Netbook boom sparks change in PC marketing

Analysts suggest PC vendors should study consumer packaged goods like shampoo and cereals to learn how to make do with ever-thinning margins.

According to statistics released today, analyst group Gartner predicts the 'netbook' or 'mini-notebook' category will grow at some 40.8 per cent in Australia during 2009 -  to account for 13.7 per cent of notebook PC shipments.

If that seems extreme, IDC expects the growth of the category will exceed 100 per cent this year. It is already growing at 70 per cent compound every quarter, IDC reports, while the mainstream notebook category is growing by a mere five per cent.

Regardless of which figures you take, it is patently obvious that little computers are a very big thing right now.

Taiwanese vendor Asus pioneered the netbook market category with the launch of its Eee PC in late 2007, followed closely by Acer. But by the start of 2009 these were competing with new netbooks from the likes of Toshiba, HP, Lenovo, Dell, Samsung and Fujitsu-Siemens.

The low price of the product, says Gartner, has led notebook buyers to "extend the life" of their existing notebooks and "consider a mini-notebook as an additional device for on-the-road Web surfing and entertainment."

But vendors have themselves expressed concerns the low margins that accompany these low price devices are barely sustainable.

The low-price models are only reinforcing the commoditisation of personal computing, according to IDC associate analyst, Felipe Rego.

"The products are pretty much on par," he said. "I mean shampoo is shampoo - it cleans your hair. Toothpaste is toothpaste - it cleans your teeth. And today a computer is a computer. You type up documents, you watch DVDs, you browse the Internet."

"You can only really get something out of [the netbook trend] by positioning products in a way consumers will see some other kind of value in it," he said.

Rego is planning a presentation in May, to be webcast on IDC's site, which will advise vendors and resellers how to maintain margins as netbook sales boom.

"Now the only difference between computers is the emotional attachment a consumer has to a particular brand," he said. "The obvious example of that is Apple - which is still getting good results in a poor economy."

With aspirational branding, he says, a vendor can "justify the ability to charge higher prices by communicating a relevant value to a particular target market."

HP has already figured out the need to differentiate at this level, with a marketing campaign tagged "the computer is personal again" and the launch of a netbook that features the packaging design of celebrity designer Vivienne Tam.

"I am not sure how well they have done, but they literally splash a different colour on the product, attach a name to it, target a specific market, and they can charge a higher price," he said. "Between you and me, it's the same product, one to another. But that isn't what is important for this product."

Rego says marketers in the PC industry should look to the consumer packaged goods industry for direction on market segmentation.

"They tend to be good at communicating the benefits of a brand," he said. "Kelloggs can sell a huge line-up of cereals based on the same ingredients which each targets a different market. And yet they still grow, they are still profitable."