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Netbooks not dead as PC makers show off new models

Analysts believes netbooks will still sell well in emerging markets

Tablets may be the hottest gadgets on display at this year's Computex. But netbooks still have a presence at the trade show, and vendors are coming out with several new models that will hit the market this year. Their low cost will continue to drive sales, analysts said.

PC maker Asus, a pioneer of the netbook concept, has shown off two new models at Computex. The Asus Eee PC 1025 C and 1025 CE are Windows netbooks that will launch worldwide in the fourth quarter of this year. Priced at US$299 the devices are built with an "instant on" feature that allow users to resume Windows in two seconds from sleep mode.

The other Asus netbook that has caught some attention is the Eee PC X101, which runs Intel's MeeGo mobile operating system. The device will launch worldwide in July and cost $199. Asus will also be releasing a Windows 7 version of the netbook that will cost between $240 and $250.

Asus' rival Acer is also showing a low-cost netbook priced at $199. The Aspire One Happy has both Windows and Android 2.3 installed. Users can switch between operating systems by rebooting the system. Acer launched a version of the device worldwide last month.

Lenovo, Samsung and Fujitsu displayed other netbooks running Intel's MeeGo operating system.

Intel executives at the Computex show said netbooks continue to be an important market and that the company wants to bring netbook prices down to $199 with new chip technologies.

The boom in tablets has however led PC makers like Taiwanese company Micro-Star International to shift resources away from developing more netbook devices. "We are staying away from them," said Henry Lu, senior vice president and cofounder of the company, who added that its shipments of netbooks are dropping.

Research firms also expect worldwide shipments of netbooks to fall in the coming years, with sales taken away by the popularity of tablets. IDC forecasts that netbook shipments will drop to 32.4 million units in 2011, a decrease from 35.6 million units last year.

Currently, netbooks account for 20 percent of the total portable PC market, said IDC analyst Helen Chiang. But in the next two to three years, that market share will drop down to 10 percent as vendors release new tablets with lower prices. Apple's iPad 2 is currently priced as low as $499.

Even as netbook sales go down, tablet shipments are forecast to explode this year. Shipments for the devices are projected to reach 54.8 million units in 2011, an increase of 181 percent from the previous year, according to research firm Gartner.

Consumers are picking tablets because of their longer battery life and short boot up time when compared to netbooks, IDC's Chiang said.

But netbooks will still sell as long as prices are kept down. "I think the most important thing for netbook products this year is the price, not the technology, not the design," she added.

In spite of the huge increase in tablet sales, there is still a sizeable market for netbooks, said Gartner analyst Tracy Tsai. The low costs of netbooks makes them appealing to consumers in emerging markets, where people have tighter budgets and want to own a PC, she added.

Micro-Star International sees this opportunity as well, in spite of the diminishing popularity of netbooks. The company will continue to release new netbook devices because there is still a demand for them in emerging markets like East Asia, said Sambora Chern, a senior director with MSI.

"I think the netbook's biggest advantage is that it has a keyboard," he said. "With a tablet, it's a virtual keyboard. It's not real."

Analysts like Tsai believe that more vendors will develop netbooks that can convert into a slate tablet. On Wednesday, Intel unveiled a netbook called Keeley Lake that uses its new Atom processor called Cedar Trail. The netbook is special in that the touch screen display can rotate and fold back on to the keyboard, becoming a tablet.

"In the future it will be harder to say if this is a netbook or a tablet," Tsai said. "I think in the future you will have all kinds of possibilities for all kinds of users. Users will have multiple choices and you can pick whatever you like."


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