Smaller, Cheaper Laptops Take Trade Fair by Storm

When 17-year old Yuna Hua bought a new notebook computer for school, she chose a smaller, lighter and cheaper one to replace her bulky and expensive laptop. Like many consumers, Hua reckons she doesn’t need a $1,500 laptop for her everyday needs.

“It’s a lot less expensive and much easier to use and carry,” said Hua, a high school senior, who uses her notebook mostly for homework, surfing the Internet and games.

For around a quarter of the price of a regular notebook, PC makers such as Acer and Asustek Computer displayed simpler laptops—called Netbooks, or low-cost PCs—at this year’s Computex trade fair in Taiwan, hoping to open up a new market and bolster the fortunes of PC makers as an economic slowdown curbs spending. Market leaders Hewlett-Packard and Dell are expected to follow suit with similar ultra-portable models in the second half of the year, analysts said.

“You can easily double the market size of notebooks with this device,” Acer President Gianfranco Lanci told Reuters.

Some analysts say these low-cost computers, which range from 7-10 inches and weigh about 1 kilo (2.2 lbs.), could end up replacing regular notebook PCs, but they agree these new PCs have also opened up the computer market to more first-time buyers.

“There is now a huge population out there in emerging markets that can afford these laptops. They may be cannibalizing some of the current notebook market, but it’s also expanding the market very, very quickly,” said JP Morgan analyst Alvin Kwock.

Kwock added that global shipments for low-cost models should hit 10-15 million units this year, and selling prices would range between $300-$500.

But other analysts were not as optimistic.

“We think it’s just unrealistic. The notion of targeting these products to emerging markets is false, since most people there won’t be able to afford it, and the people who can would rather buy a traditional laptop,” said Bob O’Donnell, vice president, clients and displays, at data company IDC Corp.

Acer’s Lanci told Reuters he expected shipments of low-cost PCs to reach 40-45 million units in 2009, while chip giant Intel said it would not be surprised to see sales top 50 million units in 2011. Asustek Computer aims to sell 5 million of its Eee PCs this year, and 10 million in 2009, while Acer predicts sales of 15-20 million of its Aspire One laptops next year. IDC said growth is still strong in traditional notebooks, and only expects 3.5 million low-cost PCs will be shipped this year, rising to 9 million in 2012.

“We’re being extremely conservative on this market. I can see these products being attractive to students and women who want to be able to fit a PC in their handbag, but so far there’s just been an industry over-hype,” said IDC’s O’Donnell.

Buyers at Computex expressed interest in the new PCs as they crowded around the displays of small pink, white and blue Netbooks.

“I’d definitely buy it as a second PC, since it’s easy to carry around and the screens are much bigger than a Blackberry or PDA—its just easier to see,” said Florence Koh from Singapore.

Most of the new low-cost laptops, running on Linux or Windows XP operating systems, will be in stores this summer, and some analysts say they could resurrect a flagging PC market.

“They have set these products at a fair price range, and I can see many people finding it attractive,” said Jonathan Dee, General Manager of NetEssentials from Philippines, as he strolled down the aisles of the computer show.

According to IDC, notebook shipments, including low-cost PCs, are expected to hit 145 million units this year, up 34.5 percent from last year as consumer demand remained strong in Europe and Latin America despite a slowdown in the U.S. market. Growth for 2009 is seen slowing to 24.9 percent, hitting 181.5 million units, said IDC.

(Reporting by Sheena Lee. Editing by Louise Heavens & Ian Geoghegan)