Netbook: The Future of Computing

Of late, the Indian PC market is flooded with the low-cost computers called Ultra Mobile PCs (UMPCs) or aptly called “Netbooks”. These computers have limited system capabilities like smaller screens and lower memory. They are small laptops that are designed for wireless communication and access to the Internet.

Devices such as the ASUS Eee PC, Acer Aspire One, Dell Inspiron Mini 9, HP 2133 Mini-Note PC, Classmate PC, LG X110, MSI Wind PC, Lenovo IdeaPad S9, Lenovo IdeaPad S10, or VIA OpenBook may fall in the category of Netbooks. 

Asus offers both Linux and Windows XP versions of its popular Eee PC – the device that kicked off the trend to commercialize low-cost laptops. It sold 300,000 units in a very short time. The company expects to sell two million Eee PCs with the Linux OS this year. Acer, too, recently launched its Netbook for the low-cost space – the Aspire one. Priced at Rs.19,999 for the Linux-based mini-laptop, Acer hopes to lure those who want an inexpensive, convenient mobile device to surf the Internet wirelessly.

One can see major players in the global PC industry like Fujitsu. LG, Dell, Benq, Samsung announced Netbook plans. Now that the combined might of the global PC ecosystem is getting behind low-cost laptops, there should be a strong impact in 2008 and a lasting one beyond that.

IDC predicts that the category could grow from fewer than 500,000 in 2007 to 9 million in 2012 as the market for second computers expands in developed economies. Also, after Microsoft ceased selling of Windows XP for ordinary machines, it made an exception and continued to offer the operating system for Netbook makers. Microsoft has worked hard to make Windows XP easily available, even changing the OS to run on low-cost laptops. The lower cost tag also challenges the adoption of open source-based operating systems like Linux on personal computers. Microsoft’s programme appears designed to ensure that distinction is maintained and to prevent low-cost PCs from cannibalizing sales of higher-end systems.

Difference between Notebook and “Netbook”
Netbooks are not true notebooks. While Netbooks will take you onto the Internet, they won’t replace notebook computers, since they lack the processing power to create media and handle advanced graphics and video – and they will not allow you to multitask. Netbooks are low-cost and highly portable, but they are designed for one task at a time. The reason for this lies in the fact that most new Netbooks sport the Intel Atom processor. These chips were really designed for use in mobile Internet devices; they are destined to be used in smartphones. The current versions were not designed for demanding laptop-like Netbooks. Traditional laptops tend to use Intel Centrino processors, and as a result can, in most cases, deliver desktop-level capabilities.

The key to the success of Netbooks, especially those running Windows XP, is to manage user expectations from the start, and not to over-promise. Users must understand that, even though a Netbook runs Windows XP, it is really more like an Internet connectivity device than a full-fledged portable computer.

Technical Specifications 
Size and weight are big factors. Up to a 10.2" screen size is the maximum for a Netbook. Typically, they don’t include a disk drive for space and weight saving considerations. Some products will include smaller SSD drives as options to the traditional 2.5 hard disk drives. Other than that most mini-notes provide the full functionality of mainstream computers and with faster productivity and HD entertainment. “Netbook” is “truly mobile”, less powerful than regular notebooks, simple cut-down computing device, usually optimized for specific applications, so you can’t expect powerful dual/ triple/ quad cores here. They are high on internal memory but low on hard disk and usually run on one fixed operating system. UMPCs thrive on connectivity and are optimized for it and will usually have a lot of USB ports to keep it going. They lack any energy draining components, hence are energy efficient. The machines generally come with either Windows XP or a Linux operating system, allowing workers to do word processing, write emails, work on spreadsheets and, most importantly, surf the Internet via wireless broadband.

Indian Scenario 
Netbooks constitute a niche market in India, occupied at upper end by Notebook PCs and at the lower end by Smart Phones and PDAs. While the concept is promising, it will have to penetrate in both the upper and lower end to create a significant base for itself. 

According to a Gartner report released last year, the Netbook units coming to the market today are just “proofs of concept”, noting that the technology for successful implementation is “at least two years away”. The report recommends enterprise users to wait for more mature versions to emerge before considering them for notebook replacement applications. Device manufacturers are also advised to monitor the UMPC technology road map toward viable product delivery.

There is no doubt that the new “Netbook” is already generating a lot of debate in the industry. While there are several industry leaders who would argue that consumers who can afford a second mobile PC will see little merit in buying these Netbooks. By adding a little more investment, they can actually go for a fully functional regular form-factor notebook. However, there are others who see the prices for Netbooks coming down in the future if volumes pick up, thus generating more sales.

Deepanshu Sharma, General Manager – Marketing, Strategy and ISV Alliances, AMD India, says,–“In any case, vendors will have to address many technological challenges including some distribution and service issues. Thus, the success of Netbook will eventually depend on how vendors innovate to create new markets. Netbook device is built for niche applications and all these segments will witness growth in India. Netbook will follow the same trend and a lot of effort has to be put in to make this happen. For example, vendors should talk to the government to create a need, by bringing some IT-based curriculum in schools.”

“We are yet to see large-scale adaptation of Netbook. AMD’s strategy is to wait and watch and if we feel that there is a need to be in this market, and then we will definitely explore the possibility,” he added.

“Indians want the same benefits of ultra-portability and connectivity as the rest of the world and many of the Netbooks are also in a reasonable price range that should appeal to a wide spectrum of Indian consumers. Last year, VIA achieved over 30 global design wins based around our VIA NanoBook mini-note reference design and this year we predict even more based around our newer VIA OpenBook mini-note reference design,” says Timothy Brown, International Marketing Manager, VIA Technologies, Inc.

Analysts estimate that Netbook shipments should reach slightly over 8 million this year and then more than double to 18.3 million units in 2009. Netbooks have the potential to expand Internet access to a large base of people by addressing affordability.

Other than consumers switching to these highly convenient Netbooks, the segment has tremendous potential for adoption in segments like education, sales force automation, entertainment and for executives on the move who need a fully functional computing experience.

The rush to Netbooks has raised concerns in some quarters that they will cannibalize laptop sales, which would be counterproductive for PC makers. Netbooks’ lower prices would mean thinner profit margins. At the same time, some analysts anticipate that Netbooks’ limited functions will limit their appeal. Computer makers are betting consumers want a product that’s more than a smart phone but less than a full-featured laptop.

Market Opportunities 
In the developing world, Netbooks will attract first-time buyers. They will exist alongside cell phones as a means for people to connect to the Internet and communicate. The low price and practical functionality will bring millions of new people into the global web. In more mature markets, they will become supplemental PCs and ready access points into the cloud of Internet services, media and information.

Vendor Opportunities 
Today, the Netbook market is at a very nascent stage. However, vendors are extremely bullish about their new low-cost ultra-mobile PCs. These Netbooks work best for specific target segments such as field sales and education as compared to mass consumption. In fact, if the Netbook concept succeeds, it may make a major impact on the PC business. Clearly, vendors would have an opportunity there. To the vendors, it gives them new form factors and a broader range of mobile products that can suit a wider sector of customers. It also extends the price ranges for mobile products to include new customer types.

Growth Drivers 
Netbook customers include lifestyle boomers, generation Y social net workers, young gamers, frugal generalists and multimedia enthusiasts. It may also find use in other verticals like point-to-point sales, door-to-door marketing, etc. where this device can be used as a great marketing medium. There can be some hesitation among large enterprises with regard to this product as they would usually evaluate options from a long-term perspective. The nice thing about the Netbook market is that you are already seeing a broad range of products, that based on differentiators of build quality, performance and connectivity options and even OS are allowing vendors to meet the needs of several different target groups, including students and second PC buyers as well as businessmen and even connected female fashionists.

Opportunities for Channel Partners 
For resellers, it is primarily the ability to bring a wider range of mobile products and price points. However, the ultra-mobile and small-sized nature of the products means that as mobile phones are very personal and style related choices, Netbooks often can be too. Resellers who understand that and know how to sell products that way will have an advantage.

Future 
Even though Netbooks won’t be confused with full-featured laptops, tons of people around the world are attracted to a low-cost machine that plugs them in. The Netbook will expand the global PC market.