Good / bad news for netbooks?

There just still seems to be no clear consensus on whether netbooks – cheaper, simpler notebooks that were one of the fastest-growing tech segments last year – are starting to lose steam.

Paul Otellini, Intel chief executive, insists the tablet PC won’t “eat the notebooks’ and netbooks’ lunch”, while others suggest the netbook’s breakneck growth is running up against other barriers such as rising manufacturing costs . The latest numbers from Taiwan’s Market Intelligence & Consulting Institute, a government-backed research institute, hardly help clear up the issue.

First, the bad news. Shipment volumes of the “Greater Chinese netbook PC industry” (read: Taiwanese contract manufacturers with factories in China who make the vast majority of the world’s netbooks) are expected to have declined 14.3 per cent in the first quarter of 2010 compared to the last quarter of 2009. That’s a pretty big drop, considering that shipment volumes last year more than doubled from 2008. It is also bigger than the 11.8 per cent fall in shipments from fourth quarter of 2008 to first quarter of 2009.

But then, the silver lining. Much of that decline, says MIC analyst Ku Ya-wei, is due to seasonality and component and labour shortages in China, rather than a lack of consumer demand. “The production facilities of contract manufacturers and component suppliers are primarily located in coastal regions of China, and labour shortages in these regions are significant. These factors are having an impact on the netbook PC industry’s shipment volume,” she says.

Overall, Ms Ku still expects netbook shipments to continue to grow this year. As for competition from tablet PCs and Arm-based ‘smart books’? These are positives, Ms Ku says, because netbooks have “mainly featured [Intel and Windows-based] models and relatively uniform product specifications. The positive impact will consist of the added buzz these products bring to the market, stimulating the growth of the overall market.”

So what does this all amount to? “In general, the industry will be hard-pressed to again achieve the high growth rates that were seen previously,” Ms Ku says.