Dell: Netbooks won't replace laptops

Netbooks may have won over many users with their relatively low cost and small size, but Dell Inc. doesn't see the lightweight machines ever replacing laptops with more powerful processors inside.

"There's been some over-exuberance on this product in the marketplace," said Steve Felice, president of Dell's consumer and small and midsize business unit, during a conference call with reporters.

"Some of our competitors have positioned [netbooks] as a replacement device, and then you see feedback from customers that are disappointed when they gave up their notebook for a netbook and find that it's not quite as fast or doesn't have quite the same functionality," he said.

Waning enthusiasm for netbooks in favor of more powerful laptops was reflected in processor shipment figures reported by research firm IDC in April.

IDC's numbers showed that Intel Atom processors -- the chips found in most netbooks -- represented a lower percentage of all processors shipped during the first quarter of 2010 than they did previously. Atom's share of the market fell to 20% from 24% during the previous period, even as the overall volume of processors shipped rose by 4.1%.

Dell views netbooks as a complement, and not a replacement, for laptops, saying users shouldn't rely on netbooks as their primary computers, Felice said, calling the company's netbook sales "healthy."

"We think we're selling the appropriate number of these products to the appropriate set of needs," he said.

Stronger demand for computers meant the first quarter was good to Dell. The company's first-quarter revenue rose 21%, to $14.9 billion. Profits were also up, rising 52% to $441 million.

The company did particularly well in emerging markets like India and Brazil, where its revenue rose 90% and 81%, respectively. Dell's sales in China rose 44%.

"We were very pleased with the overall performance of Dell," Felice said.

Even Dell's consumer business, which is typically one of its areas of weakness, did relatively well, with revenue up 16% over the same period last year.

"We had a good first step in our recovery of this business. We were able to grow revenue 16%, but at the same time increase unit share around the world and also do it with increased profitability," Felice said. "We have more work to do here from a profitability standpoint, but it was certainly the right step."

Copyright © 2010 IDG Communications, Inc.

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