel.

http://en.wikipedia.org/wiki/Netbook

[Minilap @ Jul 21st 2008 6:05PM]

Netbook is just a temporary name that will fade out soon. In 3 or 4 years when these so called "Netbooks" are faster than your current desktop with quad core processor and a high end graphic card, with lots of ram and lots of SSD, would it make any sense to call them netbook by than? Because this category of mini laptops will be powerful and they can do way more than just net surfing, so why would you call them netbooks?

[konshuss @ Jul 21st 2008 1:48PM]

since when has one company complaining about another company's product ever been about anything but money? these 'analysts' are taking guesses at best at how much netbooks are used per session or what for ... who cares? The bottom line here is they are admitting they wouldn't profit too well from it. so why the commentary and subsequent bashing? so don't make one, nobody's holding a gun to your heads. this is thinly veiled whining by companies with dipping profits looking to discredit what is essentially a brand new platform. it's ONLY about money, so take these bs studies with a grain of salt... or a chunk of ****.

[Backwards People @ Jul 21st 2008 1:51PM]

Good call Joe Don.

My Nintendo DS has an R4, so it's basically a small MacBook Air (considering all the things the MBA can't do).

These subnotes look great, but I put a dollar amount on it: $200-300. Until they meet that price point, I would never recommend a subnote... you won't feel like you got your money's worth. Just my 2 cents.

[YpoCaramel @ Jul 21st 2008 6:00PM]

You base this "worth $200-300" analysis on.... ?

[ethana2 @ Jul 21st 2008 2:04PM]

The DS doesn't even have an MMU. I love the peripherals it ships with, but the internal hardware is simply crap.

[Knives_Out @ Jul 21st 2008 1:49PM]

I can't wait to see the reviews on dell's netbook ..

[rock99rock @ Jul 21st 2008 2:18PM]

Forget the reviews, I can't wait to see it in my hands!

[Wonderkid @ Jul 21st 2008 1:51PM]

Hear this oh detractors: I own an ASUS 4G EEE PC 701 running Linux. While I await my new Mac, I have docked the EEE to a very comfortable Cherry CONTROL wireless keyboard + mouse (Maplins: £14.95 special offer), my Bose Companion 2 Series II speakers (awesome) and, last but not least, but the key to my point, an excellent (swivels in ALL directions) Philips 200XW 22" widescreen monitor. And by tweaking the video out settings via the Linux console, I have the EEE driving the monitor at, wait for it, 1600 x 1200! And that is HIGHER resolution than both the monitor and the EEE are supposed to support. (No flicker, although the aspect ratio is about 15% too wide, a minor inconvenience as it makes people look fat...) Other than that, with the exception of power applications like Photoshop, iPhoto and iTunes, thanks to Open Office, Firefox and more, my EEE acts just like my ex MacBook. But it has one major benefit: I simply unplug it, throw it in my back pack and hardly notice it - something I would never do with the MacBook. The EEE is light, never crashes, cost £1200 less than a posh Sony UMPC, is pretty snappy and I never worry about software upgrades as I do most work online.

Yes, the 7" screen is getting boring so I'm upgrading to an EEE PC 901 Linux edition and replacing my MacBook with a Mac Mini - unless Apple's next gen laptops are that special. (Mac for multimedia work only now. EEE for business.)

My point? The concept of a dockable ultra portable is not new, in fact, IBM tried a modular system a few years back, however, today, thanks to Intel et al, processors now exist that can enable relatively powerful UMPCS/NetBooks with a robust and compact form factor - and a great price to performance ratio.

Of course, it would be nice to pay say £500 ($800?) for a built in HSPDA modem, a swivel touch screen and a fold out full size keyboard - like IBMs since defunct Thinkpad with Butterfly keyboard. An Apple DUO style dock would be the icing on the cake of NetBook perfection so one didn't need to plug in all the cables when back at the desk. Global dock standard anyone?

[Rudiger @ Jul 21st 2008 1:53PM]

They may be concerned, but as a consumer, I'm not.

[Carl Vitullo @ Jul 21st 2008 2:02PM]

Now that i've discovered just how awesome or programming linux is, i would love to have a little tiny laptop that cost cheap to program on.
4 gigs of space would be plenty for that.
the problem is that "netbooks" are no longer tiny notebooks for doing small tasks on, they're now just slightly smaller notebooks that people want to do everything on.

if somebody made a 7 inch subnotebook that had wifi, your flavor of linux, expandable storage via a compact flash slot, and maybe a fold out keyboard or something to make it easier to type on for $300 or so, that would be AWESOME.

[CraigJ @ Jul 21st 2008 2:05PM]

The only thing I have a concern about is the term "netbook"

[rlynd3 @ Jul 21st 2008 4:33PM]

Its at least better than "nettop"

[W. Park @ Jul 23rd 2008 1:57PM]

Having owned a Psion Series 5, 5mx, and the original Psion netbook, I have to say that portability with a typable keyboard lets you do a lot of work with little hassle. The other thing about the above computers was speed, simplicity, and battery life. Once the netbooks get 10-15hrs of usability, I'm back in.

You can't write a consult note on a Palm Centro or iPhone but you certainly could with the Series 5. I have an NEC 790 which I bought for fun, but Windows CE on it is buggy and it crashes, needs reboots (familiar?).

Something with HP2133 form, 10-15hrs battery life, and Atom type processor speed running Linux for about $500 -would buy it today!

[keese @ Jul 21st 2008 2:08PM]

OMG, where are these people living?
If I want a cheap notebook, Asus just gave me the *second* option beside buying a used Thinkpad. The difference between the two?
The netbook won't roast my legs.

And anyway, recent numbers seem to indicate that netbooks finally the devices that *do* the much expected: Eating into the private desktop market.

The only problem for Intel, AMD and MSFT: Except for a few applications nobody needs the bleeding edge fast PCs anymore.

[DP @ Jul 21st 2008 2:09PM]

Netbooks are worthless.

[Ninjakamster (PS360 FTW!) @ Jul 21st 2008 2:32PM]

Your father's sperm is worthless.

[jegHegy @ Jul 21st 2008 2:12PM]

Boohoohoo, people aren't buying our overpriced laptops! :(

[Josh @ Jul 21st 2008 2:16PM]

Fujitsu and Sony (longtime owneres/makers of the EXTREMELY overpriced ultra-portables market) are concerned about new, efficient and low priced ultra-portables entering their market...

...I really can't say I care how they feel about that.