As Cellphones and Netbooks Converge

Jan. 06, 2009 4:03 AM ETNDSN, INTC, MSFT, QCOM, FSL, NOK, ERIC, GOOG1 Comment
SA Editor Judy Weil profile picture
SA Editor Judy Weil
337 Followers

For those worried about how the consumer electronics industry will fare in this downturn:

WSJ reports that netbooks are taking over the laptop market.

A new breed of low-priced laptops called netbooks have been thriving during the downturn -- so well, in fact, that many high-tech companies are scrambling to adapt.

The responses by these high-tech companies will be a hot topic at this week's Consumer Electronics Show. They include not only new netbooks -- which typically cost $300 to $500, and often use Intel Corp.'s (INTC) Atom chip -- but products that address shortcomings of the new category and other portable PCs.

The activity is the latest sign that technology segments are converging at an accelerating rate, driven by competitive pressures that the recession is amplifying. Companies... are trying to help netbooks and other portables work as simply as cellphones, just as makers of those pocket-size devices are improving their ability to tap into the Web.

In another tactic, Qualcomm Inc. (QCOM) and Freescale Semiconductor Inc., (FSL) which make chips for cellphones, are discussing plans at CES to offer their technology for netbooks, too. Henri Richard, Freescale's senior vice president and chief marketing officer, predicts that new entrants such as cellphone makers will join the race to make portable computers.

Any line between netbooks and higher-end laptops stands to get even blurrier, as competition causes companies to add more features to their products.

Nordson Corp.'s reported on its FQ408 conference call that it was seeing low cost computers and cell phone technology as one of the few areas still thriving in its business despite the recession.

In technology markets we’re seeing some areas like LEDs and low cost computers.

We continue to be able to win with some of our technology driven activities... Smart phones for example. The shift away from a traditional cell phone to those that can do all the things that we’re now dependent upon like emails and other web browsing.

The investment in the technology to make those phones or the investments to move to the next generation of architectures for things like memory continue to make progress and they’re offsetting broader declines

But what about margins on those low-cost products? WSJ:

More than 80% of netbooks now ship with Windows, compared with less than 10% when the devices first went on sale. But most run XP, and analysts believe that Microsoft (MSFT) receives less revenue and profit from that product than the newer Windows Vista software that comes with other laptops. Intel has said its prices and profit margins on Atom also are lower than on some other chips.

This article was written by

SA Editor Judy Weil profile picture
337 Followers
Judy Weil is a Seeking Alpha editor and an experienced journalist and translator. Judy covers the real estate and housing market for Seeking Alpha. She previously worked for Maariv Online and Ynet News.

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