An example of a disruptive innovation …
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Excerpted from Knowledge@Wharton, “The Net Impact of Netbooks?”, November 26, 2008
PC makers Hewlett-Packard, Dell, Lenovo, Acer and Asus are increasingly thinking big about small netbooks — portable computing devices that can cost anywhere from $200 to $500 and depend on the Internet for many computing tasks.
Research firm IDC estimates that 10.8 million netbooks will ship in 2008, just about a year after Asus launched what is considered the first device in the category. Asus has a 46% share of the netbook market..
Netbooks are mobile computers with screens ranging from 5 inches to 10 inches. Originally intended principally for the education market, they typically run Linux or Windows XP and need to connect to the Internet for heavy computing tasks.
Analysts agree that netbooks will be disruptive to the PC industry, but it’s not clear in what way.
- Will netbooks poach sales of laptops?
- Are netbooks replacements for smartphones?
- Will netbooks increase the popularity of cloud computing in which users store files on the Internet and manage them with web-based applications?
It’s too early to know where netbooks fit or how well they will ultimately sell among consumers, who are projected to buy about 70% of these devices.
Gartner notes in a recent research report that it is also possible netbooks will be viewed as deficient by consumers, who expect the capabilities of a fully featured PC.
Meanwhile, these small devices are proliferating. Qualcomm, a wireless semiconductor company, announced plans in November to launch its own designs for a “PC alternative” that would compete with netbooks. Qualcomm’s device, code-named Kayak, is being tested in Southeast Asia in early 2009.
The success of netbooks may ultimately rely on always-on Internet connections. Since these small PCs lack significant storage, they largely depend on the Internet to access content and documents. “Once Internet connectivity gets to the point where it’s everywhere, these devices become more viable. Dark spots and dead zones in wireless coverage are a hindrance to the netbook market.”
“If you think of what people do with their computers, it includes a) storing data and b) installing and using applications. Cloud computing will reach the masses on both these dimensions, and netbooks go hand in hand [with this]. More consumer data will move online [or into the cloud]. Users are now more comfortable with their data living in the cloud. Having your data online lets you do things like sharing it easily with your friends and accessing it anywhere.”
While netbooks are showing early popularity, experts at Wharton stopped short of declaring these devices to be runaway hits. They point out many uncertainties.
The first worry is the economy. To be sure, netbooks are inexpensive, but they are also a largely discretionary purchase at a time when the global economy is struggling. In developed markets, like the U.S. and Japan, netbook purchases could be delayed.
Another question is whether netbooks are really suited for emerging markets, as early proponents contend. In the U.S., netbooks can find Internet connectivity through multiple means, but the emerging markets are different. Ubiquitous Internet access may be a fundamental concern.
“The real use of netbooks may be for the amusement of bored teenagers whose needs for connectivity and diversion cannot be satisfied with an iPhone, [which is] not exactly a market that I expect to see emerging in the developing world.”
One thing is certain: The netbook category is worth watching because it is growing and evolving on the fly…
Full article:
http://knowledge.wharton.upenn.edu/article.cfm?articleid=2107#
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