Tue, Mar 03, 2009 - Page 12 News List

Nokia venturing into netbooks next year, Citi says

By Elizabeth Tchii  /  STAFF REPORTER

Nokia Corp’s first netbook will likely come equipped with Intel Inc’s Atom processor and a Linux operating system and be manufactured either by Compal Electronics Inc (仁寶電腦) or the Hon Hai Group (鴻海集團), with a product launch scheduled in the first half of next year, global investment bank Citigroup said in a client note last week.

However, Citi was unsure whether it would be a regular netbook or a PC tablet, the note released on Friday said.

Last Wednesday, Nokia CEO Olli-Pekka Kallasvuo confirmed the firm’s plans to enter the high-growth, low-priced laptop market in line with the trend toward cellphone and PC convergence.

In another Citi report, however, analyst Eve Jung (戎宜蘋) noted that handsets and computers have different network channels and expressed concern over the impact of razor-thin PC margins on Nokia.

Jung said netbook sales through operators remained low last year at between 5 percent and 10 percent, with operating margins of between 2 percent and 4 percent.

Citi global markets analyst Kevin Chang (張凱偉) said Nokia’s strategy of diversifying away from the smartphone competition was driven by telecom operators tightening subsidies this year.

Jung forecast that netbooks’ average selling price could decline to US$250 to US$400 in the second half of this year, aided by better “economies of scale and lean cost structure.”

However, she said that Nokia might not be a tough competitor in this segment until it has achieved greater volumes possibly in the second half of next year.

On technical specifications, Chang said he believed that instead of going with the trend and offering netbooks equipped with the popular Atom processor and x86 architecture combined with Microsoft Corp’s Windows operating system, Nokia could profit by favoring ARM-based processors and a Linux operating system.

Separately, Citi said that “Linux/ Qualcomm Inc’s first Snapdragon platform netbooks could hit the market in the third quarter of this year and retail for US$250.

The brokerage said it remained to be seen whether Microsoft would support the ARM-based processor in Windows 7, which would be crucial in the fierce netbook competition.

Citi said both Hon Hai and Compal were likely to be Nokia’s original design manufacturing partners in this project.

Hon Hai has strong Qualcomm capability and recently won notebook contracts from global PC brands, including Dell Computer Corp and Hewlett-Packard Co.

Compal currently mass produces cellphones for the Finnish company and has invested heavily in ARM-based solutions.

The two local companies did not return calls for comments yesterday.

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