There is a lot of hype around the iPad, as with any new Apple product entering the market. There are some that say the iPad will kill the netbook market. Recent articles in InfoWorld and PC World both make the case that netbooks have just been given their death sentence or as Galen Gruman says in his article, "Apple has just fired the death shot at the netbook". I say not so fast....
Our recent CMB tech Pulse research paints a very different picture. In April we asked over 1200 consumers about their device preferences, which we will be talking more about in a press release next week. But it is worth noting that we saw 23% of netbooks users will replace their netbook with a tablet and 22% of tablet users will replace their tablet with a netbook. So at this point I say that's more hype, the reality of the entire netbook market going away is just not happening. Yet the iPad is threat, something to be careful of something to take note of in the consumer market. After all, netbooks entered the market as a consumer product and the iPad has certainly put a damper on the consumer netbook hype, but netbooks are making inroads to the B2B market. So I don't think the iPad or any tablet for that matter will kill the netbook market all together, but maybe it's time for netbook manufacturers to shift their focus the B2B market.
Personally, I think the iPad is more likely to kill the Kindle and other eBook readers and smartphones will have more of an impact on netbooks than the iPad. There's no doubt that the mobile computing landscape is changing, and we can always count on Apple to drive innovation and to shake things up.
Posted by Don Ryan. Don is a senior consultant for CMB's technology practice. Don is an avid tennis player and enjoys reading political commentary and spy novels.
CMB was a sponsor of the First Annual
Netbook Summit conference held in Burlingame, CA last week. As part of the conference I was on three panels covering future device directions, platform substitution and competitive developments. In listening to the panel discussions and talking with other industry insiders there was unanimous consensus that there is a future for netbooks, but that their dimensions, uses and features will evolve. Netbooks will also have to share the spotlight with tablets and smartphones for a share of wallet for both business and consumer users.
Indeed more than one analyst predicted the availability of the $100 tablet in the next year ushering in a whole new pricing threshold for client devices.
One thing everyone agreed on was that there will be greater fragmentation of the client device market. Intel will slowly lose its monopoly on netbook processors to Nvidia and AMD and alternatives to Windows 7 will drive new paradigms for the user experience. In a nutshell, look for more choice, lower prices and expanded use as devices, applications and operating systems are matched more precisely to specific user needs.
Download Don's presentation on Netbooks in the B2B Market
Posted by Don Ryan. Don is a senior consultant for CMB's technology practice. Don is an avid tennis player and enjoys reading political commentary and spy novels.
Next week I am speaking on several panels at the Netbook Summit in San Francisco. To prepare for the event I wanted to take another look at how consumer spending has changed in recent months and the impact of those changes on the purchase of electronics, specifically netbooks. We launched a CMB Consumer Pulse study and looked at the responses of 1200 US consumers ages 18-65.
Consumers say they have permanently changed their spending habits and are looking for lower cost alternatives. They also report they may never go back to their old spending habits; this will be an interesting trend to watch. Roughly 50% of consumers are continuing to spend on electronics, but spending less and 19% have moved to lower cost alternatives.
Netbooks have achieved fast penetration in the consumer market. The question now is do they get stuck at 10% penetration and be overtaken by tablets as the next big device. Widespread device penetration is usually measured in the 40% to 50% range. Price and cost considerations are still drivers of the netbook market, however, 23% of netbook users say they will substitute for tablets and another 24% for notebooks for their next purchase. Indeed, netbooks have the lowest repurchase rate of all devices. Expect netbook sales to remain strong, but do not expect to see the historical year over year growth rates. An improving economy may work against their value proposition, given that price and generic capability like connectivity options are driving adoption.
Posted by Don Ryan. Don is a senior consultant for CMB's technology practice. Don is an avid tennis player and enjoys reading political commentary and spy novels.
Not only does HP continue to acquire companies whose time is running out, but they are also extending their product lines to offer their customers more. 3Com may not have been the first networking company one would choose to acquire, but it did fill in gaps from HP's Procurve business. Similarly, Palm complements HP's iPaq phone line (new OS, touch screen technology, etc). What HP is showing is that
an acquisition does not have to be the best, but rather it needs to provide more scope within a growing market and new technology platforms from which they can build new products.
In fact, the HP acquisition may not be as much about the smartphone business as it is about other mobile devices like netbooks and tablets. There's no question about the importance of developing Web OS applications for all mobile devices. (See WSJ article for acquisition analysis).
In a recent Bloomberg News interview with Michael Cuggino, portfolio manager for The Permanent Portfolio based in San Francisco, he talks about the Palm acquisition being about much more than the smartphone business and thinks maybe HP can "unlock the real value of the Web OS and fill a hole in their product line." Cuggino also talks about the importance becoming an integrated entity and the breadth of product lines...
In the mobile device space it is becoming table stakes to have a full product line that spans device types, user interfaces and operating systems. The importance of having a robust product line is consistent with technology research CMB recently conducted on consumer electronic device preference and usage. One of the things we asked among a group of approximately 700 US consumers was which device would you replace your current device with when you make a new purchase.
What we found is that there is a fair amount of substitution especially between netbooks and notebooks and tablets and netbooks. Not surprisingly, most smartphone users would likely replace their existing smartphones with a new smartphone, but we did see that 15% will say they will replace their smartphone with either a tablet or netbook.
These shifts underscore the importance of a vendor having a full line of products to maintain overall device market share as consumers switch from one device to another. What HP has recognized is that it is not as critical what the brand is that they acquired, but rather having a new brand in the first place that offers consumers a viable choice when they do decide to switch.
I will presenting more of these findings at the Netbook Summit taking place May 24th- 25th in San Francisco. We hope to see you there!
Posted by Don Ryan. Don is a senior consultant for CMB's technology practice. Don is an avid tennis player and enjoys reading political commentary and spy novels.