Analysis Nikkei Electronics Asia -- July 2008
Ultra Low-Cost PCs Dominate the Market

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Jun 25, 2008 17:44 Nikkei Electronics Asia

Cheap, compact and lightweight PCs are taking the market by storm; much of the time, consumers only need performance sufficient to provide access to Web-based content, services and other assets.

They sprouted forth like mushrooms after the rain: following in the footsteps of the wildly successful Eee PC 701 series from ASUSTeK Computer Inc of Taiwan, a number of inexpensive, lightweight personal computers (PC) have hit the shelves. With street prices of under US$500, these PCs have liquid crystal display (LCD) panels of less than ten inches, and most weigh under a kilogram. 

In February 2008, Everex Systems Inc of the US released its CloudBook, featuring a 7-inch LCD screen, for US$399. In April of the same year Hewlett Packard Co (HP) of the US, the world leader in notebook PC sales by volume, shipped the HP 2133 with an 8.9-inch LCD screen for only US$499. 

Even firms which have never shipped an inexpensive, lightweight PC are beginning to jump into the market, starting with Computex Taipei in June 2008 (see also p48). Acer Inc of Taiwan, with the second-largest share of the global notebook PC market, has announced it will ship in May or June, while third-ranked Dell Inc of the US is also rumored to be getting ready. Toshiba Corp of Japan, in fourth place, has "...little interest in leading a price-cutting competition, but also little choice but to join it," according to Shigeyoshi Shimotsuji, technology executive, Software, Personal Computer & Network Company (Fig 1).

Adapting to Survive

The important point is that less than a year after the appearance of the Eee PC, all the PC majors are jumping into the new market. HP's commitment is especially astonishing.

The HP 2133 was described as designed for the education market in an HP news release, perhaps in an effort to minimize the effect on existing business, but the reality is quite different. A source at the firm explained, "The real target is people looking for a mini-notebook, including young people and business users." Sales channels have not been especially restricted.

HP explanations seem to indicate that the HP 2133 is not just simply an inexpensive notebook PC. The keyboard, for example, has been expanded to almost the size of the case to make it easier to use, and given a special coating to help maintain that "new PC" touch, according to the company. The case has been given a high-grade feel by using Al and Mg alloys instead of plastic. 

Taiwan companies handling outsourced design and manufacture for 90% of all notebook PCs made worldwide are also gearing up for battle. In recent years, they have been intimately involved in design, product planning and other aspects of notebook PCs (Table 1). 

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