Netbooks: Tabbed Out?

If the news
in the market is to be believed, netbooks are yet to make their
'great leap forward' in
the retail domain. Further, with mobility solutions on the rise in
the enterprise segment, solution providers are yet to consider it as
a viable mobility option compared to BlackBerry and Push mail
services.

However,
market research as well as vendors have a different opinion on this.
According to an IDC report, 1.82 lakh netbook units were sold across
India in CY 2009, while in Q1 of 2010 alone, 97,000 netbooks were
sold which implies the potential growth of this segment. Furthermore,
according to `, the tablet trend will get magnified as 55 mn tablets
will be sold by the end of 2011. On the vendor front, netbook major
Acer is also optimistic about the annual figure to cross 9.2 lakh
units by this financial year with Asus stating about 33% y-o-y growth
in the last two financial years.

On the other
side, according to Acer, the tablet market, taken on the TAM index
for OND 2011
alone, is predicted to vary between 25,000-30,000 units. Already
reeling under lack of enthusiasm amidst majority of retail customers,
as often complained by a portion of channel partners, netbooks have
another competitor not from outside but within its segment. According
to Dell, their netbook sales has seen a steady rate of acceptance
among users mainly because of the portability, cost effectiveness and
low power consumption. The company is of the view that the demand for
netbook comes from the fact that it continues as a niche category for
those looking for these companion PCs on travel, holidays and the
like even as Dell sees a proliferation of devices in different screen
sizes.

The tablet
PCs, first launched by Microsoft way back in 2001 for more matured
markets in Europe and the US-Canada region took a long way to make
its foray into the APAC market. Apple iPad, however, took the lead in
addressing the need for tablets and took the South East Asian market
particularly Singapore and Malaysia by storm. However, its acceptance
in India is still under question. Often price point has been stated
to be the primary factor behind this phenomenon.

On the home
front, netbooks have found its own market among enthusiast junior-
level corporate customers and gamers who have transformed the concept
of portability to gaming zones. “Among the primary customers for
netbooks, the gamers curiously comprise one of the leading segments
who have redefined netbooks by transforming them into powerful gaming
zones,” said KL Lalani, MD, Lalani Infotech. In the gaming trend,
tablets are yet to make its foray. However, preloaded games and apps
substitute the consumer's search for this space. Nevertheless, with
the current tablet configurations on board, tablets are no match to
netbooks or laptops in turning them into dominant gaming zones.

“Tablet PCs
are a new genre that has just found its way into the Indian market so
it is a little early to comment on its potential market in India.
However, globally they are a great rage. Overall the market in India
is very receptive to new technologies and there are some great
tablets lined up by companies for Indian consumers,” added Basil
Bernard, head, marketing (system business group), Asus India in
support of the incoming tablet trend in India.

Tablets have
often been looked from the consumption perspective rather than
content creation. “Netbooks are primarily used as a data creation
device and are the first choice for young professionals, students and
housewives who prefer a lightweight computing device. The pricing
benefit of netbooks also plays a key role in this category,” said
Saji Kumar, head, product management, Acer India. “Tablets are more
used as an entertainment device with various market apps such as HD
movies, preloaded games. It is for consumers who are always on the
move and prefer to be connected to the cloud. Tablet PCs is an
emerging category and is primarily used for content consumption than
content creation,” Kumar added. Although the debate over media
consumption and creation continues to echo as the prime factors
differentiating the two major portable product lines, however, it
makes little difference of opinion in the consumers' purchase
concern. According to a majority of channel partners, it is primarily
the price and 'value for money' factor which plays the most
important role for consumers for either a netbook or a
tablet.

“Today,
consumers not only expect cutting edge
technology in a netbook that imparts total security to their
sensitive data but also want the best cost to performance ratio. As
technology changes, notebooks are being substituted by netbooks and
now Asus is evolving in the latest Super Hybrid Engine (SHE)
technology and many more. If you ask me, tablets are better than
netbooks because they are portable, simple to use, reliable and
efficient,” said Bernard.

According to
Acer, for consumers who are ever eager to experiment with new
technology, tablet PCs have been accepted as the hottest computing
device now. Tablets would be well accepted among consumers as a
second device and the current potential is from tier-1 cities.
However, netbooks have been widely accepted even in smaller cities
backed by a good acceptance record from educational institutions,
home users and young professionals.

“Both
our netbook and tablet offerings have received a good response from
customers in India. The netbook has seen a steady rate of acceptance
among usersmainly because of its portability, cost-effectiveness and
low power consumption. We see netbooks continuing size="4">as
a niche category for those looking for these companion PCs on travel,
holidays and the like even as we see a proliferation of

devices in different
screen sizes,” said Sanjay Yadav, country head, retail and
distribution, Dell India. According to the company, in the tablet
market, factors likegreater exposure to the latest technology and a
higher purchase power among young mobile professionals and GenY
segments is driving adoption. Today, consumers are looking at the
convenience of using devices that allow easy convergence of their
digital lives with better portability, connectivity and entertainment
features. This has lead to a huge convergence of user
devices which enable consumers to easily connect anytime, anywhere.

“Being compact and
lightweight, tablets provide a one-stop-solution for people who want
to expand their ability to access their digital lives on the go,
being able to consolidate all their entertainment and communication
needs in a single device, which is extremely portable and versatile,”
added Yadav. As companies continue to boast their latest technologies
and product development in their quest to have a larger marketshare,
price factor is poised to drive the growth for the tablets.

“Recently in the Hong
Kong Fair, about forty odd manufacturers were showcasing their
products in the tablet PC category based on Windows and Android
platforms. With these platforms makingtheir way into India and the
prices of these tablets coming down at a dramatic speed, I think
that tablets will definitely overtake netbook sales and shall see a
70% y-o-y increase in the portability space. I am, thus, considering
to venture into tablet distribution too,” added Lalani.

Echoing the same about
the
future of tablets, Bernard added, “Personally speaking, tablets
will take over netbook sales in the near future, as we see the
technology ischanging from keyboard to touchscreen. Likewise,
netbooks are substituted by tablets, both are similar in some
aspects, yet they are a lot more different. Tablet Pcis lighter,
portable and compact which increases the comfort level while using.”
However, netbook major Acer which has the highest marketshare in this
product lineis of a different opinion clearly explaining the
arrangement of these two distinctive product lines.

“We do not expect
tablets to pose a threat to netbooks or any other computing device.
Both tablet PCs and netbooks will co-existin the marketplace as they
have different target audience and functionality,” said Kumar.

Although Kumar agreed to
the fact that the growth for netbooks is expected to remain flat in
thecoming years, tablets will continue to feature as an entertainment
device. However, laptop major Dell has chosen to play its cards
safely and has come up with product lines in both of these segments.
As the next 5 years are poised to be important in deciding the market
trend for both netbooks and tablets, the company is set to address
each of these segments and their respective consumer verticals.

“We believe that
mobility will dictate the form factor of computing devices in the
years to follow. We expect to see a proliferation of devices in
different screen sizes to meet different needs as accessibility of
information-on-the-go becomes inevitable. Dell will therefore
continue to work towards offering a host of choices to consumers so
they may be able to choose the most relevant and convenient form
factor or more than one device based on
their needs,” said Yadav. “Tablets are a fresh line ofproducts
that are well accepted among the consumers as a second device is
meant only forentertainment,” concluded Kumar.

As evident from the above
statements, vendors are still different in their approach and opinion
with Acer clearly statingthe future of netbooks as a phase of
stagnated growth. However, the situation for netbooks is not as
bleak as it seems.

“Since ASUS created the
Netbook segment in 2007 with the launch of the Eee PC, the demand for
netbooks has been steadily gathering momentum and today almost 1/5th
of all PC shipments worldwide consist for netbooks. We saw the
netbook market grow by approximately 40% y-o-y in 2010-11. With the
sales of affordable and stylish looking portable devices on the
increase, we expect that netbooks will excel because of a steady
demand from consumers in Tier II and III cities of India”, Bernard
quoted.

For consumers who are
tech
savvy and is open to adopt the latest technological lineup, Tablets
has been accepted as the hottest computing device. However, this is
limited only in the metros and the current potential for tablets
comes from the top 5-6 metros. It is to be noted in this case that
Netbooks as a category has reached out to smaller towns in the B and
C class cities and has witnessed better depth and penetration in T3
and T4 towns. Netbooks are also witnessing a good acceptance from
educational institutions, home users and young professionals.

While, Asus clearly
favoring the tablets to end the era of the netbooks, Dell is
preferring to take the 'wait and watch' approach developing both
of its product lines. It is now left to the distribution and end-user
market to decide on the success of the tablets or start the golden
age of the netbooks.