Analyst: Intel Netbook growth to slow

Growth of Netbooks will slow this year as standard notebook shipments pick up, according to analysts.

Growth of Intel-based Netbooks will slow this year, and the emergence of "smartbooks" based on chips from Intel rivals will also be poky, according to analysts.

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Though Intel Chief Executive Paul Otellini was upbeat about Netbook growth in 2009 during the chipmaker's earnings conference call last week, standard laptop shipments will outpace Netbook growth in 2010, according to Avian Securities.

"The big surprise over the past couple years has been the emergence of Netbooks. However we believe regular notebooks will likely outpace the growth in Netbooks in 2010," according to a research note from Avian published Tuesday. "For 2010 we expect regular notebooks to grow to 180+MM (million) from 140MM in 2009, with Netbooks growing to 47MM from 37MM," Avian said. (Netbook shipments came to about 10 million in 2008.)

The fact that PC makers need to make more money is one of the factors driving this trend. Netbooks are inexpensive--typically about $350--and not as profitable as more standard laptops. "PC (makers) have not given up on trying to find ways to recapture some of the margin lost when Netbooks became very popular over the past couple years."

The note continued. "With...regular notebooks becoming smaller/sleeker in size, while still offering a performance advantage versus Netbooks and selling for as little as $100 more for a basic model, we think that more consumers may be tempted to migrate back towards regular notebooks," Avian analyst Dunham Winoto wrote.

Intel Senior Vice President Sean Maloney echoed this sentiment to some extent when he addressed the ultrathin laptop market--a segment slotted just above Netbooks--in a CNET interview at the 2010 Consumer Electronics Show. Maloney said the ultrathin laptop market is now beginning to take off after a slow start in 2009.

And smartbooks, the nascent rival to Intel-based Netbooks, may get off to a slower-than-expected start this year. Gartner's "Semiconductor DQ Monday Report," which focused on the 2010 Consumer Electronics Show, said that smartbooks based on power-efficient ARM chips from companies like Qualcomm, Freescale Semiconductor, and Texas Instruments, are still more concept than product.

"Fewer-than-expected actual products were announced, and most of the demonstrations were still in the prototype stage...We maintain that the smartbook market will take some time to develop, and semiconductor vendors will need to plan to be in the market for the long haul to get their return," Gartner said.

Gartner noted that the most interesting smartbook announcements were the Qualcomm Snapdragon chip-based Lenovo Skylight and smartbooks based on Nvidia's Tegra processor.

Avian Securities also wrote Tuesday that smartbooks are not yet ready for prime time. "Though we acknowledge some of the advantages of smartbooks over Netbooks, at this stage we feel that most consumers have to make too many major compromises for the promise of longer battery life, which we think many are unlikely to accept."

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