Which markets will low-cost PCs predominantly serve in Oz?

Everyone is talking about low-cost PCs and Dell has become the latest vendor giant to throw its hat into the circle after confirming plans for a cut-price mini-notebook.

The PC manufacturer made the official announcement after chief executive Michael Dell was seen brandishing a mini-laptop at the recent All Things Digital conference in Carlsbad, California.

Details are few and far between, but a Dell blog revealed that the company has “positioned it as the perfect device for the next billion Internet users”.

Images of the pint-sized notebook appear to indicate that it will come in a choice of two colours: black or red. However, the company has made no formal announcement on specifications or pricing.

IDC forecasts worldwide shipments of the ultra low-cost notebook PC will grow from less than 500,000 units in 2007 to more than nine million in 2012.

But with low average selling prices, worldwide revenues will be less than US$3 billion in 2012. As a percentage of the total consumer PC market, these devices will remain under five percent throughout the forecast period.

However, ultra low-cost notebooks could eventually capture more than one third of the education market by 2012.

IDC’s definition of an ultra low-cost notebook PC is: a sub-US$500 clamshell form factor mobile PC with a screen measuring from seven to 10 inches diagonally, running a full operating system capable of supporting third-party applications, and possessing a keyboard and wireless broadband connectivity.

HP, Asus, MSI and Pioneer Computers Australia have already flagged their intent in the space.

Asus believes it is on target to sell almost two million Eee PCs in the first six months of this year at US$299 or US$549, depending on specs.

The growing momentum behind this new genre of notebooks has been driven in part by the availability of low-cost chips from Intel and Via.

Pioneer even managed to release a $349 offering, DreamBook Light IL2, which weighs only 800 grams.

The ridiculously priced laptop followed up on the Pioneer DreamBook Light IL1.

However, hype and interest aside, we ask our experts which sectors of the mature Australian market will be looking to splash their cash on low-cost PCs?

Hugo Ortega
Prinicpal, Tegatech Australia

Tegatech Australia has been focused on distributing ultra-mobile PC for several years and if there is one trend we have noticed it is that most deliveries revolve around vertical markets and corporate solutions.

We have experienced major successes in the medical vertical with hospital projects in Western Australia, mining also in WA and North Queensland, housing in NSW, gaming in Queensland, transport in WA and more.

Ironically no matter how low the cost of the unit, another trend we have witnessed is the increased desire for end-users to ask for upgrades, and highest specifications possible; the irony is that this has created an oxymoron of the term “low-cost”.

So when I am asked which markets low-cost PCs (LCPC) will address, with confidence I can suggest that it won’t be a price-driven market, but a mobility-driven one.

If we look at most LCPC available today they are sub nine inches and most offer the integrated resources needed to operate a business or office remotely.

With an increased desire for employees to work away from an office, it will be the LCPC which help make this pipedream more financially viable, and therefore reside LCPC in vertical markets a while longer.

Schools are an obvious target audience but I don’t believe LCPC alone will play as much of a role as software will.

Students need a combined hardware and software package to make use of LCPC, and this is still lacking.

Until then we will continue to ship volumes of LCPC to vertical markets and wait for the rest to catch up.

Bob O’Donnell
Program vice-president, clients and displays, IDC

Ultra low-cost notebook PCs have received attention as a potential solution to the digital divide in developing countries.

However, IDC believes these devices will primarily find success as mobile, secondary computing devices in established regions and education PC markets.

Consumers have embraced PCs, particularly the portable PC, as a personal device rather than a shared household device. This has led to the introduction of notebooks in various sizes and shapes, as well as more specialised PCs.

Very low-cost, compact notebooks that can be carried around and provide quick and easy access to the Internet via Wi-Fi hot spots fill an important spot in this burgeoning market — the first disposable notebooks.

IDC believes ultra low-cost notebooks make most sense as secondary computing devices, used primarily for online activities and carried around more often than “regular” notebook PCs.

While the devices offer most of the functionality many users want, a true web browsing experience is one primary feature distinguishing ultra low-cost notebooks from smartphones and other smart handheld devices.

Despite its potential, the ultra low-cost notebook won’t receive a universal embrace from consumers.

The price gap with fully featured notebooks will be small and many consumers will opt to pay a little more for a fully featured, full-size notebook PC.

And PC vendors, wary of the very small margins on these very small devices, will promote ultra low-cost notebooks as additive products, not replacement products, and will still face challenges in making them a profitable business.