Tue, Apr 28, 2009 - Page 9 News List

Netbook 2.0: Is a PC upheaval on the horizon?

By Gabriel Madway  /  REUTERS , SAN FRANCISCO

A new class of cheaper, smaller netbook computers might upset the IT establishment this year and potentially usher in new players in a hotly competitive market.

The biggest change in the new pint-sized laptops is what they won’t have: Intel Corp chips or a Microsoft Corp Windows PC operating system, which dominate netbooks today.

The new netbooks, which use less energy, will run on the low-power ARM processor platform now used in nine out of 10 cellphones rather than Intel’s x86-based Atom chip. The UK-based ARM Holdings Plc licenses the chip technology.

As many as 10 ARM-based netbook models could hit the market this year, ARM says, while declining to identify specific manufacturers. Major PC players and Asian contract manufacturers alike are interested, analysts say.

Enderle Group analyst Rob Enderle called the new netbooks “incredibly disruptive,” saying: “This is a market that puts the existing PC structure at risk.”

While analysts say it’s not yet clear if consumers will embrace the ARM devices, interest has been galvanized by the emphasis on power efficiency, prices as low as US$200 and the promise of computing anywhere, any time on PCs small enough to slip into a purse.

What’s sacrificed is users’ familiarity with PC-based interfaces and systems and sheer processing power. The current US$300 to US$400 Atom netbooks are already mainly good for just surfing the Web and less graphics-intensive applications.

“We’re right in the middle of a huge shift in the market,” said Eric Openshaw, US technology leader for Deloitte LLP.

Openshaw said non-Windows netbooks will need to demonstrate a simple and accessible user interface at the application level if they hope to gain traction with consumers.

Windows XP can’t run on ARM, so the new netbooks will have Linux-based software, including, analysts and industry executives say, Google Inc Android, which has been used so far in smartphones.

But don’t count Microsoft out just yet. Although the software giant declined to comment when asked if it is planning an operating system for the new netbooks, analysts say it could easily enter the market if it chose.

Intel pointed out there are as yet no ARM netbooks on the market and that its Atom chip has a full year’s head start.

“We’re not slowing down, we fully expect competition and we continue to believe that Atom is the right choice for our customers and consumer,” spokesman Bill Calder said.

The still-evolving netbook market is growing thick with players from all over the tech sector. Wireless carriers such as AT&T Inc are helping lead the charge, while graphics chipmaker Nvidia Corp, wireless chipmaker Qualcomm Inc and Freescale Semiconductor Inc have all designed ARM-based processors that can be used in netbooks.

The netbook phenomenon took off last year to the tune of 11.7 million units, led by companies such as Acer Inc and Asustek Computer Inc that were quick into the market. Nearly every PC vendor offers an Intel Atom-based netbook, including Hewlett-Packard Co and Dell Inc.

Analysts forecast 20 million to 30 million netbooks will be sold this year, making up an ever larger part of overall laptop sales and marking one of few tech sectors still experiencing robust revenue growth.

“It’s definitely going to be a different sort of device than today’s netbooks,” said Phil Solis of ABI Research, who expects ARM netbooks to make up 15 percent of the overall netbook market next year.

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