Q1 chip sales plunge reveals slowing demand for netbooks

Demand will rise again ...

... once someone breaks the mould (and/or contract with Microsoft) and produces something radical, rather than conform to the utter blandness now characterising available products. As it is potential customers wonder why they should bother, whilst daydreaming of something better. Unfortunately for the Atom, any mould-breaking is looking likely to involve non Intel chippery, so the prospects in that particular regard remain somewhat bleak, for better or for worse.

Waiting for next revision

We've had the first round of netbooks and there are a lot of announcements already for what's coming next including Ion. With this much buzz around the next generation of netbooks being better it is understandable that buyers will pause and see what comes out.

Couple this with the current economy and the potential for 'bargain' pricing to attract sales.

RE: Cause they all suck?

You mean a proper laptop? Of course, with that kit you’ll have both cack battery and higher prices. I agree that they are all the same these days, and have grown to be too big, but with a rubbish resolution. My 5 year old Vaio has a 10 inch screen at 1280x800 and of a high enough quality that I can not only use it productively but also not get eyestrain. Of course, it did cost about six times the original Eee, or three times the newer Eee’s!!

Interestingly, if you have a look at what they are releasing in the Far East, you can see all sorts of machines not sporting Atoms, with stuff like detachable screens, and of the sub-10 inch size. Of course, it is doubtful any of these will see the light of day over here…

2 main reasons

It seems to me that there are two main reasons for a slowdown in netbook sales:

First and simplest is that the market for netbooks has been largely satisfied by the existing range, a known fact in my case. I'm really happy with my Aspire One and feel no need to immediately extend the family.

Secondly, I think the manufacturers have lost the plot. All the netbook buzz was generated by the advent of the small cheap computer (SCC). The term 'netbook' has arrived to conveniently hide the trend to getting larger and more expensive. I fail to see the point of most of the recent entrants on the netbook scene, might as well bung in a few more quid and have the convenience of a built-in optical drive.

Netbook != Atom

You can't conclude an overall decline in netbook activity by a decline in the sale of Atom processors. All you can conclude is a decline in activity for Atom-based netbooks.

With ARM_based netbooks coming soon, we may well see an increase in total netbook sales while Atom-based netbook sales drop.

Fad? Don't think so...

Join the queue at LHR T1 and watch the laptops being disgorged into the scanner. Last year, Dell, Dell, Dell, Vaio, Mac... This year, Asus, Samsung, you know the rest.

You can tell who's downsized, they walk taller. And they smile more; they run XP.

Yes, the portable computer formerly known as Netbook is here to stay.

Things were bound to level off...

This market was bound to level off eventually. No market grows infinitely large. That being said, there are some artificial factors at work here. The most significant one is the restrictions Microsoft places on netbook makers in order for them to qualify for cheaper XP licenses. Virtually all currently-shipping netbooks sport specifications that are at the Microsoft-defined limits and not beyond (though a few are below).

If last year's netbook didn't meet your needs in terms of performance, this year's won't, either. They're pretty much the same in terms of CPU, RAM, disk space, and graphics chipset. And if you bought one last year, the only difference this time is the color of the case or the form factor (generally speaking). There's no incentive to buy a new netbook if you already own one because it's not much of an "upgrade".

Netbooks are virtually as good as they're going to get until Microsoft ships Windows 7 (or Apple ships a netbook to compete, or netbook makers return to Linux - which I'd like to see but don't expect). Once that happens, they can look at dual-core CPUs, more RAM, larger storage, etc. Until then, netbooks are at their specification limits and we can't expect anything really "better". Hopefully pricing will stay roughly the same and specifications go up, otherwise (as has been noted here) the netbook will lose in favor of low-end notebooks with better specs.

Combine a leveling off of specifications, an increase in price range (as noted by others here), and a slow economy... a leveling off of netbook sales is practically guaranteed... Even a decline in sales would make sense. Once the "XP Limits" are removed, I think we'll see some very interesting stuff in the netbook space. In the meantime, expect a lot more of the same old thing... and a decline in overall interest.