The Net Net of Netbooks

Netbooks have been one of the surprise successes over the last year. They have also been one of the most contentious areas of computing.

There are conflicting reports on most aspects of the sector – in terms of market share, rate of returns etc. - and it is easy to assume that it's all fad and fashion. Against that background, it's good to have some figures – any figures – that might throw a little light on this promising sector.

The price comparison site,, produces what it calls Consumer Behavior Reports; conveniently, a recent one asked users:

about their familiarity with and interest in performance-enhancing solid-state drives as they relate to this emerging netbook category.

The sample size is small (1,545) and the report short, but it contains some suggestive statistical nuggets. For example:

Tight economy drives popularity for low-cost netbooks. The average price of the top 10 netbooks on is $379 (see Table 1).

This attractive price point is important to the 57 percent of consumers surveyed who indicated that they made a concerted effort to cut back financially in the past few months. As consumers face a down economy they see netbooks as an attractive, low-cost option to complement a portable lifestyle.

That may sound a trivial result – that people like netbooks because they're cheap, and they want to save money - but it's not. One of the many hot issues surrounding this category is whether it is really distinct from that of notebooks.

Significantly, the current manufacturers of notebooks (and their components) are proclaiming loudly that netbooks are just small notebooks, and that the two categories will soon merge as the price of notebooks comes down. But what this latest market research suggests is that buyers will continue to seek out bargains *below* that of notebooks, and that they are quite happy to put up with a few missing features in order to save the absolute maximum.

This is not only bad news for notebooks manufacturers, who will be forced to take part in a “race to the bottom” as a Sony executive so memorably put it a year ago, but for Microsoft, too.

The only way it can compete in the netbook sector is by slashing its margins on Windows 7 (once Windows XP has been dropped). It may hold on to a significant chunk of this sector, but it will do little for its increasingly troubled bottom line.

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