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Analysis: Has the iPad killed the netbook?

Can netbooks survive and thrive in the coming years?

For months we've been hearing that tablet PCs - led by Apple's iPad - are hurting netbook sales in a big way. But are they really? For now, touchscreen tablets appear to be luring consumers away from netbooks but analysts believe in the long term, netbooks will hold their own in an increasingly fragmented mobile device market, particularly as computer makers address user complaints by enhancing netbooks with faster processors and new capabilities.

Twice the price

"We are seeing a slowdown - a pretty dramatic slowdown - in the netbook market. And a reasonable amount of that is from the iPad," says IDC computer analyst Bob O'Donnell. Netbooks and touchscreen tablets are both secondary computing devices, and the consumer's dilemma is deciding which gadget to buy.

However, the disparity in netbook and tablet prices makes the iPad-is-killing-the-netbook argument "a little hard to swallow", says O'Donnell. For instance, the average selling price for netbooks is under £350, according to IDC. But for the iPad it's £500.

"Right there's a big disconnect between [average selling prices]. That's why it's hard to say that there's a direct, one-for-one knocking off, because of that huge price gap," adds O'Donnell, who sees a correlation between today's tablet-versus-netbook battle and the netbook-versus-laptop debate of 2008.

"This is sort of a netbook redux. Two years ago, netbooks were going to cannibalise laptops," he says. "There was a period when a whole bunch of people bought netbooks, and it somewhat skewed the view of the notebook market. But at the end of the day, when people needed to upgrade a laptop, they did."

Even if the iPad-induced sales hit proves to be temporary, the bigger issue is how netbooks will rise to meet the tablet challenge. "Nobody is saying that a netbook or a tablet is a must-have, primary device. That's where desktops and laptops fall," says Cindy Ng of Intel's netbook marketing team. "It's a similar market because they're both companion devices and nice to have. But at the same time, I think there are different types of consumers who value different usages."

Netbook users, for instance, really want a physical keyboard. "For doing Twitter feeds and social networking updates on Facebook, clearly the netbook with a physical keyboard really enables that ease of use much more than a tablet would with a virtual keyboard," says Ng. And for frantic classroom note-taking, a netbook usually tops a tablet.

Netbooks, phase II

Intel Atom processors power many netbooks, and the chipmaker predicts that a netbook renaissance will occur in the first half of 2011. A new crop of netbooks will add wireless syncing capabilities that allow users to sync data easily among multiple devices, such as their smartphone, laptop, and desktop. Intel's new dual-core Atoms are more powerful and allow netbook makers to build sleeker, slimmer devices that are "potentially as thin or comparable to the new MacBook Air," says Ng. Another as-yet-unnamed feature would make it easier for netbooks to stream music to a home stereo or speaker system.

AMD's upcoming Brazos-platform processors will combine low-power dual-core and single-core CPUs together with a DirectX 11-capable GPU on the same chip. If it ends up as good as it looks on paper, it should provide better performance than today's Atom-powered netbooks do, while still preserving battery life and allowing for small and thin laptops. We should see premium netbooks and inexpensive ultraportable laptops in early 2011 with the new chips.

NEXT PAGE: Acer's take

See also: can Google Chrome OS save the netbook?

  1. Can netbooks survive?
  2. Twice the price
  3. Acer's take

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