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Mini Notebooks Proliferate In 2009

Small is the new big. If anything, that’s the message we can glean from the rapid-fire introductions of small-form-factor notebooks that have been hitting the shelves from one manufacturer after another in the past year. Asus may have gotten the ball rolling in 2007 when it launched its first Eee PC, but ever since it seems more and more of its competitors are picking up that ball and running with it — a trend we’re clearly going to see continuing in 2009.

As Paul Moore, mobile product management senior director for Fujitsu Computer Systems, put it: “In the computer industry, we’re followers. If someone does something [and] it looks good, we follow. Acer launched it, it sold well, [now] we all jump on the bandwagon.”

Moore said he expects Fujitsu to introduce its own netbook product later in 2009. This month, however, Fujitsu is launching a special limited-edition version of its U820 (see picture on cover). This device has a small form factor similar to that of a netbook, but its price point (starting at about $1,000) and its expanded capabilities push it firmly into the ultraportable notebook category. The basic U820 launched in late 2008 as a follow-up to Fujitsu’s first ultraportable, the U810, which launched in 2007.

Samsung entered the U.S. PC market for the first time in October 2008 with the majority of its offerings priced more than $1000; the exception was its netbook, the NC10 which carries a suggested retail of $499.

At the time the company’s U.S. PCs first launched, McFarland told TWICE that the company planned to enter the marketplace slowly, and that it planned “erupt” into the U.S. market in 2009. This plan, according to our latest discussion, appears to be on track.

McFarland said that his company’s netbook has been “doing well” so far. “The overall response has been great. The netbook has generated a lot of traction and sales have been doing well. Our big introduction in the U.S. market will not be at CES but more into the second half of 2009,” he said.

As for the category overall, McFarland said, “As stated, sales have been off the charts. It’s too early for us to determine if this high sales rate of the netbook is due to cost and the economy or [if it is] that the customer really understands who they are and knows whether they are a netbook user or a notebook user.”

He continued, “Our biggest challenge is making sure that [the] message we provide to the customer is very clear.” He said without that level of clarity, a netbook maker runs the risk of having their product confused with traditional thin-and-light notebooks.

Fujitsu’s Moore told TWICE that he wonders what the return rates on netbooks are. “I don’t know, analysts don’t know,” he said.

“Based on the price point, people may not return. [There is] no way to gauge if people are content with them [due to the] lack of return rate data.”

The inconsistent terminology that has been used to describe the evolving category is one particular area that Moore feels has the potential to breed consumer confusion As he pointed out, terms like mobile Internet device (MID), netbook, mini-note PC and mini-notebooks have all been used somewhat interchangeably by different people throughout the industry to describe this emerging subset of notebooks.

Ninis Samuel, marketing strategy and programs director for Lenovo’s global consumer marketing group, told TWICE, “We do feel consumers now understand that netbooks are not full-function PCs. They don’t have DVD drives, large hard drives or high-end processors … We are already seeing data that shows our customers are buying netbooks as a complement to their main computer in order to perform light computing tasks in a more mobile and flexible environment.”

Lenovo launched its own netbook, the IdeaPad S10 in August 2008, and expanded the line in October with the S10e. The company plans to introduce refreshes of the line at CES by adding new functions such as its Lenovo Quick Start capability, which will enable users to access a few common applications within about 10 seconds after pressing the power button, alleviating the need to wait for the entire system to boot up. According to the company, these updated versions of the S10 will be available in March in two configurations with suggested retail prices of $349 and $399, depending on the specs, early this month.

Since the initial introduction in 2008, Samuel said, “we have experienced a considerable amount if interest from consumers who value its affordability and portability.” He described netbooks as products that are appropriate for various types of customers, but thought they would particularly appeal to families in need of a secondary inexpensive computer or “first-time PC users who currently can’t afford a full-function PC.”

Like most others, he also said his company saw high demand in the education market. “We see potential for students, teachers and education customers who are looking for an affordable access point into portable computing,” Samuel said.

Hewlett-Packard began its venture into the netbook space in the education market with a model targeted at that category in 2007. “As soon as we entered the education market, we saw a pull from other markets,” Carlos Montalvo, HP’s product experience marketing VP told TWICE. He said his company’s experience in that area showed them that the mini-notebook space “is much more than a niche.”

HP launched its consumer-targeted Mini-1000 in late 2008, with versions targeted at various segments of consumers. Its basic model retailed for $399 and a model featuring designs by fashion designer Vivienne Tam started at $699.

Montalvo said it will take the category one step further at CES when it unveils its 2140, targeted at small- and medium-business users. In all cases, Montalvo said “customers see it as a companion product.”

He said that while “the market is in its infancy,” he doesn’t view netbooks as the threat to the traditional notebook category that some in the industry feared they could be. In fact, Montalvo said he views netbooks as “accretive to the overall notebook market … It’s more of a step up from the smartphone experience than a step down from a notebook experience.”