Have notebooks reached maturity?

Manish Goenka, Account Manager, GfK, discusses the current state of the netbook market and its future.

The period of May 2012 brought mixed news for the IT category, which had year on year (YOY) growth rates of 11.7 per cent in value and -2.2 per cent in volume in the consumer channel.

It’s no surprise that most of the growth came from webbooks, (commercially known as tablets). Excluding webbooks, the IT market continues to suffer from tough economic conditions. Interestingly, there were lots of product categories that showed higher growth in terms of value compared to volume helping to keep the market in growth, if only by value.

The notebook category, which makes up a significant share within IT, struggles to show positive growth, especially in value terms. Over the last 12 months, notebooks have shown lower growth in terms of value compared to volume, (except for the month of February 2012). In the month of May, notebooks declined by -9.7 per cent in volume and -10.4 per cent in value YOY. Average selling price (ASP) has been in continuous decline in the last 12 months compared to the same period last year, (except for the month of February 2012). Ultra-thin sales have increased; however, the absolute volume is still too low to impact the market significantly.

The question that might be important to look at this point would be: has the notebook reached its stage of maturity? Is losing value the only way to generate sales? Will the new Windows operating system launch create enough stimulation to push the entire year into growth?

Interestingly, if we were to look at each price segment within notebooks and try to establish the growing and declining price segments, there is not one segment that stands out in continuous growth or decline. All the price segments in the higher price segments (more than £500) have suffered the decline except the price segment in which ultrathin sits (i.e. £900-£1000). Price points of £279, £299, £329, £349 have gained share over the period of the last few months. Specs like hard disk drives, random access memory (RAM) and screen size are becoming limiting features and falling short in driving incremental value to the category.

Netbooks continue to be the victim of lots of factors such as the Windows 8 launch, hard disk shortage and notebooks being offered at a lower price point. In May 2012, netbooks in the consumer channel witnessed a decline of -64.3 per cent by volume and -60 per cent by value compared to one year ago. In the total computing category (excluding webbooks), netbooks share has been between 6 per cent – 8 per cent in volume since start of this year. It was 7.8 per cent share in volume in May 2012 compared to 17.8 per cent in May 2011.

Within the desk computing category, AIOs (all in ones) although a small category in terms of sales units, has seen growth. It grew by 12.2% in volume and 15.9% in value compared to last year. It has the potential to grow faster if the launch of Windows 8 increases activity around the touchscreen interface feature. Desktops, excluding AIO, have marginally declined by -1.8 per cent in value and -8.3 per cent in sales units compared to last year.

Generating value within the notebooks market has been challenging for vendors and sellers alike and maybe there are lessons to learn from categories such as headsets, keying devices, communication devices and the storage market, which has seen value growth that is significantly higher than growth in volume term.

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