Netbooks : Battered & bruised

If the news in the market is to be believed, netbooks are yet to make their ‘great leap forward’ in the retail domain. Further, with mobility solutions on the rise in the enterprise segment, solution providers are yet to consider it as a viable mobility option compared to BlackBerry and Push mail services.

However, market research as well as vendors have a different opinion on this. According to an IDC report, 1.82 lakh netbook units were sold across India in CY 2009, while in Q1 of 2010 alone, 97,000 netbooks were sold which implies the potential growth of this segment. Furthermore, according to Gartner, the tablet trend will get magnified as 55 mn tablets will be sold by the end of 2011. On the vendor front, netbook major Acer is also optimistic about the annual figure to cross 9.2 lakh units by this financial year with Asus stating about 33% y-o-y growth in the last two financial years.

On the other side, according to Acer, the tablet market, taken on the TAM index for OND 2011 alone, is predicted to vary between 25,000-30,000 units. Already reeling under lack of enthusiasm amidst majority of retail customers, as often complained by a portion of channel partners, netbooks have another competitor not from outside but within its segment. According to Dell, their netbook sales has seen a steady rate of acceptance among users mainly because of the portability, costeffectiveness and low power consumption. The company is of the view that the demand for netbook comes from the fact that it continues as a niche category for those looking for these companion PCs on travel, holidays and the like even as Dell sees a proliferation of devices in different screen sizes.

The tablet PCs, first launched by Microsoft way back in 2001 for more matured markets in Europe and the US-Canada region took a long way to make its foray into the APAC market. Apple iPad, however, took the lead in addressing the need for tablets and took the South East Asian market particularly Singapore and Malaysia by storm. However, its acceptance in India is still under question. Often price point has been stated to be the primary factor behind this phenomenon.

On the home front, netbooks have found its own market among enthusiast junior-level corporate customers and gamers who have transformed the concept of portability to gaming zones. “Among the primary customers for netbooks, the gamers curiously comprise one of the leading segments who have redefined netbooks by transforming them into powerful gaming zones,” said KL Lalani, MD, Lalani Infotech. In the gaming trend, tablets are yet to make its foray. However, preloaded games and apps substitute the consumer’s search for this space. Nevertheless, with the current tablet configurations on board, tablets are no match to netbooks or laptops in turning them into dominant gaming zones.

“Tablet PCs are a new genre that has just found its way into the Indian market so it is a little early to comment on its potential market in India. However, globally they are a great rage. Overall the market in India is very receptive to new technologies and there are some great tablets lined up by companies for Indian consumers,” added Basil Bernard, head, marketing (system business group), Asus India in support of the incoming tablet trend in India.

Tablets have often been looked from the consumption perspective rather than content creation. “Netbooks are primarily used as a data creation device and are the first choice for young professionals, students and housewives who prefer a lightweight computing device. The pricing benefit of netbooks also plays a key role in this category,” said Saji Kumar, head, product management, Acer India.

“Tablets are more used as an entertainment device with various market apps such as HD movies, preloaded games. It is for consumers who are always on the move and prefer to be connected to the cloud. Tablet PCs is an emerging category and is primarily used for content consumption than content creation,” Kumar added. Although the debate over media consumption and creation continues to echo as the prime factors differentiating the two major portable product lines, however, it makes little difference of opinion in the consumers’ purchase concern. According to a majority of channel partners, it is primarily the price and ‘value for money’ factor which plays the most important role for consumers for either a netbook or a tablet.

“Today, consumers not only expect cutting edge technology in a netbook that imparts total security to their sensitive data but also want the best cost to performance ratio. As technology changes, notebooks are being substituted by netbooks and now Asus is evolving in the latest Super Hybrid Engine (SHE) technology and many more. If you ask me, tablets are better than netbooks because they are portable, simple to use, reliable and efficient,” said Bernard.

According to Acer, for consumers who are ever eager to experiment with new technology, tablet PCs have been accepted as the hottest computing device now. Tablets would be well accepted among consumers as a second device and the current potential is from tier-1 cities. However, netbooks have been widely accepted even in smaller cities backed by a good acceptance record from educational institutions, home users and young professionals.

“Both our netbook and tablet offerings have received a good response from customers in India. The netbook has seen a steady rate of acceptance among users mainly because of its portability, cost-effectiveness and low power consumption. We see netbooks continuing as a niche category for those looking for these companion PCs on travel, holidays and the like even as we see a proliferation of devices in different screen sizes,” said Sanjay Yadav, country head, retail and distribution, Dell India. According to the company, in the tablet market, factors like greater exposure to the latest technology and a higher purchase power among young mobile professionals and GenY segments is driving adoption. Today, consumers are looking at the convenience of using devices that allow easy convergence of their digital lives with better portability, connectivity and entertainment features. This has lead to a huge convergence of user devices which enable consumers to easily connect anytime, anywhere.

“Being compact and lightweight, tablets provide a one-stop-solution for people who want to expand their ability to access their digital lives on the go, being able to consolidate all their entertainment and communication needs in a single device, which is extremely portable and versatile,” added Yadav. As companies continue to boast their latest technologies and product development in their quest to have a larger marketshare, price factor is poised to drive the growth for the tablets.

“Recently in the Hong Kong Fair, about forty odd manufacturers were showcasing their products in the tablet PC category based on Windows and Android platforms. With these platforms making their way into India and the prices of these tablets coming down at a dramatic speed, I think that tablets will definitely overtake netbook sales and shall see a 70% y-o-y increase in the portability space. I am, thus, considering to venture into tablet distribution too,” added Lalani.

Echoing the same about the future of tablets, Bernard added, “Personally speaking, tablets will take over netbook sales in the near future, as we see the technology is changing from keyboard to touchscreen. Likewise, netbooks are substituted by tablets, both are similar in some aspects, yet they are a lot more different. Tablet PC is lighter, portable and compact which increases the comfort level while using.” However, netbook major Acer which has the highest marketshare in this product line is of a different opinion clearly explaining the arrangement of these two distinctive product lines.

“We do not expect tablets to pose a threat to netbooks or any other computing device. Both tablet PCs and netbooks will co-exist in the marketplace as they have different target audience and functionality,” said Kumar.

Although Kumar agreed to the fact that the growth for netbooks is expected to remain flat in the coming years, tablets will continue to feature as an entertainment device. However, laptop major Dell has chosen to play its cards safely and has come up with product lines in both of these segments. As the next 5 years are poised to be important in deciding the market trend for both netbooks and tablets, the company is set to address each of these segments and their respective consumer verticals.

“We believe that mobility will dictate the form factor of computing devices in the years to follow. We expect to see a proliferation of devices in different screen sizes to meet different needs as accessibility of information-on-the-go becomes inevitable. Dell will therefore continue to work towards offering a host of choices to consumers so they may be able to choose the most relevant and convenient form factor or more than one device based on their needs,” said Yadav. “Tablets are a fresh line of products that are well accepted among the consumers as a second device is meant only for entertainment,” concluded Kumar.

As evident from the above statements, vendors are still different in their approach and opinion with Acer clearly stating the future of netbooks as a phase of stagnated growth. However, the situation for netbooks is not as bleak as it seems. “

Since ASUS created the Netbook segment in 2007 with the launch of the Eee PC, the demand for netbooks has been steadily gathering momentum and today almost 1/5th of all PC shipments worldwide consist for netbooks. We saw the netbook market grow by approximately 40% Y-O-Y in 2010-11. With the sales of affordable and stylish looking portable devices on the increase, we expect that netbooks will excel because of a steady demand from consumers in Tier II and III cities of India”, Bernard quoted.

For consumers who are tech savvy and is open to adopt the latest technological lineup, Tablets has been accepted as the hottest computing device. However, this is limited only in the metros and the current potential for tablets comes from the top 5-6 metros. It is to be noted in this case that Netbooks as a category has reached out to smaller towns in the B and C class cities and has witnessed better depth and penetration in T3 and T4 towns. Netbooks are also witnessing a good acceptance from educational institutions, home users and young professionals. 

While, Asus clearly favoring the tablets to end the era of the netbooks, Dell is preferring to take the ‘wait and watch’ approach developing both of its product lines. It is now left to the distribution and end-user market to decide on the success of the tablets or start the golden age of the netbooks.