Netbook Sales Down 34% – Have iPads Killed The Netbook?

Recent stats from Canalys show that netbook sales have taken a hammering in the last year – decreasing by 34%.

The Q1 2012 shipment figures for netbooks are even more gloomy – two years ago at their peak they represented a healthy 13% of the market but they are now down to just 5%.

So are netbooks dead and, if so, why? Have iPads Killed The Netbook?

Some argue that the collapse in sales of netbooks is due to the increasing popularity of iPads (and Android tablets to a lesser extent) – tablet sales increased more than 200% in the last year.

It is not surprising that consumers used to Android and iOS apps on their phones may look for a similar experience on a larger screen – and tabs obviously fit that bill. There is also undoubtedly a ‘cool’ factor at play – in the corporate world the iPad is a sleeker and sexier toy than a boring old netbook.

However, it can’t be just the growth of tablets and their wider choice in content and apps that has done for the netbook – shipments of Windows laptops actually increased by 11% over the same period. In fact the humble laptop has now grown to almost 50% of the total market. Netbooks are struggling to compete against their natural rival – laptops, the same market which they previously cannibalized to good effect.

It is not iPads that have killed the netbook – it is laptops regaining the ground they lost to netbooks in previous years. In my view the real reason netbook sales have crashed is that they deserved to – because they were no longer giving people what they wanted (or needed)…


Netbook Stagnation

Netbook manufacturers took their eye off the ball in recent years – either because they switched focus to tablets or (for the cynical) because they preferred the higher margins of laptops and ultrabooks.

Whatever the reason, netbooks have been stuck in a time warp compared to laptop development. Consider the specifications of typical cheap netbooks sold in the last two years:

1.  Windows 7 Starter Edition

Unlike the full XP Home version used on older netbooks, Starter is very much a poor man’s version of Windows – no Aero Glass, no Media Center, no multi-monitor support, no remote  media streaming and no easy way to change desktop wallpaper, themes or visual styles.

It is also 32bit only (less secure than 64bit versions) and only supports up to 2GB of RAM. W7 Starter compares very badly to cheap laptops offering W7 Home Premium 64bit as standard.

2.  1GB of RAM

Whilst Windows 7 can run on 1GB of RAM it is an unpleasant experience, especially when combined with a netbook’s slow processor. To make matters worse, netbook manufacturers often thwarted users wishing to upgrade RAM by making the process unnecessarily difficult (or even impossible).

Even cheap laptops offer 3-4GB of RAM and increasing numbers of end users understand that more RAM can dramatically improve performance.

3.  10.1″ screen

Over the years netbook screens grew from 7″ to 8.9″ to the ubiquitous 10.1″ screen but even this is still very tight to work with on Windows 7. Unlike a touch and app friendly operating system like Android/iOS, Windows 7 was never designed for such a small screen.

Netbooks have not generally followed the example of ultrabooks like the Acer Zenbook and MacBook Air which offer 11.6″ screens – a much better mix of usability and portability.

4.  Slow Processor (CPU)

Most are now dual core CPUs (e.g. AMD-C60 and Intel Atom N2600) but they are not much quicker than before, benchmarking in the same range as a 10 year old Pentium 4 3.0Ghz CPU.

These processors are still capable of playing HD video, music, web browsing etc (typical uses in a highly portable netbook) but they don’t compare well to cheap laptops which increasingly use Intel’s excellent Core i3 as standard.

5.  Pricing

When netbook popularity peaked two years ago they still represented a much cheaper alternative to a low end laptop. Those pricing differentials have slipped dramatically – many cheap laptops now cost the same as a netbook whilst offering huge advantages in performance and usability.

The only benefit many netbooks had in the last 2 years is portability – not enough to make them more than a very niche product.

Do Netbooks Have A Future?

Yes they do – but only if manufacturers focus on usability and improve features to more closely match laptops whilst keeping a price differential between the two.

It’s a tough challenge – both Sony and Lenovo are moving firmly in the opposite direction, abandoning netbooks in favor of high priced (and more profitable) ultrabooks.

However, there are promising signs from other companies that the fight is not over. The launch of Windows 8 later this year should also re-energize the netbook market as it is far more suited to smaller screens than previous versions of Windows.

Tomorrow I’ll review an Acer model that is a good example of how netbooks can compete more effectively against laptops, their natural rival.

1 thought on “Netbook Sales Down 34% – Have iPads Killed The Netbook?”

  1. As the article mentions, netbooks do have their niche area. I need the portability, low cost, and an attached keyboard that is “just right” for my hands. All the right ports are available, for my use, and the battery seems to run forever. It’s reliable and does not produce a lot of heat.
    I am running Puppy Linux, on my netbook, so it runs like a bat out of hell; no need for windows here. :)

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