Netbooks eroding Intel’s lucrative notebook market

NEW TRIPOLI, USA: Netbook manufacturers are adding bells and whistles to their product that are blurring the lines between a netbook and a notebook.

The problem is the netbook market is migrating upward to be a low-end notebook with a small screen for a few hundred dollars less, yet it is still a few hundred dollars more than the original intention of what a netbook was supposed to be. Will there soon be no meaningful difference anymore between netbooks and lower-end, consumer laptops besides weight and Atom chip?

As a result, we are cautious about our forecast for 21.5 million netbooks sold this year as a percentage will probably be better categorized in the 177.7 million unit notebook market.

We are seeing a blurring of lines between a netbook and a notebook. We further envision netbooks on the market with multimedia capabilities for watching streaming video and DVDs. Asustek is already marketing a netbook with a DVD. Asustek initiated the netbook craze in 2007.

“Intel probably hates the situation because they are earning practically nothing for their Atom chip, which is eroding their lucrative notebook market. Microsoft gets smaller licensing fees as well,” noted Dr. Robert N. Castellano, President of The Information Network. “The only real winner will be Asustek, who is a 2nd or 3rd tier notebook supplier, trying to get market share in the mobile space.”

We noted in a release of March 9 that subsidized netbooks will start appearing.

“Along with the growing competition among software service providers, we will see a new infrastructure taking hold, modeled after Hewlett-Packard (cheap printer, expensive ink) and the mobile service providers (cheap cellphone, expensive monthly wireless charge). This subsidized bundle model will grow the ARM netbook to greater market shares. “

AT&T seems to think it was a good idea. The wireless provider is offering subsidized netbooks for as little as $49.99 in two markets, Atlanta and Philadelphia. The catch is that buyers must sign a two-year contract for an AT&T data service plan, which starts at about $60/month. (We’re waiting for AT&T’s royalty check for the idea!).

The $49.99 gets you an Acer Aspire One with an 8.9-inch display, 1GB of memory, and a 160GB hard drive. One needs to sign a two-year deal for AT&T's Internet at Home & On the Go service, which starts at $59.95 a month.