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Glyn Moody's look at all levels of the enterprise open source stack. The blog will look at the organisations that are embracing open source, old and new alike (start-ups welcome), and the communities of users and developers that have formed around them (or not, as the case may be).

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The Net Net of Netbooks

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Netbooks have been one of the surprise successes over the last year. They have also been one of the most contentious areas of computing.

There are conflicting reports on most aspects of the sector – in terms of market share, rate of returns etc. - and it is easy to assume that it's all fad and fashion. Against that background, it's good to have some figures – any figures – that might throw a little light on this promising sector.

The price comparison site, PriceGrabber.com, produces what it calls Consumer Behavior Reports; conveniently, a recent one asked users:

about their familiarity with and interest in performance-enhancing solid-state drives as they relate to this emerging netbook category.

The sample size is small (1,545) and the report short, but it contains some suggestive statistical nuggets. For example:

Tight economy drives popularity for low-cost netbooks. The average price of the top 10 netbooks on PriceGrabber.com is $379 (see Table 1).

This attractive price point is important to the 57 percent of consumers surveyed who indicated that they made a concerted effort to cut back financially in the past few months. As consumers face a down economy they see netbooks as an attractive, low-cost option to complement a portable lifestyle.

That may sound a trivial result – that people like netbooks because they're cheap, and they want to save money - but it's not. One of the many hot issues surrounding this category is whether it is really distinct from that of notebooks.

Significantly, the current manufacturers of notebooks (and their components) are proclaiming loudly that netbooks are just small notebooks, and that the two categories will soon merge as the price of notebooks comes down. But what this latest market research suggests is that buyers will continue to seek out bargains *below* that of notebooks, and that they are quite happy to put up with a few missing features in order to save the absolute maximum.

This is not only bad news for notebooks manufacturers, who will be forced to take part in a “race to the bottom” as a Sony executive so memorably put it a year ago, but for Microsoft, too.

The only way it can compete in the netbook sector is by slashing its margins on Windows 7 (once Windows XP has been dropped). It may hold on to a significant chunk of this sector, but it will do little for its increasingly troubled bottom line.

Further proof that the netbook is quite distinct from the notebook is provided by more figures from the report:

One in 10 online users own a netbook, 75 percent own a laptop and 83 percent own a desktop (see Table 4). Of those consumers who indicate owning a netbook, 91 percent also own a laptop and 87 percent also own a desktop. Most netbook owners have all three form factors most likely because each serves a distinct purpose.

The netbook claims to be different, not better, than other mobile Internet devices on the market. It may not compromise price and portability, but it does compromise processing speed, comfort and battery life. With a slower processor and two and a half hours of battery life, it cannot run complex local computing applications and it generally will not serve as a practical device for everyday productivity.

Again, this emphasises that people have a very clear idea of what a netbook is, and what it is for. It is not simply the latest twist on the notebook. In some ways, that's good news for notebook manufacturers (and Microsoft), since it means that they can still sell such machines.

But it does emphasise the different dynamics of the netbook sector, and that's bad news, because these may allow completely new manufacturers – and operating systems – to take a much bigger slice than in the mature notebook market.

Moreover, that danger is not just among some niche of younger users:

Netbook owners are spread across all consumer age segments 18 years and older. Survey data reveals that consumers of all age segments have purchased a netbook. Nearly one third, 27 percent, of netbook owners fall within the 45-54 age segment and another 26 percent fall within the 34-44 age group

This means that netbook usage cannot be dismissed as some generation shift that might pass once people grow up: it cuts across age groups. And uptake is likely to increase as solid-state technology advances to the point where its advantages outweigh its disadvantages compared with hard discs (and hence notebooks):

The primary deterrents from switching more netbook hard drives to solid-state drives are the higher price and lower capacity.

The cost per gigabyte of the solid-state drive is no where comparable to the cost-efficient hard disk drive, as of yet (see Tables 7 and 8). Fifty-four percent of online users indicate they would consider purchasing a netbook with a solid-state drive when price per gigabyte drops considerably in the next few years

Again, it is worth emphasising that this is a small sample size, and drawn from a particular type of user group. But the figures add to the picture of netbooks emerging as a major category in their own right, and of offering GNU/Linux a unique opportunity to capitalise on that.

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