Market Watch

Netbooks to Bow Out of PC Market Completely by 2015


After selling prodigiously early on, the end is near for the small, economically priced laptops

Once a white-hot PC product that sold in the tens of millions of units annually, netbook computers are now marking their final days, with the rise of tablets causing their shipments to wind down to virtually zero after next year, according to an IHS iSuppli Compute Electronics market tracker report from information and analytics provider IHS.

Global shipments of netbooks this year are forecast to amount to just 3.97 million units, tantamount to a plunge off the cliff given the harsh 72 percent falloff from 14.13 million units in 2012. The market for the small, inexpensive laptops had steadily climbed for three years from the time the devices were first introduced in 2007, peaking in 2010 when shipments hit a high of 32.14 million units. Since then, however, the netbook space has imploded and gone into decline—fast.

Next year will be the last hurrah for netbooks on the market, with shipments amounting to a mere 264,000 units. By 2015, netbook shipments will be down to zero.

Netbooks shot to popularity immediately after launch because they were optimized for low cost, delivering what many consumers believed as acceptable computer performance. Initially intended for light productivity tasks such as web browsing and email, netbooks eventually became more powerful, taking advantage of a mature PC technology that allowed cost-effective implementation of various functionalities. And though never equaling the performance of full-fledged notebooks and lacking full laptop features like an optical drive, netbooks at one point began taking market share away from their more powerful cousins.

The start of the decline of netbooks coincided with the introduction in 2010 of Apple’s iPad. The following year, netbook shipments dived 34 percent on what would become a trend of irreversible decline. The iPad and other tablets came in a new form factor that excited consumers while also offering improved computing capabilities, leading to a massive loss of interest in netbooks.

At the other end of the spectrum, high-end laptops were also making their appearance. Although much more costly than netbooks, they offered premium performance. Squeezed in between, netbooks could only pass off pricing as their strong point, losing out in other benchmarks that consumers deemed important, including computing power, ease of use such as touch-screen capability, and overall appeal. 

From the supply end of production, the major original equipment manufacturers of notebooks will have already terminated netbook production at this point. Whatever production is left is expected to be limited, or manufacturers will simply be shipping last-time builds to satisfy contractual obligations to customers.

The rest of the PC market: Set to rebound after a disappointing year

Total PC shipments this year are primed for a modest recovery after declining in 2012—the first time the market fell in 11 years.

PC shipments in 2013 will hit a projected 353.0 million units, up 3 percent from 341.3 million units last year. Earlier figures had pegged the 2012 PC shipment total at 348.7 million, but the decline appears to have been much worse.  

Mobile PCs retained the largest share of the overall PC market in the fourth quarter last year—the latest time for which full figures are available—compared to desktop PCs and entry-level servers. Mobile PCs had about 63 percent share, compared to 34 percent for desktops and 3 percent for entry-level servers.

Nonetheless, mobile PCs continued to be sideswiped by the ongoing popularity of tablets, and new Ultrabooks and similar ultrathin PCs have yet to take off to the extent hoped for by manufacturers.

Among the computer brands, Hewlett-Packard was No. 1 during the fourth quarter with a nearly 18 percent share of total PC shipments. China’s Lenovo was second, followed by Dell in third place, Acer in fourth, and Asus—which introduced the first netbook in 2007—in fifth.  

Landing in sixth place was Toshiba, which climbed one spot from the third quarter, sending Apple one rung down to seventh. Apple struggled during the last quarter of 2012 because of constraints related to panel supply for the company’s new iMac desktop system, which kept Apple PC shipments down.

In eighth place was Samsung, trailing Apple by a tenth of a percentage point, followed by Sony and Fujitsu rounding out the Top 10.

Read more >> PC Market Looks to Rebound from a Disappointing 2012