There's a lot of milling around right now about the big slow-down in netbook sales. It's not looking good, especially if ALL you make is netbooks. But there is I think a more widely applicable and much more interesting phenomenon to be observed...
Lessee, where to begin? First, what's a netbook (from PC Magazine, where a number of other old friends first got their start in publishing)?:
A subnotebook computer in the $200 to $400 U.S. dollar range. The term was coined by Intel in 2008 for use with its Atom microprocessor; however, it is widely used to refer to small portables, no matter which hardware is used. Netbooks took off in Europe, but have also been popular elsewhere.
"Elsewhere" is of course what the netbook makers are banking on, as the EU isn't the biggest or most dynamic market. Critically, the One Laptop Per Child Children's Machine XO (AKA the laptop formerly known as the "$100 computer") is frequently classed as a netbook, and it's marketed only (well, almost only) in developing countries, theoretically to kids in schools, which constitute a big, big potential market. Other netbook manufacturers are similarly looking for sales in countries that are outside the OECD, as well as in OECD member states.
What's the main buzz, industry-wide? Basically, netbook sales have slumped badly, and opinionators are now trying to frame the causes of this slump.
But there are many facets to this diamond-hard problem that remain to be cracked. In the geek-focused segment of Public Radio International, the resident PRI opinionators hypothesized that netbooks, well, just aren't that good. (I summarize their points, because a transcript is unavailable):
- They're too small, so the keyboards are nasty
- They're don't have enough storage, so you can't play with your photos and tunes
- They're too small, so the screens are nasty
- They're slow, especially if they run Windows
- They're bigger and more powerful than your phone, but not by much
- They're smaller and more portable than your laptop, but not by much
The guys at FutureTense (and they do seem a bit tense) point to the real, emergent, and interesting problem, which is that the hardware spectrum is getting as crowded as the wireless spectrum: Given the proliferation of useful, Web-enabled, high-performance computing devices, NO product is going to face an undiscovered topography of potential users panting with excitement for its unique features.
(Just ask Apple. As early as January 2008 analysts [another word for opinionators] were asking if the iPod Touch was cannibalizing [their word, not mine] iPhone sales. And Apple, with the Touch, the iPhone, and a strong-selling line of notebook computers, has repeatedly said it's not about to launch a netbook.)
The FutureTense guys go on to suggest other long-term problems in the netbook market:
- At $300, a netbook price is too close to the lowest-priced laptops (e.g., Toshiba Satellite L305D for US $399)
- The same guys that buy netbooks also probably by iPhones and laptops, and use both of those items more
- Netbook manufacturers are absorbing 30 percent returns on sales
The last bit is the most important: users buy, they try, and then they box the netbook up and send it back.
And the pile-up of evidence suggesting that netbooks are, uh, a 'transitional" platform keeps getting higher: In this case, from Wi-FiPlanet.com, which posits in a headline that "Stronger Economy May Weaken Netbook Sales":
"People are not buying netbooks because they are truly desirable platforms, but rather because as low-cost PCs, they offer a good mix of features at an acceptable price point," said Matthew Wilkins, principal analyst for compute platforms at iSuppli.
That really does it. If you're a netbook manufacturer, you can watch your sales tank in Q1 of 2009 with a degree of equanimity, it's the worst economic crisis of your lifetime. But here you've got analysts saying, Look out, Netbook Guy, when the economy picks up NO ONE is going to be forced to buy your tiny-screened, monkey-keyboarded, slow pig of a memory-challenged laptop. No one.
But wait, there's more! (Oh no, you cry, feebly. More?)
Atanu Dey, brilliant, ICT-focused economic analyst of the Indian market, throws out the idea that the inexpensive, learning-dedicated OLPC device is completely inappropriate for the 100 million or so schoolchildren in India because, well, there are so many of those kids. Getting an OLPC machine in the hands of every child would cost--even if it's really cheap--way too much for a system that still can't figure out how to pay teachers appropriately and get an effective day's work out of them once they're paid. (See, if you're interested in backstory about inefficiencies in Indian schools, the work of James Tooley.)
What does that mean? It means that even when poised to enter one of the biggest micro-niche markets in the world (Indian schoolkids), a learning-dedicated netbook is still the wrong choice.
Bummer.