Netbook sales will soar to 22 million in 2009 – IDC
Pressure is mounting on Apple (AAPL) to do something about the netbook problem.
IDC reported Friday that worldwide shipments of these sub-compact portable computers grew seven-fold year-over-year in the first quarter of 2009, according to Computerworld's Agam Shah. By the end of the year, IDC estimates, netbook shipments could reach 22 million.
Meanwhile, Apple's market share is shrinking, and Mac sales fell last quarter for the first time in five and a half years.
"Vendors are waking up to the fact that people respond to so-called 'good-enough' computing," Jay Chou, research analyst at IDC, told Shah. "They don't really need all the power of a Core 2 Duo CPU most of the time."
Steve Jobs famously dismissed netbooks as "a piece of junk," a sentiment echoed two weeks ago by COO Tim Cook.
"It’s not a space as it exists today that we are interested in," Cook told analysts during Apple's most recent earnings call. "Nor do we believe that customers in the long term would be interested in.”
Apple watchers parsed those lines carefully, noting that "the space as it exists today" could change dramatically the moment Apple releases its long-awaited touchscreen tablet computer.
But that misses the point.
Netbooks, which sell for s little as $300 to $350, are typically used by students for note-taking or as light-weight secondary computers in situations where all one needs is a keyboard and a wireless Internet connection.
An Apple tablet might be a game changer, but it's not going to sell for $300. and it's not going to serve those needs. Nor, for that matter, will an iPhone or an iPod touch — the devices Cook and Jobs have suggested are Apple's versions of a netbook.
That's why the smart money is betting that Apple will respond to the growing netbook threat by cutting MacBook prices — sharply and soon — before back-to-school sales start, and parents who might have given their kids Apples for graduation settle for Acers instead.
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Look…Netbooks are here to stay..They satisfy the basic needs of price concious consumers. Apple does not have to satisfy this market with low price. Apple is quality driven and attract consumers regardless. As I have learned from owning desktop and laptop PC's, Iphone and itouch, the major driver is operating system, features, and software. We know where Apple stands in reference to this.
I own an Asus netbook and an Apple MacBook Pro. The Apple has 2 USB ports, the Asus 3. The Apple has both wireless and Ethernet connectivity and so does the Asus. The Apple has a 160ghz hard drive and so does the Asus. The Apple has a built-in webcam and so does the Asus. The Apple's chip is a 2.4 ghz and the Asus is a 1.6 but that is really a non-factor unless you are into games or high end calculations and graphics.
Cost of the MacBook = $2,800.
Cost of the Asus = $ 299.
Oh yeah, about repair?
The MacBook is 18 mos. old and I had to replace the video chip, motherboard, and one stick of ram. (Fortunately, Apple paid for it.)
I don't know where the underpowered "piece of junk" idea came from but I find it not to be true. I dearly love BOTH machines and wouldn't trade either of them. They are very different but they both serve a purpose.
Frodoone
Market share is irrelevant to this discussion. The thing that matters is the profit made per unit. If apple were to make a netbook and pocket 25 for each netbook versus making a macbook pro and make 250 for each unit, it would have to sell 10 times as many netbooks.
Apple's business model is built around selling high price items. Thats a niche that is interesting & profitable.
A company doesn't have to be everything to everyone.
Phillip,
Apparently you are not privy to the dominant mindshare position which Apple holds in the college market. Parents who can possibly afford a Mac will make supreme sacrifices to purchase one rather than incur the wrath of a child faced with the embarrassing prospect of having the only piece of crap Asus in a lecture hall full of MacBooks.
I could be wrong, but Apple prides itself on avoiding knee-jerk reactions to market conditions. I doubt very seriously that we will see any truly sharp drop in MacBook prices – perhaps a token fifty bucks or so. Any huge drop in MacBook prices will greatly constrict their operating space with respect to pricing the new device they’ll be introducing soon, which I believe will be somewhere between the current MacBook and Mac Mini price points.
Look a 22M unit market is still TINY! The smartphone market is over 100M units. Apple sold 13M iPhones last year. Apple sold alot of iPod touches last year. I'd say, iPhones and touches probably exceeded 20M last year. That's just Apple's share. Compared to the WHOLE netbook market, I'm not so sure there's a compelling market there.
And, the nascent netbook market is not pressuring Apple to do anything.
Apple is working on their own time table. They have a plan, regardless of what is happening with netbooks. Like the iPod, there are other iterations of iPhone. It's a no-brainer. It's coming, it'll be different. It'll be a "duh" product, like "duh", why didn't we think of that?
Brian wrote:
"…How do you know it was not in lieu of a laptop? It appears that is is exactly what happened–look at the PC sales figures. Regarding students, most are going to laptop full time…"
Relax fan-boy. I am sure that netbook sales are indeed taking PC sales as well. I am also sure that most students are indeed choosing full featured laptops.
This doesn't change the fact that people (not students probably) are indeed buing an awful lot of netbooks. Read this article quote carefully:
"Netbooks, which sell for s little as $300 to $350, are typically used by students for note-taking or as light-weight secondary computers in situations where all one needs is a keyboard and a wireless Internet connection"
Note the quote above does not say that only students are buying secondary computers. It can be logically taken as follows:
"..by students for note-taking or by anyone else (student or not) as light-weight…"
It is in this context, by non-students and for a second computer, that Apple is going to have to do something to compete.
Again, I am not saying Apple can't compete here. I am merely saying, as is this article, that they are currently not doing so.
"You totally missed the point. Apparently, someone wants second computers because netbook sates are up seven fold year over year. The point is that Apple does not have a product in this space."
How do you know it was not in lieu of a laptop? It appears that is is exactly what happened–look at the PC sales figures. Regarding students, most are going to laptop full time. Netbooks simply won't fill the bill there for a lot of students who actually need a full featured computer. I certainly would not send a student to college with one, unless it was a clown college.
Brian wrote:
"Your article is filled with a lot of assumptions, For instance, that students want TWO computers…"
You totally missed the point. Apparently, someone wants second computers because netbook sates are up seven fold year over year. The point is that Apple does not have a product in this space.
Ashley Grayson wrote:
"The current vendors are doing an adequate job providing only slightly uncomfortable email and “squint at the internet through a keyhole” browsing…"
If a netbook is like browsing the web through a keyhole, what is an iPhone?
People want this. They really do. That's why netbook sales are up so much.
All you Apple fan-boys suck it up and admin that this is an area that Apple is not in yet. No one said that they can't be in it. They just arent.
Apple already have a hardware platform to do the Netbook. The Apple air. All it needs is a little bit of a hardware strip down to cut it's cost and there you have it. It's light weight very portable and everything connects to it wirelessly.
@Brian,
"They are merely waiting for the precise time to take the rest of the market."
This is not going to happen. It will:
1) Kill the brand.
2) Reduce the margin.
3) Lower the quality.
Apple just needs to have achieve:
1) Between 15% and 20% US OS market share.
2) A little above 10% for the rest of the world.
3) Consistent rate of innovative product launch.
At that point they can stabilize and focus on other things.
Because beyond that, they won't be able to sustain the quality.
But only down to $849 is not the price point. $499 offerings will get an item into the Netbook range. Could Apple do it with OS X, with the Leopard or Snow Leopard operating system?
If they can fit OS X on the iPhone, fitting it on a NetBook is easy 
I think there are two aspects to the 'netbooks are junk' perspective:
1. A lot of the hardware is relatively low-end. We don't know how well those machines will stand up to the kinds of 'road warrior' use that many want them for. (I have experience with that, carrying my AlPB through 3 years of nearly constant travel and about 500k frequent flier miles. That machine lasted about 2 years 10 months before it had to go in for a motherboard repair, and that doesn't count the time it was knocked over and I had to get the screen fixed…)
2. The user interaction, i.e. the quality of the total user experience, is uncertain. Some netbook vendors have done a good job integrating a few applications under Linux, and then hiding the Linux underpinnings. Those built on some flavor of Windows have a different user experience. The question here is whether you can build a stable, secure and extensible (and user-friendly) platform for more than just Web Browser and Email.
Now what I want is an Apple instantiation of the original Dynabook concept from Xerox PARC. The only Windows machine I ever lusted after was a tablet computer, which had a nice form-factor, either as a laptop or as a 'write on the screen' tablet. There is a company that takes MacBooks and turns them into similar tablets. But I -require- a full-size keyboard at least part of the time, as a touch typist, I can't deal with thumb keyboards (e.g. Blackberries) or those tiny things on 'pullout phones'.
Let's see what comes out of not just Apple but others this year. An Android-based netbook/tablet with some significant value-added could be an attractive proposition, and I for one don't count Palm out of this fight yet.
What netbook problem? The current vendors are doing an adequate job providing only slightly uncomfortable email and "squint at the internet through a keyhole" browsing on their cheap netbooks. Markets rain money on attractive products all the time. Apple lacks a netbook. They also lack a high milage low cost car, a low calorie, but tasty burger, and a vaccine for flu. Oh, but they do have an iPod interface that is popping up in every model of car, and an iPhone app that provides directions to nearby restaurants. Oh, yes… how many of those netbooks can run iTunes like the iPhone and iPod touch?
People might expect Apple to just reduce the price by $100 or $150, but Apple tends not to do what people expect.
If they came out with a really low cost computer, it would be devastating to the PC world. Who would buy anything else? They are merely waiting for the precise time to take the rest of the market. Apple already has the MAJORITY of the over $1000 market. Think about that for a minute.
But only down to $849 is not the price point. $499 offerings will get an item into the Netbook range. Could Apple do it with OS X, with the Leopard or Snow Leopard operating system?
Your article is filled with a lot of assumptions. For instance, that students want TWO computers, or that Apple will slash prices on MacBooks. I think the whole trend is playing to Apple's strengths in terms of designing a smaller form factor computer.
BTW, if netbook sales increase to the _assumed_ level you quote, it will be devastating to Microsoft. It would be far easier for Apple to release OS X for these machines than for Microsoft to get Windows 7 running adequately on them.
This market is still in flux. In the coming year you will see a number of 8 to 10 inch netbooks with 12 to 15 hours of run time hit the market. Most will have 3G as well as WiFi built in. Light, small, portable, ubiquitous networking, long battery life. It is an evolving situation and it will be a game changer.
I don't want to carry a 17" laptop and its power adapter around.