Amid the global economic downturn since 2008, netbooks, or scaled-down notebooks run by low-power processors, were the only bright spot in an otherwise disappointing PC market. One of the major driving forces behind this tech sensation is U.S. semiconductor company Intel Corp., whose Atom processor powers the majority of these devices.
The company is placing high hopes on its consumer ultra-low voltage chips, which it describes as the “big trend” in notebooks this year. “We look forward to the launch of our new CULV products, which will enable many new thin-and-light notebooks at very compelling price points,” Intel Chief Executive Officer Paul Otellini said April 14.
“Up to this point in time, those machines have been considered executive jewelry,” Otellini said, referring to MacBook Air of Apple Computer Inc., Voodoo Envy of Hewlett Packard Co. and Adamo of Dell Inc., which are generally priced at US$1,700 or above. “I think they will hit mainstream consumer price points,” he said. “We are expecting a more clearer set of distinguishing characteristics between netbooks and notebooks.”
CULV-based notebooks refer to a specific type of laptops with screen sizes ranging between 11 inches and 15 inches. Other than carrying a longer battery life—eight hours with a traditional drive and up to 10 hours with a solid-state drive—these gadgets are super light and thin. The average thickness is around 25 mm, and the weight is generally less than 2 kilograms. Differing from netbooks, which are mainly used for web surfing and word processing, the new products come equipped with features such as extended memories and powerful multi-media functions.
Spearheading the netbook movement, local computer manufacturers are taking swift action to follow in Intel’s footsteps. The most aggressive player is Acer Inc., the world’s third-largest computer manufacturer behind HP and Dell. The company unveiled its flagship Aspire Timeline series in early April that it claimed would “mark the beginning of a new era in mobile computing,” according to a statement released in April. The products are expected to be available in late May.
With a price tag ranging from US$699 to US$899 and equipped with Intel’s CULV processors, the new ultraportables will cater to customers who demand longer battery life, thin and light form factors and great processing technology at an affordable price, according to Acer President and CEO Gianfranco Lanci. He expects the company’s Aspire Timeline series and partnership with Intel to help it to continue exceeding customer expectations.
Asustek Computer Inc., Acer’s domestic rival, is also slated to enter the race. According to CEO Jerry Shen, the company will spend 30 percent of its resources developing these new devices this year. Asustek will introduce a 15.6-inch CULV-based laptop dubbed XS15 targeting the high-end segment in May, with mainstream products to be rolled out in July. The third player will be Micro-Star International Co. Ltd., which launched its X-Slim series at Hanover’s CeBit computer expo in March. The company will commence regular shipments from June.
According to the locally published Digitimes, five more local PC makers will launch versions for the white-box market starting this June. These are Pegatron Corp., Clevo Co., Compal Electronics Inc., Elitegroup Computer Systems and Mitac Inc.
Industry experts point out that the success of netbooks has placed Intel in a conundrum. While the company’s Atom processor dominates the netbook market, the chip itself carries lower profit margins. If the current trend continues, surging demand for the Atom may negatively impact Intel’s overall profitability. So far, promotion of the CULV-based system has been seen as a strategy to ensure the Atom does not cannibalize the company’s sales of higher-end laptop chips.
Intel’s major opponent Advanced Micro Devices Inc. was quick to react to its rival’s move. “We view this as a response to our Yukon offering, which is exploiting an opportunity in the marketplace to bring PC performance at an affordable price to ultra-thin notebooks,” said AMD President and CEO Dirk Meyer April 21. The rival chipmaker has started shipments of its Yukon processors to the world’s leading notebook maker HP and will release another solution, the Congo, in the second quarter this year.
Market analysts believe these devices will have a significant impact on both netbooks and traditional laptops. With CULV-based notebooks promising the same mobility as netbooks but with larger screen sizes and more powerful functions, the machines are well positioned in the mobile segment and provide “the perfect compromise between price, size and performance,” said Patrick Wang, an analyst at U.S.-based financial service firm Wedbush Inc.
Acer Chairman J.T. Wang said the company predicts its new product line will account for 50 percent of the notebook market this year, and that global demand will reach 100 million units in three years. Confident in his firm’s Timeline series, Wang hopes to see Acer overtake HP as the largest notebook maker as early as 2010.
While Acer holds high expectation of the new system, Asustek is relatively conservative about its prospects, and believes these machines will not be as popular as netbooks. Shen is anticipating a 10-percent share of the mobile market in 2009, and a 20-percent penetration rate for next year. A public relations representative from MSI said May 6 that the company remained bullish on its outlook, but declined to offer any forecast.
Market analysts seem to be backing Asustek. Jane Tzeng, a research analyst at the locally-based Topology Research Institute, expects to see CULV-based laptops snap up 20 percent of the market in 2009. “CULVs can be expected to eat into sales of both netbooks and lower-end notebooks. They probably will not create new demand, though, because these products are not a new concept as netbooks,” she pointed out. Henry King of Goldman Sachs Group Inc. also predicted a 20-percent market share for this year.
Despite the differing views on the actual impact of CULV-based notebooks, all agree that Taiwan’s PC makers, including original design and equipment manufacturers, stand to gain from this new development. Acer, Asustek and MSI are already several months ahead of rivals HP and Dell, which will not release their CULV-based versions until the third quarter of this year.
King explained that HP and Dell may outsource CULV models to local firms Flextronics International Ltd. and Quanta Computer Inc., while the mainland Chinese PC maker Lenovo Corp. could award orders to Compal and Wistron Corp. “Should CULV become the new trend for notebooks, we think all manufacturers should share orders,” he said.
Write to Meg Chang at meg.chang@mail.gio.gov.tw