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PC industry scared netbooks may hurt laptop sales

Sumner Lemon | Aug. 11, 2008
AMD says it has no plans to enter netbook market, as questions loom over where the netbook is headed.

The Atom's apparent success -- based on the number of models announced by computer makers -- is a double-edged sword for Intel. On the one hand, netbooks may open up a new market for Intel's chips, but the company also runs the risk that Atom sales will eat into sales of its mainstream laptop chips as users opt for netbooks instead of more powerful systems.

In a research note, IDC analyst Richard Shim warned that the cannibalization of mainstream laptops sales by netbooks is a concern, but said the threat is diminishing as mainstream laptop prices fall.

"We believe the story line of ultra-low-cost notebooks will increasingly be sidelined as the notebook market continues to offer a better solution and experience at price points similar to what ultra-low-cost notebooks are hitting," he wrote.

Naturally, Intel is upbeat about the market, and executives have consistently said netbooks will grow the overall market for laptops instead of eating into mainstream sales. But Atom-based laptops are just now hitting the market from a range of vendors and it's unclear what impact these systems will have on the overall market.

Intel has worked to prevent the cannibalization of mainstream laptop sales by setting limits to the features, such as screen size, that can be used on an Atom-based computer. The company also tried to position the Atom processor as a low-end chip best suited to simple Web surfing and e-mail. Intel CEO Paul Otellini drove that point home during a recent conference call with financial analysts, saying, "you are dealing with something which ... most of us wouldn't use."

To illustrate his point, Otellini said Atom-based computers weren't suitable for watching YouTube videos for an extended period of time.

But a recent online debate suggests Atom-based netbooks may do more for users than Intel might wish, even when it comes to video playback.

The debate was sparked by the release of a video by Via Technologies, which compared the high-definition video playback of a netbook based on Via's Nano processor and an Atom-based Eee PC, with both computers running Windows Media 11. The video showed the Nano-based computer playing a high-definition Windows Media file. The Eee PC struggled with the same file; the video playback was unwatchable.

Blogger JKK, of hardware site JKKMobile, called the Via video "BS," and countered with a video of his own that showed an Eee PC 901 playing the same high-definition video file using Windows Media 10 without any apparent problems.


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