CRN Special Report: Notebooks

The sub-$1000 notebook phenomenon is gaining momentum, with notebooks being sold for between $787 and $999 in places like Big W and Harvey Norman.

In terms of the future for notebooks, it poses a lot of issues for resellers.

GfK’s Ray says if it continues like this, then notebooks will become almost a commodity item. “If you look at indications in Europe, we’re seeing notebooks sold through different retail channels, like groceries.”

“About 30 percent of notebooks in Germany are reportedly sold through grocery retailers. It’s quite frightening for the IT industry. That’s a step that could happen here and possibly will, especially at the low end,” he says.

Newton says there has been a very mixed response to Acer’s sub-$1000 notebook blitz. “Some are horrified by it and others really don’t seem to care too much; it’s a real polarised response we hear, there’s no-one in the middle.”

He says those that are not threatened have pretty well-established businesses, which are running well and meeting their customers’ demands.
 
“We don’t do stunts with notebooks. We don’t do what Acer has done with its $999 or $997 product, which is essentially driving for numbers. We’re not interested in that. We’re more interested in building a long-term viable business and that is essentially driven by consumer demand. For example, we’re bringing in Sonoma early and bringing in DVD burners early in response to that demand,” Newton says.
 
Notebook specialist resellers are looking at the sub-$1000 trend with some apprehension. Andrew Humphreys of Melbourne reseller City Notebook Centre (CNC) says prices are getting slashed to barely nothing due to a lot of competitors deciding to “gut the price and go on bulk”.
 
The vicious price cutting is not something they can ignore. “Every Thursday in The Age they have the Green Guide. From our perspective, the prices on some of the notebooks advertised in there, I swear they’d be lucky to make $10 on them. They’re selling on price but make nothing on them. It makes it harder for everyone else, and it’s unfortunate for us because we’re only a small business,” he says.
 
CNC has been around for 15 years and Humphreys says that ultimately you just do what you can do to make yourself stand out.
 
“We have a laptop service agreement that we provide with our sales on notebooks, and we’re pretty much the only people in Melbourne that I know that do this. If you purchase a notebook from us, we offer free support for the first year.”
 
Acer had a fairly mild response to the question of how its push for sub-$1000 notebooks direct to the consumer market impacts on resellers.
 
“They can differentiate and add value at the point of sale by offering their own repair services and integration services,” says Acer’s Leone.
 
The fierce price competition first appeared in the pre back-to-school months of January and February and Sony is watching with interest as it rears its head again.
 
While Sony does not play in the low-end, Kerr says it is a very fast growing market and is really driving the notebook market.
 
“It’s assisting everyone,” he says. “The reason for having the sub-$1000 notebook is to expand the market, expand interest.” The issue is, if traditionally you were selling laptops at $2000- $3000 you cannot afford to shift everyone down to $1000 laptops. If you shift down to that, you have to sell four times the number of laptops, quadruple your efficiency to make the same amount of money, he says.
 
“Do I think the sub-$1000 notebook is a good thing? Yes, I do. It opens up the idea that people can own a notebook. And while they may buy a $999 notebook this time, when they’ve outgrown this one, in six months or a year’s time, that’s when you can move them to a $2000 or $3000 model,” Kerr says.

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