Telco-driven netbook sales turning PC industry upside down

Stuart Corner
Monday, 14 September 2009 07:40

IT Industry - Strategy

Netbooks, products that did not exist two years ago, are driving the biggest transformation in the PC industry in 15 years, largely because of telcos enthusiastically promoting netbooks with subsidies as they do cellphones, according to research firm Canalys.

"The biggest change of all has been the success the telcos have had in selling subsidised 3G netbooks, emulating the mobile phone business model," Canalys says. "The market shares of PC vendors are changing rapidly on the back of their willingness to commit to the netbook category and their agility in chasing these new, substantial telco deals."

Tim Coulling, Canalys research analyst, said, "Our latest research reveals that, in August, across Europe, the four PC vendors with the most telco deals were Samsung, Asus, HP and Acer. The real surprise has been how quickly the Korean vendors have moved to leverage their mobile phone businesses, selling netbooks to telcos – LG's netbooks have become prominent in the major countries too. Samsung has achieved great reviews for its NC10 netbook, primarily because of its keyboard and extended battery life.

"Suddenly, Samsung is a force to be reckoned with in the PC industry – it already has deals with more than half of the telcos currently selling netbooks. Meanwhile, traditional notebook category leaders – including Lenovo, Fujitsu, Sony and Toshiba – have been slow to recognise how quickly the market is changing around them and as a group they have signed fewer than 10 operators."

Coulling adds that, as well as being an important sales channel, the telcos are playing a pivotal marketing role for the netbook. "The telcos have massive retail and marketing coverage, so suddenly netbooks are being promoted in newspapers, billboards and storefronts with a prominence never before given to PCs.

"Vendors that are not present in the telco channel are missing out on valuable promotional opportunities. Netbooks and smart phones are finally justifying the telcos' massive infrastructure investments in mobile broadband. They are seeing data revenues rise quickly to offset falling prices for their voice services, and the business case for investments in LTE are starting to look more promising."
 
Canalys senior analyst, Daryl Chiam, added: "The telco channel took around six months longer to develop in APAC than in EMEA, but activity has accelerated, especially in North Asia. We observed more than double the number of netbook deals in telcos in August as we did in June.

"The local vendors are moving fast in their home countries, so Asus and Acer lead in Taiwan, Samsung and LG have the deals in Korea, while Lenovo, Haier and Tsinghua Tongfang are active in China. Sony, Toshiba and Sharp have all arranged deals in Japan. HP's superior coverage gives it the most deals overall across the APAC region. We expect to see a rush of new deals across South East Asia and Oceania toward the end of this year."
 
Canalys predicts that the distinctions between smart phones, netbooks and notebooks will become increasingly unclear over the next year as the screen sizes and performance of netbooks increase while new operating systems and processors are launched. It estimates that 13.5 million netbooks were sold worldwide in H1 2009 and that more than 50 telcos have begun selling netbooks.