Today’s Netbook Market: Current Trends and Our Take

by Reads (30,454)

The market for netbook computers (you know, those miniature laptops) has exploded since their inception in late 2007. Today we take a look at current and future netbook market trends, netbooks themselves, and the pros/cons of netbook ownership.

Netbook Overview
Netbooks are small computers with screen sizes ranging from 8.9 inches  to one foot diagonally. Netbooks are designed to be portable computers for Web surfing and checking email on the go; they complement rather than replace a user’s main computer. Netbooks typically weigh less than three pounds and have a six to 12 hour battery life. Compared to typical notebook computers, netbooks have limited performance. The Intel Atom processor in netbooks is small and power efficient, but not particularly powerful; it can handle Web surfing but little else.

Another characteristic of netbooks is special operating systems. There are two main choices: Windows XP Home Edition and Windows 7 Starter. Microsoft is still allowing Windows XP to be licensed on netbooks; it saves manufacturers on licensing costs. Windows 7 starter is an emerging choice (pun intended); it is a no-frills and limited version of Windows 7. Starter edition has some unorthodox limits  like not allowing users to change their wallpaper, and not offering aero glass transparent window design or network printing.

The table below summarizes the primary differences between a netbook and a notebook.

Netbook Notebook
Price Range $250-$500 $500-$1,000
Screen Size 8.9″-12.1″ 13″-17″
Keyboard Size 80-90% Full Size Full Size
Weight 2.5 -3.5 lbs. 5.5 – 7.5 lbs.
Battery Life 6-12 hours 2-4 hours
Operating System Windows XP or Windows 7 Starter Windows 7 Premium
Input/Output Ports Limited Full
Hard Drive Space 80-160GB 320-640GB
RAM 1GB 3-4GB
Optical Drive No Yes
Processor Intel Atom (single-core) Intel Core 2 Duo/Core i3 or AMD Athlon/Turion II (dual-core)
Overall Performance Factor 1x 4x-8x

PriceGrabber.com Netbook Survey Analysis
PriceGrabber.com is a comparison shopping website owned by Experian. This January, the website surveyed 1,680 U.S. online consumers for its Netbook & Portable Computing Trends Consumer Behavior Report. The survey revealed some trends and demographic information about the netbook market. Some of the key findings are summarized below:

  1. The number of online consumers who own a netbook has increased from 10 percent last year to 15 percent this year.
  2. Consumers want to spend less on their computing devices; 65 percent of respondents reported they want to spend less than $750 on their next computing device even though they spent more than $750 on their last one. PriceGrabber.com has seen significant drops in the average selling price of portable computers over the last year.
  3. 55 percent of respondents said they do not consider netbooks to be a replacement for their primary computer.
  4. The average netbook screen size has increased from 8.9inches to 10.1inches
  5. The primary age group of netbook owners has shifted from 35-54 year-olds to 45-64 year-olds.

The first two points are mostly expected – netbook sales have been growing at about twice the rate of standard notebooks since their introduction. As a matter of fact, netbooks were responsible for carrying the notebook industry (which includes notebooks, netbooks, and tablet PCs) through the PC sales slump that existed throughout most of last year. Research firm DisplaySearch reported that netbooks accounted for about 20 percent of overall notebook sales in 2009.

It is also not surprising the survey revealed consumers want to spend less on computers. The PriceGrabber.com survey showed that the average selling price of notebook computers dropped from $808 in December 2008 to $645 a year later, a 20 percent decrease. Some of the netbook’s popularity can be attributed to their low prices.

The third point is actually surprising. Despite bold claims by netbook marketing teams, many consumers don’t use them as their primary computers.. However, netbooks have higher return rates than regular notebooks because consumers sometimes misunderstand their intended purpose.

The fourth point is a response to consumer demand. An 8.9 inch screen can be hard on the eyes for some people. Some netbooks have 12.1-inch screens (which by Microsoft’s definition invalidates their “netbook” status, though other companies still rank them in the netbook category).

The last point is a conversation starter. Below is a graphical chart showing PriceGrabber’s survey results for the age of netbook owner respondents:

Assuming the sampling methods for the survey were the same as last year (and other factors were held constant), the age demographic shift is a talking point. Why the shift toward an older demographic? We have to speculate here, but let’s consider a few possibilities. Because netbooks typically cost between $250 and $300, they become an impulse buy for holiday shoppers. Second, netbooks are less complex than regular notebooks, which make them easy to introduce to folks that may not have had much experience with computers. Further, netbooks are convenient to use thanks to their small size and light weight. All of these factors add up to make them attractive to people with little to no computer experience (or as gifts to them), and older people fit that profile well.

Our Netbook Market Analysis
Although the netbook market is less than three years old,  we have seen some significant changes  during this short period. Let’s take a look at the first netbook released in 2007, the ASUS Eee PC 701. It had a measly 7 inch screen, 900MHz Intel Pentium M processor, and ran a customized version of Linux. Its battery life was just about three and a half hours. Despite the 701’s pilot product status, it was an instant hit with consumers, and netbooks have been flying off the shelves ever since. Below is a quick comparison between this first-generation Eee PC 701 and a more modern Eee PC 1005PE, which we reviewed in September 2009:

2007 Eee PC 701 2009 Eee PC 1005PE
Screen Size 7” (800×480 resolution) 10.1” (1024×600 resolution)
Weight 2 lbs. 2.8 lbs.
Operating System Customized Linux Windows 7 Starter
Battery Life 3.5 hours w/ 3-cell battery 12 hours w/ 6-cell battery
Processor Intel Pentium M (900MHz) Intel Atom N450 (1.66GHz)
RAM 512MB 1GB
Storage Space 8GB Flash Drive 250GB Hard Drive
MSRP $250 $380

The ASUS Eee PC 1005PE is a good example of a modern netbook, sporting a 10.1-inch display, Intel Atom processor, 1GB of RAM, and a six hour-plus battery life. Unlike the original Eee PC 701, today’s netbooks are built on an Intel platform tailored for such applications, at the heart of which is the Intel Atom processor.

The overall trend stemming from this comparison is a response to consumer demands for a more practical on-the-go “keep me connected” device. While novel, a 7-inch screen was simply not that practical for typical computing tasks. It did not take long after the Eee PC 701’s introduction for the first 8.9-inch netbooks to appear; 8.9 inches was the most popular size in 2008-09. This year, the average screen size has increased to 10.1-inch. Even at 10.1 inches, the viewing area is limited but still better than 7 inches or 8.9 inches, and based on user comments, practical enough for basic computing tasks. Only a few netbooks have pushed north of 10.1 inches, which brings us to the next point in this article: where the netbook market is headed.

In 2009, Intel introduced its Consumer Ultra Low Voltage (CULV) platform; computers based on it are known as “Ultra Thin” notebooks. Ultra Thin notebooks have the following characteristics:

  • 11.6” – 15.6” screens (1366×768 resolution)
  • Typically < 1” thin and 3 – 5.5 lbs.
  • Pentium Dual-Core or Core 2 Duo Ultra Low Voltage (ULV) processors
  • 5 – 10 hours of battery life
  • Run full versions of Windows 7 (not Starter)
  • 320 – 640GB hard drives and 2-4GB of RAM
  • Price range: $500 – $900

At the small end (11.6 inches) these computers are slightly bigger than netbooks yet offer significant advantages. Ultra Thin notebooks essentially have nearly all the features of a standard notebook in a thinner and lighter package with more battery life. Overall performance from an Ultra Thin notebook is more than enough to handle everyday tasks, something that can’t be said about netbooks. ULV processors only run at 1.2 – 1.3GHz yet are significantly more powerful than the Atom processors used in netbooks by a factor of 3x-4x. A prime example of an Ultra Thin notebook is the ASUS UL30:

The introduction of Ultra Thin notebooks is significant because it has cemented netbooks in their role as gimped computing devices. Netbooks are now obligated to keep limited feature sets and low performance to differentiate themselves from Ultra Thin notebooks. If netbooks were to expand much beyond what they are now in terms of practicality (larger screens, better performance), they would encroach on Ultra Thin notebook territory. Considering Intel maintains the platforms for both netbooks and Ultra Thin notebooks, it would be a most unwise business decision for them, and for manufacturers, to allow meddling of the market segments.

Netbooks are in all likelihood going to stay where they are now, which means a 10.1-inch screen (give or take an inch), a barely-adequate Intel Atom processor, and a “just enough” feature set. Don’t expect to see significant additional features or improved performance from netbooks in the near future. Netbooks will remain devices that represent the largest compromise of usability consumers are willing to accept in exchange for portability and battery life at a $250 – $500 price.

Netbook Ownership – It’s a Love-Hate Relationship
The PriceGrabber survey showed that 85 percent of netbook owners used their devices for Web surfing followed by 77 percent for e-mail:

Netbooks are generally fine for e-mailing and Web surfing since that is what they are practically designed to do after all. However, many people, including myself, find that despite their portability and long battery life, netbooks have some serious limits.

Netbook use feels confining. Despite the fact the average screen size has increased from 8.9 inches to 10.1 inches, it is still small and tiring to use for extended periods. The low screen resolution does not help; where most notebooks have a screen resolution of 1,366 pixels horizontally and 768 pixels vertically (1366×768), netbooks by comparison have just 1024×600, a difference of about 70 percent in overall area. A significant amount of scrolling is required while using a netbook because of their limited screen resolution, which can get frustrating. Using two windows side-by-side with a 1024×600 screen is nearly impossible, which hampers multitasking.

The small chassis also means a smaller-than-usual keyboard; typical netbooks have keyboards 80-90 percent of full-size, which takes some adjusting. This only adds to the frustration of using a netbook for extended periods.

Performance remains another hard limit of netbooks. The Atom processor is weak even compared to even the lowest-end processors found in standard notebooks. There is a noticeable lag opening applications and switching among them. Web surfing performance is adequate, however it is evident the Atom processor is at capacity because of the occasional stutter and lag while navigating to different pages. Standard-definition (360p) YouTube videos generally play without trouble, however high definition (720p) is out of the question.

Be sure to check out some of our netbook reviews for additional performance analysis:

Lenovo IdeaPad S12
Acer Aspire One D250
Samsung N120
HP Mini 311

In the end, netbooks fit the role they were designed for –Web surfing and checking e-mail. They also work fine for Microsoft Word and other basic office productivity applications, but anything more (especially multitasking) can overwhelm the limited performance capabilities. Deciding whether to buy a netbook is simple: are you willing to accept a lessthan-stellar computing experience for the convenience and practicality of having a computer you can take anywhere?

Conclusion
In less than three years, the netbook market rose from a 0 percent market share to a 20 percent market share. These miniature laptops have limited capabilities, but they fit the role they were designed for: staying connected on the go. Consumers are attracted to them because of their low price, small size, and long battery life. The PriceGrabber survey shows the netbook market continues to grow at a rate faster than the regular notebook market, and that they are being used as complementary devices to customer’s main computers, not as replacements. The netbook market will likely stay where it is in the near future because of the introduction of “Ultra Thin” notebooks, which have more or less capped netbooks as 10.1-inch devices with limited capabilities.  Regardless, netbooks continue to be an ideal choice for consumers who want an affordable, “on-the-go” companion.

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