Netbooks Bringing Down Revenue For Laptop Market - InformationWeek

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Netbooks Bringing Down Revenue For Laptop Market

While netbooks are driving increased laptop unit sales, overall revenue is down because netbooks are so inexpensive, according to a market research report from DisplaySearch.

Inexpensive netbook computers are driving down revenue for the overall laptop market, even as they increase unit sales for laptops, a research firm said.

In the second quarter, the overall portable PC market was $26.4 billion, up 10% from the first quarter but down 5% from the same period a year ago, DisplaySearch said in a report released Thursday. Strong growth in netbook revenue, 264% more than a year ago, drove their overall share of the mobile PC market to 11.7%.

Nevertheless, the low price of the netbooks, typically $300, was a major contributor to the overall revenue decline in the market year-to-year, the research firm said.

"Mini-notes have been a significant contributor to volume growth in the portable PC market as their very attractive price points make owning a secondary computer viable for many consumers," John F. Jacobs, director of notebook research at DisplaySearch, said in a statement. "However, the lower ASPs (average selling prices) of these devices are clearly having a negative impact on portable PC market revenue."

The average selling price for laptops in the second quarter was $688, 19% lower than a year ago, DisplaySearch said. For the rest of the year, the research firm expects continued decline in average price across all portable computer categories, which will likely lead to the first year-to-year drop in mobile PC revenue.

Netbooks are typically bought as second or third computer by travelers looking for a lightweight computer with basic functionality, such as Web browsing and e-mail. The PCs are also used by schoolchildren and are bought as a first computer in developing countries where people's computing needs are limited.

In addition, telecom providers offer the systems at a subsidized price in return for a two-year subscription to their wireless data networks.

In 2010, DisplaySearch expects netbooks to account for 21.5% of all portable shipments and 10.9% of total revenue.

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