Heads up Apple, the Intel Netbook is unstoppable
September 13th, 2009 | 
Author: Friday night at a Best Buy in Southern California. Maybe not the hippest place to be but some interesting dynamics were at work.
HP ‘Mini’ promo: more than a few of the newer Netbooks are not low quality
(Credit: Hewlett-Packard)
A typical flow of people passed through the laptop section in the 20 minutes I was there. Towards the end, all of the remaining customers (a few men and women, each) were marveling at all the cute, inexpensive laptops. Cute, inexpensive laptops to them, Netbooks to us in the media who like cut-and-dried categories.
I was mildly shocked to see these people ignore the 50 or so standard laptops behind them and focus solely on Netbooks. So, I began querying the sales guy and one of the customers. It came down to essentially two things: price and selection (surprise, surprise). Best Buy now has a large selection of Netbooks–10 or so on display. A far cry from the Best Buy display of six months ago: a single, tiny, neglected Asus Eee PC pushed into a corner.
And I visited a second Best Buy. The sales guy there gushed about Netbooks. “They’re extremely popular,” he said, adding that “almost all of my customers” just want to do e-mail and surf the Web.
That is circuitous way to get to my point. The Intel Netbook is not going away and is just getting more popular as this marketing research report indicates. Apple’s Tim Cook dissed Netbooks back in April for what seemed like acceptable reasons: cheapness equates to downmarket, shoddy products. But that Apple reasoning needs an update–the fall 2009 version: a lot of the newer Netbooks coming out now are not shoddy nor cheap feeling. (And I am hereby updating my previous pessimistic take on Netbooks too per this post.)
People like cute, light, and cheap–especially in a laptop. This sentiment won’t be overcome, as Intel believes, by the emerging ultrathin laptop category, which ranges from about $500 to $1,000 (formerly called CULV or consumer ultra-low-voltage). Certainly not this year. Ultrathins are not different enough in appearance from a standard laptop and not cheap enough. (And recent reports indicate that the ultrathin category is not taking off as expected.)
Intel will never admit in a thousand years that it has created a Frankenstein monster of sorts. Intel will of course take credit (which it should) for the creation of a new category of computing devices but my sense is that the company is not head over heels about the Netbook business model–and this is also a reason for Apple’s very conscious decision not to make a Netbook. And, as many people are predicting, its reason for pursuing a more upscale tablet-like touch device.
Best Buy has a large Netbook selection
(Credit: Best Buy)
Intel’s sales chief Sean Maloney has intimated in the past that Netbooks are not huge money makers. Speaking about the expected emergence of the ultrathin laptop category back in May he said that this is “an opportunity for upsell. We don’t need to give this stuff away. The industry doesn’t need to give this stuff away. We can reach new price points and we can also get paid for it.”
But there is just too much marketing momentum now behind Netbooks at large PC makers–and in retail. Hewlett-Packard, Dell, Toshiba, Sony, Acer all are pushing Netbooks. And in Japan, easily one the largest PC markets in the world, the Netbook is a hit–despite initial resistance from Japanese PC makers–for all of the same reasons cited above: small, light, inexpensive–and add fashionable. Major Japanese tech Web sites (such as ASCII) and large retailers (like Yodobashi Camera) have a significant Netbook focus now because that’s what readers and consumers are demanding.
And I just don’t think performance is that much of an issue for many consumers. Some will of course return a Netbook because their expectations were too high (I heard this from a sales person at Frys Electronics) but a lot of people across all consumer segments (kids, students, business people) will continue to buy these things by the boatload (unless Intel intentionally sabotages the category–which I hope Intel is savvy enough not to do.)
Apple’s products and marketing are good but not infallible. And the lack of a Netbook may come back to bite Apple at some point. Maybe not tomorrow. Maybe not next month. But maybe next year. One of the Best Buy customers eying a Netbook made a comment that was a powerful counterpoint to all the Apple Mac-PC ads. To paraphrase: “You have to pay an arm and a leg for Apple (pointing to the Apple corner), I’m trying to make a practical business decision here.”
http://news.cnet.com/8301-13924_3-10351387-64.html?part=rss&subj=news&tag=2547-1_3-0-20
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