Laptop Futures: Mobiles on Steroids or Notebooks on Atkins

Posted on June 6, 2008
Filed Under China Business, China Internet, Mobile, Wireless Networks |

Intel said the market for smaller, low-cost personal computers, some of which can fit in a pocket, could be as big as US$10 billion, driven by demand from emerging and matured markets.

The worldâ€™s largest semiconductor maker has launched its smallest ever processors - the Atom range - to power what it calls mobile Internet devices, as well as ultra-small PCs, called Netbooks and Nettops.

â€œItâ€™s a US$10 billion opportunity over some period of time,â€ Sean Maloney, general manager of Intelâ€™s sales and marketing group, said in an interview at the Computex PC fair in Taipei, referring to Netbooks and Nettops.

â€œItâ€™s a big opportunity for Intel and itâ€™s a big opportunity for Taiwan manufacturers,â€ Mr Maloney said.

Intel has already said it sees four market opportunities for Atom that could be worth US$40 billion by 2012: Atom chips powering Netbooks and Nettops; consumer electronics devices such as set-top boxes; mobile internet devices; and the embedded chip market, such as vehicles.

With the laptop war heating up in China, the whole mini-laptop (or Netbooks, or Nettops, or Mobile Internet Devices - MIDs, or Ultra-Mobile PCs - UMPCs, whatever…) trend is an interesting wrinkle. SCMP follows up with some juicy prognostications from IDC:

Worldwide computer shipments will rise more than previously estimated, driven by demand for ultra-low-cost and portable models, according to researcher IDC.

Shipments would climb 15.4 per cent this year, higher than a March estimate of 12.8 per cent, said IDC.

“The rise in our forecast comes from a few different areas. One thing to point out is that we are including ultra-low-cost personal computers in this forecast, which we did not before. Large [sales] rises were [seen] in Asia-Pacific excluding Japan and western Europe, mostly due to consumer-portable demand,” said IDC analyst Douglas Bell.

…IDC forecasts worldwide shipments of ultra-low-cost notebook computers will grow from fewer than 500,000 units last year to more than 9 million in 2012.

But with low average selling prices, worldwide revenues will be less than US$3 billion in 2012.

It’s bad enough that vendors are all piling into the notebook market. What was once a high-profit business is being squeezed as competition bites hard. Now a cheaper, even lower-margin option, is on the horizon.

I don’t have the crystal balls or entrail-reading skills of IDC, so I’m not sure it will be the big boom they so confidently predict. The success of MIDs is dependent on comprehensive wireless coverage. Without it they’re handy, but hardly worth lugging around. WiFi is all well and good, but if you’re tied to a location (or group of locations) to get online it quickly loses its utility.

However, that’s not to say that MIDs are only a blip on the horizon. The required wireless infrastructure has been built for China’s Olympic cities. As the great Chinese telecom rejiggering unfolds the new firms will roll out municipal wireless networks on various platforms over the next eighteen months. 3G flavors, WiMAX, municipal WiFi, whatever, the signal is going to be there.

That’s good for consumers, but the computer vendors will rue the end of an age. The high margins will erode and they’ll be caught up in a battle over a commodity communications device. Just wait until they have to compete against Nokia.