Remember when IBM wouldn't make 386-based PCs because they'd cannibalise minicomputers? Well Compaq did, and IBM did eventually, and minis died, taking the likes of DEC with them.
Last week Ray Chen, president of
Analysts NPD say the average laptop price was $864 in 2007, $671 in 2008, and will be around $600 this year.
Does this have anything to do with the rising popularity of the netbook? Netbooks went to 8 percent of the portable market in 2008 from nearly zero, according to analysts IDC.
Last week Qualcomm CEO Paul Jacobs told The China Post: "It (the netbook market) could be substantially larger than the existing notebook market.When you get down to those lower price points, your addressable market expands very quickly."
And who precipitated this phenomenon? Why, Intel of course, with its Atom processor which has 85 per cent of the netbook market.
Now Intel used to like 50% margins but, last quarter, that had shrunk to 45%. Atoms are said to command 11 percentage points less margin than Pentiums.
If laptop prices continue to decline, Pentium margins will decline as well. Atom prices are pre-ordained to decline, as netbooks vie to compete at lower and lower price points.
Of course people will argue that netbooks don't do enough to take over from laptops, but analysts say they do enough for about half the laptop users.
While
Netbooks do more than people think:
Quick links are becoming more important than quick CPUs as more people use server-based (Cloud) apps.
And brace yourself for this one. The Indian government has launched Sakshat, an $11 laptop, as part of a plan to link 18,000 colleges and 400 universities across the country.
Sakshat, with 2G of RAM and wireless connectivity, will be used by students to tap into lectures, coursework and specialist help across
Sakshat was designed at the Vellore Institute of Technology, the Indian Institute of Science in
The most senior civil servant in
Sakshat means, 'before your eyes'. Is history repeating itself before our eyes? Is the laptop about to go the way of the mini?
isn't this just one of those divergence-convergence things we see so much of these days ? As phones & computers diverge so we converge on a new product category - netbooks & i-phones meet, just like we now have MPV/SUV's and home cinema systems. I think that is a more valid, relevant & topical comparison than the mini-comp vs PC story. I guess it shows that actually technology devt & product marketing works better these days. I think Intel are doing this very smartly. For me big question is what will happen with Intel vs. Qualcomm ? Scope there for speculation aplenty....
Spot on grumpy, did you see what Paul Jacobs told the Korea Times last weeK?
I repreat it here:
``What we are seeing is a convergence between communications, computing, consumer electronics, productivity, Web services and entertainment. All these things are coming together and we are positioning ourselves well to compete in those spaces with new capabilities on multimedia, processors and wireless technologies aimed at these different areas,'' Jacobs said in an interview with The Korea Times at his San Diego office.
'According to Jacobs, wireless connectivity will be required in virtually every device, whether in handsets, computers and consumer electronic products, something that could happen as quickly as in the next two to three years.
And Qualcomm's superiority in mobile and its broad technology coverage puts it in a good position to exploit the evolving market, and also in an inevitable collision course with Intel, the dominant chipmaker for personal computers (PCs), he said.
Qualcomm's new microprocessor chip, Snapdragon, embodies the company's ambitions for computer chips. Snapdragon, targeted for smart phones, laptops and other mobile Internet devices, guzzles less power than similar chips by Intel. '
The central issue is that the BRIC countries are essentially patent and copyright free zones. For years, few foreign companies filed patents there because of the cost, the relatively small market sizes and the perception that local courts would not enforce them. Now they are large markets with low respect for intellectual property. Result: products are sold for little more than the price of components and the resulting price pressure leaks into the developed countries.
This drive to the bottom on prices will destroy our industry and our careers. Netbooks add value on weight and battery life - they are worth at least $500. A tank of diesel costs me $100.
The electronics industry has to start lobbying hard for stronger patent rights and international patents enforcable in all countries.
Tom, surely the 'drive to the bottom on prices' is the force which has kept the IC industry and the electronics industry profitable and growing these past 50 years. If Moore's Law says that functionality doubles every 18 months while cost stays static, then surely a drive to the bottom is inevitable. In the 50s, 60s and 70s no one gave a fig for IP (AT&T sold transistor manufacturing licences for $25k a pop). IP wasn't seen as important because the force of Moore's Law was so strong that it drove terrific growth and expansion all by itself. Now that Moore's Law isn't delivering the same benefits as it did, then IP is becoming the differentiator. I agree. But protecting IP is a problem for governments - unless the IP is so cleverly encrypted, or impenetrably embedded in hardware, that no one can copy it. I don't think this is a problem which the semiconductor industry can't solve.
I would argue that the uncontrolled drive to the bottom on prices was never desirable and did not make the industry profitable but it was survivable for many years because of Moore's law. But now the deflation on electronics prices has gone totally out of control as factors like open source and China come into play and the sustainability of electronics in the west is in question.
How can you possibly make a laptop for $20 while paying a reasonable price for the intellectual property that makes it work? In the west an electronic copy of a textbook would cost you more than $20 - if you paid for it instead of downloading a pirate copy.
Maybe we should take a few lessons from pharma and movie studios on how to lobby government and make money from patents and copyright.
Tom, you are right, of course, but IP protection is always an imperfect tool, and the best way to beat foreign competiton is to run faster with the technology. I just hope we get to the next mainstream technology - whether it's CNTs, Graphene, Organic, Single Electon or whatever - before Asia. The West's general superiority in education (I don't think China and India have a single university in the top 400) should ensure that it gets to new technology first, and being able to do something better is a sounder guarantee of profitability than a patent.
Tom:
In principle I agree with you, I practice US patents are all but useless in controlling what a Taiwanese company sells to a Korean or Chinese customer.
Now if that Korean customer sells that product in the US than you can potentially get an injunction prohibiting importation of the product, but even that does not really help you.
Think about it: Do you believe for one second that the Korean company, whose product you are preventing from entering the US is going to thank you by buying your chips!
Sorry: But these days US Patents are tools which only benefit Trolls. Even the most famous Troll Q... is having no luck convincing the Chinese Bandit phone producers to part with any license fees. These phones are starting to leak out of China and into all BRIC and third world nations. Good news for Big M, but I'm not sure who else benefits...