Trend

Sub-notebooks: portability pays

The sub-notebook category is seeing a lot of action. By Kushal Shah

Models: Shreya Singh & Kshitij Dhankar Location Courtesy: Croma

At a time when the ultraportable laptop segment was taking shape across the world, some of the smaller but technologically capable companies were in the hunt for making another sub category within the ultraportable market. This category can be termed as sub-notebook or Netbook, it is not so cheap, but is does come at an affordable price as a result of stripped down approach in terms of features. Arguably the first player to create a stir in the market place in this sub-notebook category—broadly defined as laptops ranging from seven to nine inches with stripped down features and limited capabilities—was Asus with the launch of EeePC. Almost all the other players have either followed suit or are in plans or at least rumored to be developing products for this category.

Certainly, this new segment has become a growing trend for all laptop manufacturers and whether they like it or not, they will at least have to look towards it to catch as much market share as possible. The biggest question here with respect to India as a market for these tiny machines is—who will buy them and what will be the driving factors for these low cost, and not so powerful machines.

Market for ultraportables

With 1.8 million laptops shipped in 2007, the market seems bullish over the 81% growth compared to the previous year for the overall laptop market. This market is mature when compared to the segmented ultraportable space. Indians, as of now, are not responding strongly to the ultraportable market. “The laptop market is predominantly divided into two segments. Large form factors are more popular in western countries and small form factors are more prominent in Japan and some of the South-East Asian countries. India on the other hand has adopted the western trend and has been more inclined towards large form factors and thus we see low adoption of ultraportable laptops in India,” explained Diptesh Ghosh, Country Manager-Consumer Notebooks, Personal Systems Group, HP India. The ultraportable segment presently accounts for less than 10% of the overall laptop sales, traditionally, owing to the high prices of small form factor laptops, which is rapidly changing.

Growing businesses, the education sector and rising casual first-time user population in the country, in addition to mobility and Internet requirement, is leading to the ultraportable segment slowly but steadily taking shape in India. Vendors are targeting people with low incomes, housewives and advanced users with a need for an alternative lightweight laptop on the move. People are in need of machines that can enable functions like the Internet and basic office activities, which can be well fulfilled by laptops priced at less than Rs 20,000, and are small enough to fit into a handbag.

Ironically, this sub-notebook category is a new phenomenon globally, which has entered India at an arguably wrong time when people are neither ready financially to have a second notebook nor are the educational users ready to compromise much with respect to features. This could only be apt for someone who is looking to access the Internet on the move and wants to have some basic application loaded. Nevertheless, this segment will surely make a place for itself after some innovative marketing and technological changes.

A market without top brands

Unlike other firsts in the industry, the tag of the early mover in this market goes to Asus and not HP, Dell, Apple or Sony. Asus became the first brand to launch its Asus EeePC which is a bare bones version of a regular laptop. For the Indian market in particular, apart from Asus, HCL, Allied Computers International-Asia and Fujitsu are also selling notebooks in seven to nine inches space out of which Fujitsu can be classified as a fully functional notebook of 8.9 inches and rest can be classified as sub-notebooks with limited features.

To start with, the Asus EeePC comes with a 7” display, low speed Intel processors, solid state drives for storage and a host of applications which can be useful for a casual user. It weighs less than a kilogram. The same is true of other brands with specs varying marginally. Even in terms of pricing, other laptops, i.e. HCL and ACi, have approximately same start range of less than Rs 18,000. HCL Mileap X series is pegged at over Rs. 14,000, including taxes, whereas ACi prices hover around the Rs 15,000 mark.

Describing the important factors of this category, Francis Kao, Product Manager, Notebook Business, Asus India said, “This is an altogether new segment in India, earlier, lightweight laptops were high on price; with the EeePC, with the help of technology, we have created a low cost, lightweight machine which is easy to carry around.”

Be it different versions of HCL Mileap series or Asus EeePC or ACi, all have similar mobility and hardware features. One major difference between ACi and the other two brands is the difference in storage medium. ACi is using a 40 GB HDD whereas others are using smaller SSDs. Elaborating on the move to SSD, Kao felt that it provides ruggedness and is better for the mobile device as it will be able to absorb shocks, which is not quite the case with HDDs.

Apart from these already existing players, some of the bigger brands in laptop segment are also rumored to be lining for a share of this pie through their new products. HP is rumored to be coming out with the HP Compaq 2133. Ghosh pointed out that even if they are entering the sub-notebook space, they are not planning to be really aggressive about it because he thinks that people buying this kind of laptop will be a fraction of the total number and Indians are still not ready for the second laptop concept yet.

Dell, on the other hand, is skeptical about this segment itself. “I think it’s too early to decide. We still have to figure out the use case for this segment. We have to see whether it’s a companion product or a primary low end, low cost PC. I think this segment will evolve; overall it is an interesting form factor,” said Michael Tatelman, Vice President- Sales and Marketing, Consumer Business, Dell. Price is an important factor, but what a user wants to do with it is a question to be answered by the users themselves, and which will eventually drive the market and product upgradation.

Application driven

A debate on this sub-notebook category against the full fledged notebooks would be a rather unreasonable comparison. What will be the primary usage scenario and the market differentiator for vendors would be the question to be asked.

As far as most of these tiny machine’s hardware are concerned, they all lack an optical media and most of them come with a rather small 2 or 4 GB SSD storage, which would be of no use if one is planning to store data on it. The user would certainly have to spend on some sort of external storage if this so-called notebook is his only possession. And, despite the fact that external storage media prices are touching bottom, some thing as important as an optical media cannot be left out for day-to-day usage for a country which is not yet used to other forms of data transfer and storage. Kao said, “What users need is an ultra-portable machine, and they do not need storage or optical drive as they already have another laptop or desktop at home. EeePc would work more as an add-on laptop than the primary one.”

Perhaps one way to look at it would be that the sub-notebook would be an additional machine for a user with an existing PC who needs mobility to some extent but doesn’t want to give up the power of his desktop for demanding tasks.

Finding some other market drivers and used cases, Diptarup Chakraborti, Principal Analyst, Client Computing Markets Asia Pacific, Gartner said, “It will be an application driven market. More and better applications preloaded on the machine would drive this Netbook category. Indians rarely buy software and would like to have more relevant applications preloaded for this particular segment.” Certainly, if one is using this notebook as a first machine or for Internet access, what he would need is some useful applications running on it and with that idea in mind, vendors have taken care of this aspect. Asus EeePC has got its own version of Linux developed by Xandros and has preloaded 40 important applications. When a user will have all the basic applications at his disposal, he will not worry much about lack of optical media and storage for application installation at least. Chakraborti believes that the target users would be all together a different kettle of fish and would not really compare between a low cost entry level laptop with this range. The main target of this machine will be primarily the Internet and mobile users.

Ghosh believes that technologies have to be worked around to overcome the drawbacks of this segment. Within a year’s time, companies will have a way around it and one might get a full-fledged notebook in that small form factor. When that architectural and technical achievement is obtained, this segment will grow rapidly.

Impact on Blackberry market

When we look at the sub 20k pricing of these new laptops, any organization might wonder whether it is better to give it to its sales force than a rather expensive Blackberry service, which is capable of only checking mail to a large extent. When we see the number of other features and portability provided by likes of ASUS, HCL or ACi, Blackberry or other PDA devices seems a questionable investment. A sales force would really like to have a semi laptop than a device which can just do e-mail. The sense of satisfaction would be higher with a laptop; well, at least in India, where employees do not always have all the mobile accessories. To compliment this ideology, Kao is certainly targeting this market and feels that it will bring a large chunk of the sales in future.

Further, Ghosh stated, “Blackberry and this sub-notebook space will overlap till an extent due to some gray areas which are common. There is confusion over where are the boundaries for each of them. Where does one and other begins is a bit of question mark.”

On the other hand, Chakraborti feels that it would not make much of an impact on each of the market and both will co-exist. “The laptop market has not been cannibalized by the Blackberry market and vice-versa. Blackberry is a matter of convenience. A Blackberry user is a power e-mail user and no matter what he will keep on using it, and he even gets an option to call from that device,” he added.

Road ahead

None of the vendors or analysts are hoping for a lot out of this segment, but are optimistic about growth in the future as and when the segment goes through an upgradation phase. Some feel that it is too early to predict the size of this market and a lot will depend on positioning the product and marketing it.

Chakraborti believes that the market will explode when vendors move to 9 inches from 7 inches because that size does not restrict the viewing. Further, he pegs this market at roughly about 5 to 10% of the overall market and expects a lot of people from the desktop segment to move to this segment.

A little reduction in the stripped down approach with innovative technology will help this segment grow faster in India even if the price shoots up a bit. That will ensure both portability and a fully functional device on the move, and would be able to attract the whole gamut of consumers.

kushal.shah@expressindia.com