Few IT products gain great favor with consumers when everyone is holding tightly onto their cash. But netbooks have had market success even as the economic downturn reduced spending by both commercial and retail customers.
As telecom operators in China aggressively push their new third generation (3G) services, sales of netbooks are in high gear, creating a new market for companies ranging from chipmakers to computer vendors and telecom operators.
Michael Yang, general manager of Dell China, estimates that the netbook will comprise over 12 percent of the company's sales this year as Chinese telecom operators promise to provide subsidies to buyers. "And according to our sales numbers in the first quarter, the estimate may be a little conservative," he said.
In April, Dell announced a partnership with China Mobile to provide customized netbooks that support China's homegrown 3G standard TD-SCDMA. The company said it is also in talks with China Telecom and China Unicom to launch similar products.
According to research firm IDC, shipments of netbooks in China only reached 510,281 units last year, but the market is expected to grow 277 percent this year to nearly 2 million. Antonio Wang, analyst from IDC, estimates that netbook sales will surpass 5.6 million in China by 2012 as demand in lower-tier cities and rural areas take off.
See Chin Teik, senior vice-president for HP Asia Pacific & Japan, said he expects netbooks will stimulate sluggish consumer demand and attract new users who may not be able to afford a full-sized laptop.
"We see it as a secondary device, not a replacement device," said See, noting that he did not worry that the increasing demand for netbooks would hurt sales of full-sized laptops.
See said HP is now talking with Chinese telecom operators to release customized notebooks, which he hopes will help enlarge the company's market share.
As a new gadget that sacrifices some of the features of a full-sized notebook but is much cheaper, portable and enables wireless Internet access as long as there is a cellphone signal, netbooks provide a good alternative for those notebook users who only need simple applications such as Microsoft's Office, Internet browsing and watching online videos.
The product sells from 2,000 yuan to 4,000 yuan apiece, compared with the average price of about 6,000 yuan for a full-sized notebook - not factoring in subsidiaries from telecom operators, which in some cases can surpass 3,000 yuan.
"Netbooks represent an exciting evolution of personal computing that has the potential to tap new markets due to their lower cost, portability and Web connectivity," said Robert Nalesnik, senior director of marketing at Broadcom Corp, one of the world's largest mobile chipmakers.
He said the product "should accelerate the portable computing trend and provide opportunities to a broader set of computer, chip and software companies".