Cheap, small and easily portable, netbooks have proved the darlings of the recession-scarred consumer. They now account for a fifth of global sales of portable PCs, and 30% in Europe, writes Mark Hobart, director at TNS Technology.
This is encouraging. But with the likes of hot notebooks like Apple's MacBook Air, Dell's Adamo and a host of new touchscreen smartphones, is there really market space for all the mobile computing devices noaw on offer?
Many consumers still don't 'get' the netbook. Recent research from TNS in the US shows that over half of consumers are not even aware that netbooks exist, and one in four does not know what they would do with one. The UK is similar; TNS has found that Brits are unaware of a difference between netbooks and notebooks.
Unquestionably, the category is converging. As the functionality of smartphones improves, and notebooks get more compact, the market niche that netbooks originally occupied is getting smaller (see Figure below).
Figure 1: Mobile devices - functionality vs size
Netbook vs smartphone
New applications have increased Mobile phones' usefulness sharply in recent years. This has boosted smartphone sales despite total sales of handsets sliding as consumers delay upgrades from 21 to 25 months on average.
TNS' Global Telecoms Insight (GTI) study shows that smartphones made up 23% of all handset sales last year, compared to only 13% in 2007. They are particularly popular in the UK, where 36% of all handset sales or upgrades are now smartphones compared with less than 20% a year ago.
Two killer smartphone apps are email and mobile internet access. The TNS GTI research shows 77% of smartphone owners regularly use email and 69% access the internet on their handset. But email and net access are also the killer apps for the netbook.
Many consumers appear unclear whether the netbook has unique benefits, but the smartphone has both greater portability and better battery life.
Manufacturers on both sides are blurring the lines. Nokia is pushing its new N97 smartphone as a mobile computer, while Asus, a leading netbook maker, is adding Android mobile phone software to its products.
Netbook vs notebook
Some say cannibalisation of notebook sales by the netbook has been exaggerated, but the fact is that some cannibalisation definitely exists.
TNS research among US consumers shows that more than a quarter "may" or "would definitely purchase" a netbook instead of a notebook or desktop when buying their next computer.
Netbook makers never intended them to be the primary computer. But many consumers find the netbook (perhaps enhanced with external storage) enough for most computing needs.
The recession has undoubtedly helped netbook sales due to their lower price compared to notebooks. The real test will come when netbook owners upgrade. They will then have to decide whether they are happy with the netbook format or go for more processing power and storage capacity in notebooks.
What does this mean for the market? The mobile device category is fragmenting rapidly and the traditional boundaries of notebook, netbook and smartphone are starting to overlap. We are not far from a future where the user simply wants a "device". Their choice will be based not on an industry-imposed product categorisation but rather on the device's fitness for that consumer's purpose.
This makes it imperative that device manufacturers adopt a consumer-centric view of product development. They need to build a diverse portfolio whose individual products are differentiated not just on the basis of size and technical specifications, but also on applications, looks and brand positioning.
TNS' Global Telecoms Insights Study covers 32 markets and 20,000 consumers. It addresses some of the most pressing themes in the telecoms industry and looks to understand the evolution of global, regional and local trends in mobile technology.
TNS ComTech is the world's largest syndicated research project measuring the converging markets of mobile telecoms, fixed line, broadband and Pay TV.
A panel of more than 170,000 consumers, demographically represented across the five key European countries, are interviewed every four weeks on their behaviour across mobile, broadband, fixed line and TV.
TNS Technology writes here exclusively for Computer Weekly.
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This was first published in June 2009