The Notebook vs. Desktop Computer Popularity Contest
(A positive sign for the market?)
story.news.yahoo.com
Mon Mar 11, 1:28 PM ET
Lisa Gill, www.NewsFactor.com
With notebook computer prices holding steady around the US$1000 mark, strong signs of an economic recovery and continued weak desktop computer sales, notebook sales in both the consumer and business markets show no signs of slowing, according to analysts.
Whether notebooks or desktop computers deserve the 'Most Popular Computer' award remains to be seen. However, evidence suggests that speedier, more efficient mobile chips, wireless networking capability and lower prices have brought mobile computing new life -- and new customers.
Attractive Price, Performance
Alan Promisel, portable PC analyst at research firm IDC, told NewsFactor that the psychological effect of a price tag around $1000 had a positive impact on consumer notebook spending during the fourth quarter of 2001 and into the first quarter of 2002.
"Consumers see the [mobile] price in the same ballpark as desktops. There isn't that enormous $2000 to $3000 price gap that there used to be," Promisel said.
Due to a significant increase in notebook performance, which Promisel attributed to Intel's (Nasdaq: INTC - news) newest Pentium 4 mobile chips, notebook computers are fast closing in on desktops' traditional dominance in speed, capacity and durability.
Spending Patterns Debated
Rob Enderle, an analyst at research firm Giga Information Group, told NewsFactor that though desktops represent about 75 percent of all computer shipments, that number does not reflect the true popularity of notebook computers among consumers.
"Typically," Enderle said, "users prefer a laptop computer, but they end up getting a desktop because they either can't justify the expense to purchase and support one or their company can't afford it."
Enderle pointed to desktop retail prices that have dropped to between $500 and $1000 while sacrificing very little in terms of performance.
IDC's Promisel agreed that extremely low desktop prices, particularly during last year's holiday season, cut into notebook shipments. But he also noted that IDC expects a 20 percent rebound for notebook computer sales in 2003 and 2004, partly because of changing business desktop replacement cycles.
"Corporations -- primarily small to medium businesses -- are replacing desktops with mid-range portable PCs. While IT budgets have been constrained, businesses can't wait until the economy improves, which [we see] at the end of 2002 and the beginning of 2003," Promisel said.
Chips Drive Mobile Effort
Analysts pointed to chip makers' increased research and development efforts, as well as improved mobile chip performance, as the primary factors spurring a shift toward mobile computing.
Both Enderle and Promisel suggested that Intel's intensive marketing effort on behalf of its Pentium 4 mobile chip is evidence that the behemoth chip maker has shifted its focus.
Robert Manetta, mobile computing spokesman for Intel, told NewsFactor that the company has deepened its commitment to mobile chip development based on industry evidence that shows the growth of notebook computers is stronger than that of desktops.
But Intel's strongest push for mobile computing is yet to come. A new chip, code-named Banias and developed specifically for mobile computers, is slated for release in the latter half of 2003, according to Manetta.
"This is the first chip we've produced that is designed from the bottom up to be used in mobile computing," Manetta explained. "What we've done previously is design a microprocessor and then tailor it, depending on whether the chip [is] used in a server, a desktop PC or a laptop PC."
Earlier this year, Intel competitor AMD (NYSE: AMD - news) released its mobile AMD Duron and Athlon 4 processors. Another competitor, Transmeta (Nasdaq: TMTA - news), is poised with its 5500 and 5800 chips to recover time lost to production problems last year.
Intel: Desktops Will Rule
Giga's Enderle said Intel's Banias has the potential to significantly shift all chip development toward mobile as the standard.
"It may be that at some point desktop designs will lag the laptop designs. We may have the mobile chip be the center of the world," Enderle said.
But Intel's Manetta did not agree.
Pointing to the constraints involved in designing mobile chips -- energy conservation, heat output and size -- Manetta said he believes the necessary tradeoffs will not enable mobile to eclipse desktop performance.
"Unless something big changes, the desktop will always be the higher-performing box out there," he noted.
PC Makers Turn to Mobile
But even as consumers and business spenders are torn between price, performance and portability, both groups are tantalized by what is available in the retail space, fueled by the increased focus on mobile.
Bellwether PC maker Dell (Nasdaq: DELL - news) last week released two notebooks, the wireless-ready Inspiron 8200 and Latitude C840, both of which incorporate Intel's Pentium 4 mobile processors.
The notebooks also boast long battery life, speedy graphics rendering and a price tag starting at just under $1,700 and $2,600, respectively. Dell claimed the new machines pack double the performance of the company's other notebook computers.
Earlier this week, Compaq also released two notebooks that use the Pentium 4 mobile processor, the Presario 2800 and the Evo N800.
IDC's Promisel noted that while desktops still far out-ship notebooks, better margins on many portables have encouraged PC makers to expand into that market.
"The margins are so low on [desktop] PCs right now that portables are the only place that PC manufacturers are able to make much profit," Promisel said.
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