The Economic Cost of Netbooks
January 27, 2009 
1 Comment
Notebooks, as we know them today, used to cost thousands of dollars. With technology improvements, new manufacturing efficiencies, and economies of scale, computer costs have plummeted over the last few years. Where a computer was once a purchase as important as a car or large piece of furniture, computers are rapidly becoming commoditized as prices and feature differentiation declines.
Netbooks are the next evolution of this commoditization and, despite their relatively short time on the market, the effects can be seen already. The first effect is an obvious one: netbooks generally cost $300-500 and are dramatically lowering the average selling price of a notebook. Sure you could find $400-500 notebooks before, mainly during big sales, but those did not make up the bulk of sales. Especially in the past few quarters, netbook sales have surged and to a certain degree replaced the sales of larger, more expensive notebooks. You can see this effect with companies who saw an increase in units moved, but a degree in overall revenue.
But what about the companies behind the curtain? This same effect is taking place with Intel and Microsoft. As the dominant chip supplier for netbook systems, Intel saw a 50% increase in revenue with Atom sales while overall profits are down 90% year to year. Microsoft saw a 12% drop in OEM licensing revenue, which is in part due to the slumping demand in the PC sector. But don’t forget that the majority of netbooks don’t come with Vista, as they can’t run it satisfactorily, and thus come with Linux or XP. While XP earns Microsoft some money, it’s not as much as Vista and that’s starting to hurt their bottom line.
Right now the major players are saying that netbooks are incremental, revenue that they otherwise would not have gotten. But as the world’s economic situation flounders or even worsens, that won’t stay the truth and people will continue to compromise that first PC purchase or Junior’s school computer down to a netbook (or nettop for those that prefer something at a desk).
This is a guest post by T.J. Aaron from LaptopLogic.com – a great place to find a laptop for your specific needs. Head over to them to have a look at their reviews of ordinary and ultraportable laptops.
