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Netbook sales bigger than expected
A Lenovo Ideapad netbook.
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TEXT OF STORY
Tess Vigeland: One item more and more school kids are expected to have and use is a laptop computer. Sounds financially onerous for many families, but these days you don't have to spend the GDP of Swaziland to buy one.
Today Hewlett Packard reported second-quarter earnings of $1.6 billion, 67 cents a share. The company's netbooks get some of the credit. Netbooks are mini laptops, originally conceived of as cheap computers that could be used in the developing world.
Marketplace's Stacey Vanek-Smith tells us their new popularity here at home could spell big changes for the computer industry.
STACEY VANEK-SMITH: A netbook is kind of like a laptop-light. They're about the size of a sheet of paper and roughly half an inch thick. They're not very powerful. You use them for the basics: e-mailing, surfing the Web, writing a paper. In other words, what most of us use a computer for. The price: $200 - $300.
Roger Kay heads Endpoint technologies.
ROGER KAY: The value proposition for a netbook is so simple that if you were doing an elevator pitch, you could get it off between the first floor and the second floor. Basically, it's something that you know for cheap.
Netbook sales have more than doubled over the last year. They now make up one of every five laptops sold. And that's caught the computer industry by surprise. Because no one expected consumers would want a slower, less powerful machine. After all, the whole PC industry was built around selling the newer, faster, more powerful machine.
Power's not an issue for Jeff Jennings, even though he runs the technical operations for Freewire, a company that builds fan sites for celebrities. He bought an HP netbook a couple months ago, and he says thanks to cloud computing, the little netbook and an Internet connection are all he needs to do his job.
JEFF JENNINGS: I can literally sit on my boat on the weekends and if there's a problem, I fire up my netbook. I hop on a server in Germany, per se, help diagnose the problem, or fix the problem and get it back up and running.
The price and portability of netbooks has transformed the computer business, says Bob O'Donnell, a tech analyst with IDC.
BOB O'DONNELL: It's shaken up the market in terms of who the leading players are. It's shaking up the market in terms of the kinds of offerings that can be made. It's shaking up consumers expectations around what computers can be.
Like fashion accessories. HP's sold thousands of so-called "digital clutches" by designer Vivienne Tam. Disney offers netbooks for kids at Toys R Us, featuring themes like Wall-E and Hannah Montana.
Telecom companies are heavily promoting netbooks, too, because they can sell wireless plans for them. That's got the computer industry worried about the future -- that customers may decide they no longer need a $1,200 laptop with all the trimmings, and can make do with a cheap computer and an expensive phone.
I'm Stacey Vanek-Smith for Marketplace.
For years I used Palm PDAs. My last one cost me $300. I finally wore it out but, now, Palm doesn't make PDAs anymore. It's all about smart phones and cloud computing. Problem: I live in an area where cell phone coverage is spotty at best and I need access to my data as I travel in that area. Cloud computing isn't a functional solution yet. Paying a monthly service charge plus app fees, surcharges, taxes and other fees quickly raises the cost of a smart phone to $1,000.00 per year, $2,000 the next year, $3,000 the next... $1,000.00 per year for an organizer and some spreadsheets which is all squished into a ridiculously small screen? No thanks! So when I saw some netbooks on the shelves at the local office supply advertised for about the same price as my trusty old Palm TX I began to start saving my pennies to buy one. More computing power than my Palm TX, more computing power than the old laptop I travel with and more computing power than the old desktop I use at home. I never considered my computing needs as basic (photo editing, sign designing, book keeping, DVD watching, MP3/FLAC music). Looking at the specs of the netbooks, they have more than enough cpu, ram and hard disk to handle what I need. If you are into hardcore, bleeding-edge technology, 3D gaming then, no, the netbooks are too underpowered and basic for you.
I'm floored that the computer industry thought people wouldn't want a netbook. I am still using a Mac iBook (12 inch) from 2001 and it suits me fine. I passed along a clamshell mac (1999) to my family that they are still using daily.
I think the computer industry needs to do more market research into what people are actually doing on their computer, not what they want to be doing. Cropping and emailing a picture from a digital camera hardly qualifies for the realm of "digital production."
A netbook is all I ever wanted in a laptop. In 2001 I went into Circuit City and told the salesman "My needs are VERY basic. Show me the laptop that is so underpowered you are almost ashamed to sell. it." That got me a Compaq 12XL500. My needs are so basic that I used it up until this past February. Replaced it with an HP mini. Perfect!
