Netbooks, Nettops Threaten 2010 PC Refresh Cycle

By Jessica Davis  |  Print this article Print

While Dell and HP are expecting pent up demand and the arrival of Windows 7 to spawn a significant PC refresh cycle in 2010, netbooks and nettops, the low-powered Intel Atom-processor based mini-PCs, could potentially spoil the party.

Plenty of industry-watchers say that netbooks are cannibalizing sales of traditional notebooks and sacrificing average selling prices of portable PCs. But could that just be the tip of the iceberg?

While PC giants such as Dell and HP are forecasting a significant PC refresh cycle for early to mid-2010 as pent up demand and the arrival of Windows 7 push businesses to finally upgrade their PC fleets, the disruptive forces of thin clients and mini-PCs such as netbooks and nettops may be looming ahead, largely undetected, and about to sink the refresh ship.

While net tops haven’t made a huge splash yet, some VARs and analysts believe there’s plenty of potential for nettops, netbooks and thin clients to actually replace many PCs in business settings.

"Many users only need internet access and light computing like word processing, and these machines are tailor made for that," says Jude Daigle of PA Computer Connection in a Pittsburgh, Pa.-based solution provider. "Now that the genie is out of the bottle manufacturers will not be able to push it back in. Even low power machines run most applications very well, and Windows 7 runs well enough on the Intel Atom processor for most people’s portable needs, so why spend more than you have to?"

Daigle’s company sells Acer machines, and Acer recently introduced a net top with enhanced video – a machine that is aimed squarely at business users and only available through the reseller channel.  And other companies, including Daimler Chrysler, that are looking to cut costs have turned to PC alternatives such as thin clients.

While the market for low-powered net tops and netbooks is just starting to take hold in business, the potential is there, some analysts agree.

"Acer is positioning their net top as a desktop replacement for knowledge workers who require little beyond a browser and Microsoft Office," says Charles King, principal analyst at Pund-IT. "That actually describes the needs of many PC users, so it’ll be worth watching how well Acer’s and similar products do among consumers, particularly as next generation products with Nvidia graphics processors/technologies hit the market."

But will it completely disrupt the business PC buying cycle? King is doubtful.

"I’m not sure how disruptive they’ll be to the market as a whole," he says. "While they’re cheap compared to conventional PC and notebooks, they’re also poor choices for common applications with muscular processing and memory requirements"

The price difference between netbooks and traditional laptops is also a much bigger than the difference between net tops and traditional desktops, Rob Enderle, principal analyst at The Enderle Group points out.

"These net tops could be very attractive to a market looking for new, cool and inexpensive," he says. "However, they are also a little limited and regular PCs are priced much closer to these price points which makes this more of a stretch than the netbooks were… the perception of a big price drop isn’t as evident here.  It is going to depend a lot on how this stuff is positioned."

Customer acceptance of such technologies will likely play a big role in the uptake of these low-power and thin clients, and that’s where VARs may play an influential role in the fate of these technologies for business.

"At this moment, I don’t expect this to significantly impact the refresh cycle, though the potential is certainly there," says M.J. Shoer, president of Jenaly Technology Group in Portsmouth, Maine. "In the last 90 days, it seems like a flurry of vendors have been rolling out virtual desktop solutions that are prime to take advantage of this class of hardware.  The key will be client acceptance of virtual desktops."

And according to Marc Harrison, president of solution provider Silicon East, the acceptance isn’t there yet.

"Most users want the full Windows desktop experience," he says.  "We’ve tried - thin clients and virtual PCs are not ready for prime time yet, and frankly, aren’t cost-effective either."

Harrison still believes the PC refresh cycle is coming, driven largely by the aging fleet of PCs still in operation out there.

"There is no question that Windows 7 is going to be huge for the channel," he says. "All of those 5-8 year old Windows XP boxes have got to be replaced, and users are painfully aware of that."

But while thin clients may not be ready for prime time, netbooks and net tops still have a following.

"We see netbooks hitting the sales of the more powerful notebooks every day," says Daigle.  "For example, a business user that has a good desktop at the office and enjoys the flexibility and power of the desktop will often buy a netbook to take on the road with them so they can do some document editing.

"…As a reseller, whatever I can do to make projects more affordable for our clients is something we welcome," he adds.  "If you have a value-add they can be great for business, but if you don’t it’s just another nail in the coffin for equipment sales.  As they are commodities with no margin   and not worth the effort to stock or actively sell."


Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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