Netbooks the way to go in '09
More consumers are using these ultra-portable PCs as their second mobile computers, and 2009 might be the year that the gadgets become a mainsteam item in Singapore.
By Winston Chai
2008 will go down as the year the ultra-portable personal computer (UMPC) became a mainstream item in Singapore.
But its rising popularity could create fresh challenges for an industry already confronted by thinning margins and cut-throat competition.
In the past 12 months, computer makers have successfully carved out a new market segment to spark consumer demand, as PC ownership started to show signs of peaking in some countries.
One after another, PC manufacturers and even smartphone makers introduced UMPCs - pint-sized, lightweight laptops that are touted as secondary PCs for the tech-savvy.
The growth of UMPCs, also referred to as netbooks, lifted shipments of laptops past those of desktop computers for the first time in the third quarter of 2008, according to a report released last week by iSuppli.
The California-based research firm said 38.6 million notebooks were shipped globally in Q3 last year, up almost 40 per cent from 2007.
In contrast, desktop shipments fell 1.3 per cent in the same period to 38.5 million.
'Consumers are quickly moving to netbook computers as their second mobile computers,' says Lim Teck Sin, director of product marketing at Fujitsu PC Asia-Pacific. 'They can potentially become the primary mobile computer.'
According to Howie Lau, general manager of Lenovo Asean and Korea: '2008 has been a big year for the PC industry as we saw a surge in the 'smallest', 'lightest' and 'thinnest' offerings. We opened 2008 with our entry into the global consumer market and a short six months later we moved into the netbook market as well.'
Fujitsu became the first Japanese PC maker to throw its hat in the UMPC ring when it launched its M1010 netbook in August last year, while Lenovo entered the fray in the same month with the S9 and S10.
They have been joined by a growing list of competing offerings such as the new Mini-note from Hewlett-Packard (HP), Dell's Mini-9 and Acer's Aspire One.
As testament to the fierce competition, these companies, with the netbook's early backers - Asus and MSI, were fiercely touting their UMPCs at the Sitex tradeshow in Q4 last year at prices ranging from $500 to $1,000.
Local telcos were even dangling UMPCs as free gifts for consumers who signed up for long-term broadband contracts.
Although netbook sales are rising rapidly, market watchers say their ascension to the mainstream could cannibalise revenue from other computer products this year, particularly entry-level notebooks and desktops.
'We cannot ignore the possibility of lower-priced netbook computers making their entry into the target market segments of entry- level mainstream mobile computers or desktop computers in the coming quarters, which will lead to faster price erosion for mainstream mobile or desktop computers,' says Fujitsu's Mr Lim.
In addition, the lower price tag of UMPCs makes it difficult for manufacturers to differentiate their products in the eyes of consumers. 'There is little room for differentiation from one brand to another due to (the netbook's) strict price bands,' he says.
Cost-cutting the new business mantra
While UMPCs could help lift sales in the consumer segment, PC spending by businesses is likely to be muted this year amid the deteriorating economic environment.
'There will be signs of slower growth in Singapore, and likewise for many countries in Asia,' says Steve Felice, president of Dell Asia-Pacific and Japan.
'As a knee-jerk reaction, organisations tend to raise barriers to IT spending, requiring IT heads to seek higher-level approvals for investment decisions.
'We foresee that cloud computing and green IT, arguably the most-talked about trends in 2008, will hit mainstream audiences in 2009 as companies look to cut costs and increase business efficiency.'
PC companies say that against the current economic backdrop, business computing investments will be assessed strictly by return- on-investment (ROI) and the resulting impact on a company's bottom line.
Tan Yen Yen, president and managing director of HP Singapore, also singles out cloud computing and green technologies as the key trends in the coming months.
And with the heightened emphasis on ROI, she reckons IT value management will become an important discipline in 2009.
'As technology environments change, the growing complexity of large IT systems often results in higher maintenance costs and decreasing ROI,' she says.
'We are likely to see a greater focus on IT value management, to manage complexity and reallocate IT spend from maintenance to innovation of business processes that enable competitive advantage.'
This story was first published in The Business Times on 1 January 2009.
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