Abstract

Seasonal Effect to be Less Apparent as Economy Fears Remain

Due to the ongoing subprime mortgage crisis, closedowns of subprime lenders, and leading companies' layoff plans due to losses, the global economy is expected to be affected in 2008. Additionally, due to greater concerns over the economic outlook and soaring prices of crude oil and raw materials in the first half of 2008, the household disposable income was reduced considerably in 2008. Consequently, the consumer spending on ICT products were affected as well. The growth momentum in the fourth quarter, with sales traditionally peaking around the Christmas holiday, is expected to slow. It is anticipated that the traditional seasonal effect will be less apparent in the second half of 2008. 

Components Shortages Continue to Affect Sales in 2H 2008

Battery cell shortages significantly affected the notebook PC supply in the first half of 2008. As PC makers are increasing production capacity, and prices of upstream raw materials are slightly declining, notebook PC prices are expected to fall back. It is anticipated that price hikes of notebook PCs due to supply shortages are expected to alleviate in the second half of 2008 compared to the first half.

In the second half, as PC makers plan to launch more consumer and emerging notebook PC models, there are worries that the shortage of IMR treated chassis could be a swing factor for notebook PC shipments. The shortage is likely to also affect the industrial design for notebook PCs and further affect customer purchase intentions. Moreover, owing to rollouts of netbook PCs, and new high-end AV notebook PC models, consumers are given more options when buying notebook PCs. The launches of new platforms are expected to boost the market demand and accelerate the DRT effect in the second quarter.

Mainstream Notebook PC to Feel Increasing Pressure from netbook PC

In the second half of 2008, several leading brands have plans to launch netbook PC products. Affected by the economic situation, the seasonal effect is expected to be less apparent in comparison to previous years. This is partly due to the fact that with limited disposable income,  consumers are relatively conservative when purchasing notebook PCs.  

netbook PCs featured the best of basic computing functions in an compact and affordable form are bringing some impact on sales of mainstream notebook PCs in 2008.

With compact form factor, internet access, gaming, basic computing functions, the education market is predicted to be one of the fastest growing areas for netbook PCs. Using the Intel Atom processor, the netbook PC provides basic notebook functionality and mobility, and can be bundled with telecom operators' services to meet customer demand. netbook PC typifies compact and lightweight design to meet customer demand for mobility. netbook PCs are size competitive in comparison to other mobile handheld devices with panel sizes ranging from 11.1-, 12.1-, to 13.3-inches. Customer demand for notebook PC with basic computing functions is likely to boost netbook PC shipments, which will affect the mainstream notebook PC market.

Currently, netbook PC is priced between US$400 and US$650. In anticipation of the back to school effect, Acer re-adjusted the price of its netbook PC, Aspire One, down to US$349 in North America. The price of Aspire One was reduced by US$50 on average. Asus followed suit. The price competition for netbook PCs have kicked off less than a year after its launch. Price reductions of netbook PCs is likely to lure buyers - who initially plan to buy a new notebook PC or replace the existing notebook PC - to buy a netbook PC instead for the Christmas season. The reduction of consumer spending occasioned by general economic conditions is expected to push sales of netbook PC Therefore, mainstream notebook PCs are expected to see share eroded by netbook PCs.     

Overall, key component shortages and the ongoing global financial crisis are likely to continue into the second half of 2008 and cloud the global notebook PC market. Several PC brands and contract manufactures have scaled down their notebook PC shipment target. The accelerated DTR effect and rollouts of high-end models, new notebook PC platforms, and netbook PCs, were expected to stimulate demand in the consumer market. Other ICT industries, which were expected to suffer growth setbacks, the worldwide notebook PC market was expected to continue to see steady growth in the second half of 2008 and upcoming years.

Appendix

Glossary of Terms

List of Companies