October 27, 2008 2:00 am

Netbooks lead computer growth

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A new category of miniature, low-priced laptops has quickly assumed a central place in the computing world, leaving some of the biggest technology companies scrambling to catch up.

Despite the downturn in the economy, an unexpected surge in global consumer demand for the machines, known as "netbooks" or mini-notebooks, has turned them into one of the hottest new consumer-tech products in years.

"We expect there will be shortages before Christmas," said Richard Doherty, an analyst at Envisioneering, a consumer technology research firm.

Demand for the devices "has been growing dramatically faster than we had thought", added Bob O'Donnell of IDC, another tech research firm. IDC is set to raise its forecast for worldwide sales of the new machines this year to 10.8m, rising in 2009 to 20.8m, or 11-12 per cent of the entire laptop market, he said.

With a smaller 9in or 10in screen, narrower keyboard, less computing power and a price tag of under $500, netbooks have emerged as a distinct segment of the laptop market since a spate of new models hit the stores over the summer months. Some have little storage capacity, relying instead on data and applications drawn from the internet.

The new netbooks are expanding the laptop market by making it more affordable for families to own multiple computers, according to analysts. However, they are replacing some sales of low-end laptops and could eventually take a bigger bite out of sales of more profitable machines.

The surprisingly rapid impact of the machines on the PC world was evident last week when Microsoft said virtually all the growth in new PC sales in the developed world in recent months had come from netbooks. Since the software company makes about half as much from selling its Windows operating system for the devices as it does for regular laptops, the shift dented its revenues.

Paul Otellini, chief executive of Intel, said earlier this month that the world's biggest chipmaker had been unable to keep up with demand for the new low-power processors used in netbooks, although he added that it expected to catch up before the end of the year.

Steve Jobs, chief executive of Apple, last week ruled out for now the idea of a miniature laptop from the maker of iconic consumer devices such as the iPod and the iPhone. "We don't know how to make a $500 computer that's not a piece of junk, and our DNA will not let us ship that," he said.

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