Netbooks killing off sickly Windows PC sales - Page 2

I recently bought a MacBook Pro. When I was looking for a new Mac, I was trying to decide between an iMac and a MacBook Pro. I'm a big fan of desktops because I didn't really need the portability and wanted more computing power for my buck.

However, Apple's slowness in updating the iMac (as well as the fact that I'll be more mobile, and the fact that I can take the MacBook Pro apart to upgrade it) was really the tipping point for me getting a MacBook Pro. Granted, now that I have a notebook, I'm enjoying the freedom that comes with it. I can watch TV and surf at the same time Now I just need to find a way to wireless sync with my external hard drive to do Time Machine backups and I'll be all set.

However, I really sense now that Apple has shifted its focus away from desktops, which aren't selling nearly as well, to notebooks the iPhone/iPod touch. Once Apple starts selling docking stations for their notebooks (as opposed to just the cinema displays) then that might be the beginning of the end for their desktop lines (maybe not the Mac Pro, though).

That's an interesting way to think of it. This is a smart move by Intel, even if we aren't making much money in this market at least we don't give our competitors a chance at it either.

It'll be interesting to see how ARM responds. ARM has nothing to loose and may prove competitive.


That could be a way for ARM to compete. Continue to drive down the cost of netbooks while delivering similar performance. Cannibalization of cannibalization, Intel can only go so low.

MS is also worried about putting android on netbooks, hmm android, G1 app store, why even MS/ windows,linux at all?
the move will be to put a supported moble OS on netbooks that will use with 3g access, skype another convergence product.
iphone is MY netbook, what does a netbook do that iphone doesn't? (EPC does have a camera for video conferencing)

like i have said, give iphone BT keyboard support

Well as I said, (and as you quoted), I don't disagree with the facts of this article at all, merely the way in which it's "spun." I'm saying that the problem behind the bad numbers quoted at the beginning of the article have more to do with the recession, than product choices and that Apple's success at deflecting the recession has more to do with it's financial decisions than it's software/hardware. This in no way implies that there is anything bad about the value proposition in Apple hardware.

As for the "rich" tag, people can argue all day long about who's "rich" and who isn't, without coming to any agreement in my experience, but Apple is definitely a luxury brand no matter how you spin it. Regardless of how affordable or not any computer is to any particular segment of the market, Apple currently sits in that top spot, brand-wise. Try to name another exclusive brand of personal computer that is even more desirable than an Apple for example. Hard isn't it?

I don't see ARM working here. Perhaps you feel differently.

Atom works well here because it still is compatible with all the x86 apps. You can still work with MS office, surf the net and check email.

ARM isn't going to have that x86 app availability. I guess MS could port a version of office to ARM but will they? I don't know.

I doubt their are many people who are choosing between a $1500 notebook or a $300 netbook. Generally people are not looking over that wide of the price/performance spectrum.

At some point Apple's sales will slide, most people will attribute that to the economy, you'd have to be single minded to find a direct association to netbooks.

Proponents of netbooks like to say that the point of a netbook is web, email, and word processing. For these basic tasks ARM and Linux would work just fine.

Then add in however many millions of iPod Touches. That certainly puts Apple's "netbook crisis" oin perspective. If selling them makes sense some day, they'll do it. For now, netbooks don't hurt Apple... they hurt the Windows PC makers themselves, as they rush to compete with each other in cutting profits down to nothing.

Agreed, but Apple could still be in trouble from the netbook sector in that they may not be able to develop a true alternative in the right price segment.

The iPhone is "sort of" an answer to the netbook, but it's still a phone. It does not access your documents, and you cannot edit documents on it. It's a viewer.

The much rumoured Mac mini-tablet would be a clear "answer" to the netbook if it exists and if it is announced, but unless it is also a telephone, it won't be subsidised. It could be that Apple is delaying this product because they won't be able to make it appear in the crucial under $500 price range.

They may be faced with the deciding between eating some of their margin, (which they have never done and is the reason for their solvency), or introducing the luxury super-expensive netbook alternative in the middle of a recession. Tough choice.

I agree with you, I guess my point is a Mac isn't as expensive as it might appear from the price tag when you take a few years of flawless operation without any paid help into account.

But very few people calculate it that thoroughly. See how many iPhones are sold now that they are subsidized by the providers and the users bleed the price difference through their nose each month (and do so happily).
If this financial crises goes on throughout 2009 this could be Apple's weak point. They might not loose profitability as Apple is defending it's margins with all they have. But Apple might loose considerable revenue.

As to the BMW analogy: not a good one. BMW declined ~31% in revenue during January.

But users are rejecting Linux. Apparently the windows netbooks sell better and are returned less.

I don't know why, the lInux distros look great on a netbook to me. Much better than xp.

I never made a BMW analogy?

However I think more and more are making the initial cost v long term cost calculation. I have helped install Parallels on quite a few Macs for folks making the switch as yet another fat fee to fix their PC finally became one time too many. They even pay the extra for Parallels and a genuine Windows on top of Mac cost to be free of PCs. The need for Windows in this case is all due to our local MLS system not allowing anything but IE to work (yes I know Safari can pretend to be IE but it doesn't work in this case).

They're not maxing out the current 32-bit limit of 3.5GB, so it's obviously not the container that's the limiting factor. Remember that a lot of games are cross-platform and the PS3 and Xbox 360 only have 512MB of RAM each.

The same arguments popped up around the release of the PS3, when Blu-Ray was going to bring about a revolution to gaming. It hasn't. Very few developers were hitting the 9GB limit of DVD-9 before Blu-Ray came along and new developers can't truly take advantage because most games are cross-platform.

Having lots of RAM is great for running many applications and processes simultaneously. Games by their very nature are a single application and don't benefit from more RAM after a certain point.

But anyway, this has veered away from the original point I was making. Gamers right now don't benefit from the 64-bit variants of Windows. Even if you want to argue over the details, they certainly aren't the ones who benefit the most, as the original author claims.

Their is another option. Apple can be patient and see how the PC makers fair with their race to the bottom. To continue to make cheaper and cheaper machines is not sustainable in the long run.

Yes I agree, when netbooks are running Windows 7 and Ion chipsets, that should bring things back in favor for MS.

But their is room for ARM and Linux to achieve sales based on being good enough and undercutting price.

When Apple went from PowerPC to Intel in 2005, Jobs explained that the future was mobile. So the focus shifted long ago, altho the iMac and Mac Pro will continue to be made. (Ironically, Apple is turning more to ARM-based chips for its handheld mobile; I'm sure Intel imagined themselves as the future iPod/iPhone CPU.) With regard to the Mac Pro, Apple must always have a high-end machine to maintain its premium brand perception.

As for docking stations, don't hold your breath, as long as Jobs is CEO. In the Apple aesthetic, the display is the docking station.

This is the reason why I think MS will release Win 7 this fall (Sep-Dec). Win 7 runs on netbooks with just 1GB of memory while Vista doesn't. Doing so will allow MS to kill XP and force OEMs to start releasing Win7 netbooks. Plus, they can't afford to waste the opportunity of the holiday sales.

It's not a matter of they want to, but rather, they have to release Win 7.

My takeaways from this article are:

1. $300-500 XP/Linux-based very-low-to-no-margin Netbooks are significantly cannibalizing $600-900 higher-margin Vista-based notebooks. Vista's "advanced" features and better hardware performance haven't been enough to stop this. Chip sales (a forward-looking indicator) shows PC mfrs believe this trend will continue and even accelerate in the coming months.

2. By refusing to release an OS X netbook, Apple won't allow OS X netbooks to cannibalize $900+ very-high-margin OS X-based notebooks. Rather, Apple offers a $200-400 good-margin iPod touch to the consumer with truly low-end Internet or very-high-mobility needs. Thus, Apple is forcing the consumer to choose from a continuum of iPod touch to XP/Linux netbooks to OS X notebooks, and counting on the AppStore and OS X "brands" to shift consumers downmarket or upmarket. (Apple has said that Mac owners delay purchases rather than switch away, so Apple is mostly appealing to non-Mac owners who are considering switching.)

In Q4 08, this seemed to work out okay for Apple; iPod touch sold very well and although OS X notebooks have surely lost some sales to netbooks, there was still y-o-y growth. However, all of the above propositions still need to be verified by empirical evidence during this quarter and next. If Apple sees potential switchers turning to netbooks, it has already said that it has some ideas in this area - which no doubt means that a product decision (to manufacture or not) isn't far behind.

3. As for Snow Leopard and Win 7, that is forward-looking. MS needs to deliver Win 7 to increase profit at the low end as OEM XP is very cheap, and also make Win 7 higher-margin notebooks more attractive (at a minimum, just getting rid of the Vista negativity). In contrast, Snow Leopard aims to significantly enhance OS X notebook performance - 64-bit and Grand Central - thus enabling Apple to keep $900+ high-margin notebooks differentiated from Win 7 notebooks and netbooks.

Personally, I think Apple will definitely have a mobile product in the $500-600 range (cheaper upfront if it has cellular and is subsidized) before next Christmas. They just need pieces like Mobile Me to grow its capabilities further in order to make that product really work.

The question is how much damage control is possible.

Sure, the new OS will run on the netbook so no XP necessary but unless they somehow manage to charge more for it they'll earn way less per sold machine than they're used to.

We're finally at the point where the price of capable hardware is so low that even moderately priced software looks expensive in comparison.

For a linux netbook it doesn't matter as much. WindowsMobile is what might run on an ARM netbook vs Linux and I guess Office Mobile.

Folks that want/need full windows will go Atom. Folks that just want a web browser and email might go ARM/Linux.

Apple markets Macs and the iPhone/iPod touch to SMART people.

When it's YOUR money and money is tight, you think differently and spend differently. You spend smartly, or try to. The rich have different concerns and priorities.

Smart people value a good, solid, reliable, trouble-free product that's well designed and has a history of retaining a high resale value. There are enough smart people who realize that a generic PC box running ANY variant of Windows is NOT trouble-free, even at work with a full-time IT staff. These are the switchers.


We long-time Mac users have been ALWAYS been smart.

People return linux netbooks because they aren't exactly like the windows PCs they're used to. Most people hate having to learn something new in order to perform tasks they're already familiar with. If people didn't feel they were being forced to learn the new UI of Vista and Office 2007 they wouldn't do it. Fact is many people would lose their jobs or not be able to get one if they refused to accept everything Microsoft dictates.

I guess so. <shrugs shoulders>

Linux doesn't seem *that* much different IMO. If you can operate a drop down menu it would seem to me that you could work a Linux netbook. The OEM has done all the hard work as far as installing the drivers to get the thing to run.

I guess its a hassle to install a driver to get a printer to work but you still have to do that with xp as well.

And good luck with that half the time

Agreed. My wife just made the switch from PC to Mac based one primary point - she was not going to work with Vista.

A couple of things haven't been said so far (thanks for the great posts):
1. Rich people get rich because they consistently spend less than they make - hence the idea that Apple appeals to "rich" people is absurd. The reliability factor and ease of use is a huge factor and this has been well pointed out in previous posts.

2. Video - they is a huge push to video. I don't have a netbook and no idea of how well it handles this yet the MBP is amazing. Video will become more and more important for communication and entertainment.

3. Smart people like things that work and pay extra for them. I drive a BMW and do so for a variety of reasons - it just works all the time and the engineering is excellent. I like things that work. I still drive my 17' G4 PowerBook (running Leopard...well, a fast trot actually) and expect to keep it around for a backup once I get a new MBP. Money is tight yet the service, design, ease of use, and reliability is what makes my life easy.

4. And for something completely off topic, the reference to "Bush's 1%" needs to change to Obama 1% since we've upgraded from Bush 2.0 to Obama Alpha.

This is the whole point though. A part of the reason that Atom runs slower and consumes more power than ARM equivalents is that it needs to emulate x86 code (although it's also inherently slower.)

The new ARM chips are over 100 times more energy efficient and about 20 percent faster at executing code at the same MHz than the Atom last I heard. They also take up far less space physically. Those are all huge benefits to a mobile device.

Unless you need to run Windows, ARM has already beat Atom into the ground and it isn't even available yet!

Remember also, that its' not necessary to run Windows just to open and edit Microsoft documents. The webOS, OS-X, Linux, etc. are all capable of doing this, and they all run on ARM.

Interesting thread(s)...

There are several different arguments going on here. As for the viability of the Apple business model during the next year or so of recession, compared to its competitors is one, the future of netbooks and cloud computing is something different.

Today, the argument goes, many people since satisfied with netbooks since those people do little more than read email, browse the Web, and manage relatively simple documents. But is that not because the clients required to do those tasks, using a 25 year-old paradigm (keyboard, mouse, graphic display) are well within the capabilities of netbooks and the bandwidth available is relatively up to the task.

Few of us have the vision to see clearly the next paradigm--touch screens and voice recognition are merely glimpses of what is to come. How much of that paradigm will need be built into the OS, how much in the client software, how much in the client hardware remains to be seen. Today's move towards thinner client-side software/hardware may not be appropriate in the future--the only surety would be that the processing hardware will continue to shrink even as it continues to grow in capability.

Another facet of this is the continued growth of the computing platform into the home entertainment arena. DRM notwithstanding, today's balance between the client and the cloud may not be appropriate or desirable in the future, should the industry find new ways of leveraging home processing power in order to reduce overhead in other areas (new and more powerful codecs to reduce bandwidth requirements for HD streaming?).

All of this to say that I see the netbook as chasing yesterday's problem, not tomorrow's. And if Apple is known for anything, it is figuring out where the industry is going next. If Snow Leopard is meant to clean up OS X, where will the next cat take us? The only thing of which I am relatively certain is that my shiny new MacBook will be able to run it and that it will likely push its currently relatively idle Core 2 Duo and 9400M closer to their limits.

According to some recent numbers, 40% of the browser hits coming from Apple mobile devices are coming from the iPod Touch, a high-priced non-subsidized iPod. And starting at $229, it's at the low end even for a netbook.

So you can check your email, do a little web browsing, play some games, listen to your music, and watch some TV and a movie or two, all on a pocket-sized device that costs less than the average netbook.

Sounds to me like they're competing just fine.

All they really need to add, IMHO, is a Touch with the screen size (and battery) bumped up from 3.5" to 5". That would be a killer media/book/game device.

Personally, I disagree with the entire premise. Netbooks are not eroding PC notebook or desktop sales to any significant degree.

First, the type of person that is going to buy a netbook for his main computer is probably the same person who would have bought the cheapest notebook or desktop anyway. Machines that already run on the thinnest of margins. After all, does it make a major difference to Dell if they sell you an Inspiron mini 12 ($399) or their cheapest Inspiron 518 desktop ($329)?

Second, from my perspective a large number of netbook owners are buying them as SECOND machines, argmenting their existing notebook or desktop use with an additional small and light portable device. A use for which they would not have purchased a notebook anyway.

In which case netbooks are working to expand the market, not shrink it.

Its not just windows.

Many osx apps are intel only (x-86). And as time goes on its likely to be more.
^^^
Should be 'some'

Something like a thin paperback? I'd like one.

So a slightly different twist on the market share impacts. What about browser market share (vs OS market share) and the influence on web standards?

If a healthly percentage of netbooks are running Linux (of which I know next to nothing), what does this mean to web developers who are using MS proprietary tech for their web sites? Will this push them to use official web standards more? Or are these proprietary technologies also available on Linux?

One organization I work with recently had their web site completely redone, and the company they hired used so much proprietary crap that parts of the site are unusable on Safari. None of the new functionality was anything that isn't done by many other sites which work with Safari, so it's nothing special. Just proprietary.

Besides MS technologies, what is the status for support for things like Java, Flash, etc? Will lower powered netbooks encourage these technologies to be less resource dependent, or will netbooks drive more use of JavaScript (like the iPhone)?

Yet these are cheaper than netbooks.

A netbook does not necessarily have to be a low-margin product. Apple could sell a $600 netbook that would probably match the MacBook in profit margin, and generate higher profit per unit than an iPod Touch. All the arguments about Apple not having to compete against cheap Windows notebooks on price would also apply to cheap netbooks, if Apple decided to release a netbook.

I think all this talk about profits is missing a couple of points. Apple may be able to maintain profit margins going forward, the question is whether unit sales will be affected by its product mix. And if unit sales were to drop significantly, could Apple earnings per share drop (or even go into the red) as a result of declining revenue against operational expenses. Even if Apple's EPS were to drop over the next few quarters, it wouldn't mean anything bad for the company, only the shareholders and stock price. Apple the company and all of it's product lines would be absolutely fine.

I think Apple probably imagines that it's typical customer would buy a MacBook and an iPhone/iPod Touch to go along with it, rather than a MacBook and a MacNetBook. The advantage of selling an iPhone/iPod Touch over a netbook is that it can't substitute for a real Mac. But again, ultimately it's also going to come down to product mix and unit sales. You can't extend this line of thinking indefinitely, otherwise you could argue for Apple to even drop the white MacBook. I guess some people here might think even that would be a good idea, but most probably wouldn't. The Apple Price-Demand curve is not infinitely elastic.

The most significant aspect of Apple's product strategy is not limiting customer choice and funneling them towards unnecessarily expensive products, it's in providing greater utility value to offset somewhat higher price tag. And they have done that with everything from desktop computers to sub-$100 iPod Shuffles.

Yes, but what's wrong with that (for the time being)? Even the highest-priced MacBook Pro uses the same 25-year old paradigm.


Yes, Apple has definitely been ahead of the ball. Suddenly everyone wants to do an App Store, and every phone maker has touch screen phones with big screens. What a coincidence, huh? I would never advocate that Apple choose netbooks over developing brand new products, interfaces, applications, etc. I don't think it necessarily has to be an either/or thing though. Apple could bang out a netbook pretty quickly while still working on next-gen products, although I can still understand why they might choose otherwise.


Well, not if that brand new thing obsoletes the ancient paradigm our Mac notebooks are based on. Ultimately I think it's also a very practical issue. After all, netbooks are basically a product category based in practicality. It's great that hardware has advanced to the point that a sub-$500 notebook computer can handle the majority of most users' needs. That is still true for even OS X, it's just that you'd be buying a used iBook or PowerBook, vs. a netbook.

In fact, the economy may actually be prompting Apple to keep its product line more focused. Keep overhead at reasonable levels, which means not being able to develop and support 1 more notebook line.

Apple most certainly does cater to the average consumer. Who do you think is buying up all those iPods, including the Touch (or the iPhone for that matter)?

I was debating myself between a netbook and a Touch, opting for the Touch. I got the base model and for a good price which allowed me to pick it up for significantly less money than a netbook, any netbook.

Netbooks are not really good machines to be doing significant work on. They're too underpowered, generally have smallish, hard-to-use keyboards, screens too small for working with video editing, doing higher-end photo work in programs like Photoshop, etc. and usually don't come with a lot of memory. In other words, they're really best suited to surfing the net, checking email, playing the odd video, etc. But here's the thing. The iPod Touch happens to be a very good device for such uses and it has netbooks beaten on several fronts. Battery life is better because it's a significantly smaller device. It's far easier to lug around than a netbook and has a killer app associated with it thanks to the App Store which makes buying and loading programs onto the device a very easy and fairly inexpensive process.

Myself, I think, Apple would do just fine by ignoring the netbook category mainly because they have a better solution in the iPod family of products. All it would take to seriously outdo the whole netbook segment would be to add another iPod to the mix with a somewhat larger form factor (maybe go to a 5-inch screen and add bluetooth) and continue to evolve the line as the company has been doing all along. If that addition to the iPod family came in at a netbook price point, it would make a lot of sense for many consumers as an alternative.

After a few weeks of enjoying my Touch, I have to say that for a lot of consumers, the device would undoubtedly gets the job done and can be bought for less money, so why opt for any of the netbook offerings out there? The main thing is, you look at what you want to do with the product and consider your options. The Touch really does fill an important niche far better than a lot of the netbook products being hastily brought to market by other computer manufacturers.

I have the best of both worlds with a desktop set-up that allows me to do more demanding work off a 32-inch monitor (a base mini that cost me well below $1,000 attached to a Sony that I use as my TV as well) and a Touch that allows me to do assorted stuff on the go.

I'm not exactly bringing in lots of cash but Apple has products that are affordable for me and offer more elegant solutions all around compared to what other manufacturers do. You don't have to spend thousands on a Mac Pro laptop and set up a Mac Pro tower on your desk to take advantage of Apple's superior products. There are affordable products available from Apple and they offer good value all things taken into consideration.

Maybe I'm not the typical customer. I can't say. But at the risk of sounding like an ad, I have to say that for me personally, Apple has managed to provide affordable solutions that are a pleasure to use.

iPhone/ touch +BT keyboard connection+ap store =netbook lowest cost netbook maximum satisfaction
we already have the new paradigm mobile convergence tool

I think you are wrong on that, but whatever.

The point is that chips that run x86 instructions are not necessary for mobile platforms unless you are running a variant of windows as the mobile OS. Atom will almost certainly be restricted to windows UMPC's and a few "also-rans," and the new ARM chips are much faster and more efficient than Atom for mobiles.

I agree that in a handheld device, where the ability to run x-86 apps isn't that beneficial, ARM is a worthy if not superior chip.

But netbooks still are 'real' computers and the ability to run office and especially word processor app is pretty important. Now if cloud computing and Google docs takes off then ARM looks all the more attractive in a netbook.

I guess I see netbooks as a more general purpose computer than perhaps others do.

Except that Moorestown is Intel's entry into the lower power market at 1/10 the power usage as silverthrone (menlow). It's not like Intel wasn't an ARM manufacturer and unaware of ARM's advantages and disadvantages.

Arguably it should have been the year of the MID (if you look at articles from this time last year) and not the year of the netbook...but MIDs haven't broken out like the netbook. And as much as Intel loves the idea of MID, they've always known that Atom would have been crushed by ARM in the market.