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Low-priced laptops will set the trend this year, IDC says

The trend this year in the notebook PC sector will be toward new market segmentation and a niche created by low-priced notebooks, industry research group IDC said yesterday.

With increasing parity in the distribution of wealth and an already highly developed PC technology market, manufacturers are more inclined to cut prices, with the introduction of Asustek Computer Inc's (華碩電腦) Eee PC the clearest indication yet of this trend, said Helen Chiang (江芳韻), PC and peripherals research manager at IDC Taiwan.

The Eee PC is a single product controlled by a single company, which avoids market confusion for consumers, a business model that is not unlike that of the tremendously successful Apple iPod, she said.

"The PC industry is watching this new niche closely. We expect 5 million units of this type of notebook to be sold worldwide in 2008, which leads to a market share just below 20 percent," Chiang said.

The products in this price range have a lower performance than regular laptops, but are just as well designed aesthetically and functionally, and could attract three types of consumers initially: fans of new technology products, consumers with limited budgets and users who only require basic computing and Internet functions, an IDC analysis said.

The domestic notebook market is expected to see a 5 percent growth this year to an estimated 850,000 units sold, said Dickie Chang (張祐昌), a Taipei-based personal computing solutions analyst at IDC.

Chang said IDC does not yet account for models such as the Eee PC in notebook industry numbers, but expects it to eventually account for 10 percent to 20 percent of notebook sales.

"In the fourth quarter of 2007, approximately 40,000 Eee PC units were sold, which demonstrates its great popularity amongst consumers. This made it the third-biggest notebook brand during that period, behind Asustek and Acer Inc," he said.

He said that the challenge for Asustek was whether it can create the same sort of enthusiasm among consumers worldwide.

"The profit margin for this segment is low, therefore the channels that carry these products have a lower margin as well. It therefore remains to be seen whether Eee PC and similar products can maintain their momentum in foreign markets through 2008," he said.

Acer will reportedly start selling low-cost laptops during the first half of this year, the Chinese-language Commercial Times reported on Wednesday, without specifying sources.

This niche created a unique challenge for analysts, because they remain unclear as to what constitutes "low-priced." IDC has set the line at US$500, Chiang said.

In related news, IDC said that total IT spending in Taiwan this year would grow only 1.2 percent, a marked drop from the 3.6 percent last year.

However, through various new technologies and market trends, total telecommunications service spending would grow 4.7 percent, an increase from last year's 3.8 percent.

“The IT market in Taiwan consists of 60 percent hardware and 40 percent software. Because of the declining value of PC and server systems, the total value of IT spending will be affected,” said Alan Tsao (曹永暉), an enterprise solutions research manager at IDC Taiwan.
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