Abstract

Netbook PC Grows in Popularity on Reduced Consumer Spending; Creates New Segment in Mobile PC Market

Observing the factors behind the industry's shipment volume and value growth, as far as the product development cycle is concerned, netbook PCs are currently in the growth phase of the cycle, with vendors continuing working on channel and market expansions. In 2009, the netbook PC industry's shipment volume and value were relatively low since netbook PCs are still at the beginning of the development, but the industry managed to see significant shipment growth in both shipment volume and value in 2009.

Even though the global economy was haunted by the global financial crisis in 2009, the shipment of netbook PCs was bullish as consumers became more price-sensitive due to reduced consumer spending. In addition, the growing popularity of telecom operators' bundled packages, the back-to-school demand in the third quarter of 2009, and the holiday promotions in anticipation of the fourth quarter of 2009 all led to strong full-year shipment in 2009. Aside from the European market, netbook PCs' major shipment destination, netbook PCs to include major destinations in North America and Asia Pacific regions and  successfully created a new segment in the mobile PC market. Reduced consumer spending resulting from the global downturn seemed to be the main growth driver behind netbook PC shipment growth in 2009. 

Uniform Product Specifications Source of Concern

Looking ahead to 2010, Google's operating platform made its foray into the netbook PC market combining the emergence of tablet PCs such as Apple iPad and cloud computing, the shipment volume of mobile devices with sizes between a mobile phone and a notebook PC are expected to see a boost, bring new business opportunities for netbook PC products.

Confined by the issues of product pricing and uniform specifications, it is projected that the netbook PC industry will encounter development difficulties in the future. As regards product pricing, PC companies initially positioned netbook PCs as low- to mid-priced products by halving prices of their mainstream notebook PCs. However, as prices of the overall mobile PC products are on the decline and the retail prices of netbook PCs also are falling, the profit margins of netbook PC manufacturers are narrowing. As a result, manufacturers will be less willing to develop netbook PC products.

Mainstream notebook PCs, with continuously lowering price tags, have gradually narrowed the price gap with netbook PCs. Moreover, as the global economy has begun to pick up, consumer confidence has resumed, reducing customers' appealing over low-priced netbook PCs. This will affect consumers' willingness to purchase netbook PCs and buy mainstream notebook PCs instead. 

Limited by the design of CPU and operating system, the display sizes of netbook PCs are ranged from 7- to 10-inches. With the shipment share of 7- and 8.9-inch products decreasing considerably, 10-inch netbook PCs, which mostly are in clamshell design, took the lion's share of the total netbook PC shipment in 2009. The industrial design of a 10-inch netbook PC is similar to that of a mainstream notebook PC, but with limited product differentiation. In addition, as the system performance of netbook PC products cannot be effectively improved, along with relatively uniform specifications, and high level of overlapping between a netbook PC and a mainstream notebook PC in terms of product features, the netbook PC industry's development in the future is expected to be compromised.

Appendix

Research Scope

This research focuses on netbook PCs, which are notebook PCs with screen sizes between 7-inch and 10.4-inch (not including 10.4-inch).

Product Definition

Netbook PC

A netbook PC is one kind of personal computer characterized by mobility and book-shaped design, but does not include WebPad and Pocket PC.

Form Factor

One-spindle

Includes only a built-in hard drive

Two-spindle

In addition to hard drive, holds a built-in optical disk or floppy drive

All-in-one

In addition to hard drive, holds built-in optical disk and floppy drive, or alternatively, two optical disk drives

Assembly Level

Full system

Finished notebook PC ready for boot up at time of shipment

Barebone

Barebone systems range from motherboards that have been assembled with any other piece of notebook PC equipment, such as a case, to a product that contains all but one key component of a full system, such as a CPU (Central Processing Unit)

Business Type Definitions

ODM

ODM (Original Design Manufacturing) entails collaborative product design between manufacturer and customer, or product design autonomously undertaken by the manufacturer within parameters established by the customer. Following customer verification and order placement, the manufacturer proceeds with production and assembly. The manufacturer does not participate in customer activities related to product conception, branding, sales, or logistics.

OEM

OEM (Original Equipment Manufacturing) entails production and assembly within customer-specified parameters and according to product specifications designated by the customer. The manufacturer does not participate in customer activities related to product conception, branding, sales, or logistics.

EMS/CEM

EMS (Electronics Manufacturing Service) entails production and assembly within customer-specified parameters and according to product specifications designated by the customer. Additionally, the manufacturer provides after-sales services. The manufacturer does not participate in customer activities related to product conception, branding, or sales. The CEM (Contract Electronics Manufacturing) business model is similar to EMS, however, CEM focuses on sub-assembly rather than complete product manufacturing and after-sales services.

OBM

OBM (Own Brand Manufacturing) entails the oversight of product conception, production, branding, sales, and logistics activities by manufacturers themselves. Any goods shipped to customers carry the brand of the manufacturer.

Private Label

Private label entails product conception, design, and production by manufacturers. Customers affix their own brand and handle branding, sales, and logistics activities. In the PC industry customers within the private label business model are typically referred to as clone or white box makers, most of which are regional channel players or system integrators. In the communications industry, such customers are usually brand-name telecoms, channel players, or system integrators.

Geographic Definitions

Other Asian Countries

Bangladesh, Bhutan, India, Indonesia, Malaysia, Mauritius, Nepal, North Korea, Seychelles, Sikkim, Singapore, Sri Lanka, Thailand, The Philippines, Vietnam

North America

United States, Canada

Latin America

Argentina, Bahamas, Belize, Bolivia, Brazil, Chile, Colombia, Colombia, Costa-Rica, Cuba, Dominica, Ecuador, El Salvador, Guatemala, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Venezuela

Western Europe

Austria, Belgium, Denmark, England, Finland, France, Germany, Greece, Holland, Ireland, Italy, Norway,

Portugal, Spain, Sweden, Switzerland

Other European Countries

Albania, Andora, Bulgaria, Czech Republic, Slovakia, Gibraltar, Hungary, Latvia, Lithuania, Moldavia, Romania, Russia, San Mareno, Malta, Ukraine, Vatican, Bosnia and Herzegovina, Croatia, Macedonia, Montenegro, Serbia, Slovenia

Other

Oceania

Australia, Fiji, Nauru, New Zealand, Saipan, Tahiti, Tonga, Western Samoa

Africa

Algeria, Congo, Djibouti, Egypt, Ethiopia, Ivory Coast, Kenya, Lesotho, Liberia, Libya, Morocco, Mozambique,

Somalia, South Africa, Sudan, Swaziland, Tanzania, Tunisia, Uganda, Western Sahara, Zimbabwe

Middle East

Aman, Armenia, Azerbaijan, Bahrain, Cyprus, Georgia, Iran, Israel, Jordan, Kuwait, Lebanon, Palestine, Qatar,

Saudi Arabia, Turkey, United Arab Emirates, Yemen

Glossary of Terms

List of Companies