Netbook Sales are on the Rise, but will that hurt the Overall PC Market

[Abbas]

Netbook sales are on the rise, but is it really a good thing? Do consumers know what they are getting? And is the PC industry really benefiting from this wave of new found netbook momentum?

According to leading market research company The NPD Group’s retail tracking service; laptop unit volume increased more than 23 percent in December to 1.9 million units. That growth was propelled by netbooks. Without netbooks sales laptop PC growth would have been just 9 percent in December. For the full year laptop sales growth was 21 percent with netbooks and 16 percent without them.

Netbook sales ramped up during the year. In the first half of the year, netbooks accounted for less than 1 percent of laptop sales. While that number rose in third quarter it remained less than 2 percent. Only in fourth quarter, as products became more available and began to reach the shelves of the major U.S. retailers, did sales become significant. By December, netbooks accounted for 12 percent of unit volume, their highest total of the year. Nearly 50 percent of all netbook sales for 2008 occurred in December. The impact on overall laptop ASPs was significant. In January, laptop ASPs were $861, by December they had fallen to $740. Without netbooks price erosion in 2008 would have been much smaller as non-netbook ASPs were $795 in December compared to the $861 at the start of the year.

So are netbooks cannibalizing the market or just making a commotion?

“Without netbook sales, the laptop market grew 16 percent in 2008,” said Stephen Baker, vice president of industry analysis at NPD. “That 16 percent non-netbook growth likely indicates about 50 percent of all December netbook sales were incremental and about 50 percent were cannibalistic.

But according to a new NPD report, A Snapshot Report on Netbooks, consumers really are confused about the functionality of a netbook. About 75 percent of consumers surveyed had never even heard of a netbook, and of the 25 percent of consumers who said they might buy a laptop in the next year, 70 percent said a netbook sounded like a good alternative. Memory (76 percent), operating system (69 percent), and processor speed (73 percent) were all high on the product attribute wish list for consumers who own, or are interested in, a netbook.

“Those figures are a clear indication that consumers are confused about netbook capability. If consumers see netbooks as an alternative to a laptop instead of an additional PC we could see cannibalization occur very quickly,” said Baker. “New features are already being introduced which may blur the line between netbooks and laptops even more. The netbook market is being redefined before it’s been fine tuned and that may cause even more consumer confusion.”

Source: npd.com