March 14, 2009

Laptop computer prices go light


Observing the personal computers prices over the last years we go used to a 5% yearly decline. We could purchase a laptop computer with $2,500 in the late 90's and in the last December we could buy one with only $600. But in the last year the decline went steeper. In the fourth quarter of 2008 alone, the average personal computer's selling price dropped 14.3%, according to consultancy company IDC. In the past 15 years have PC prices declined at a faster rate only once, in the fourth quarter of 2001, as the Internet bubble burst and they dipped 14.5%, according to the same source, IDC. And this can be only the beginning. The current global economic downturn and the growing popularity of low-cost computers known as netbooks will be major contributors to steeper declines ahead. The trend is favorable for consumers but not for the laptop computers industry. For tech companies, the squeeze of shrinking margins is painful. The economic recession is certainly a major factor in the computers price declines, but, although the economy looks bad now, it will recover at some point. But there is one thing that will not change. That is the growing demand for netbook computers. Manufacturers like Asus and Acer opened the road with $300 to $600 stripped down devices. Noticing the netbooks success top manufacturers launched their own slimmed new flavour of laptop computers the netbook. Even Apple is rumoured to consider the launch of it's own netbook computer. According to IDC the number of netbooks shipped this year is expected to double, to 20 million, reaching 15% of all laptop computers shipments. But why is the industry not quite happy with the growing demand for netbook computers. Let's discuss Microsoft Windows. IDC estimates that manufacturers pay for each netbook $15 to $25 to Microsoft for the operating system shipped by the software giant which is less than half the price of the company's cheapest version of Windows XP for laptop computers. Low price being a strong feature of netbook success adds more pressure on chip makers already struggling to survive this not so encouraging economic environment.
Another downside of this success for the manufacturers is that while always being cheap the netbooks keeps getting larger and more powerful. Even they cost one third of the traditional notebook they can compete and cannibalize the last ones, rising concerns that netbooks "could potentially reset consumer expectations of what you pay for a notebook,"Richard Shim, research manager at IDC, said.
Another factor that could further erode consumer perceptions of what a laptop computer is worth is changes in distribution. Wireless and mobile telephony carriers in Europe and the U.S. are offering netbooks to their customers for little money up front or even for free with a monthly wireless data contract.
According to iSuppli, for 2009 is predicted that, despite the downturn, laptop computer shipments should grow 12% this year, to 156 million units globally.

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