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Wednesday, 17 December 2008 16:03

Windows crushing Linux in netbook market: Acer

Contrary to some recent reports, senior managers at Acer and other leading vendors have confirmed that Microsoft Windows XP now dominates the emerging sub-notebook market with more than 90% of new sales. Meanwhile, Linux, which had the netbooks market to itself until April this year, has seen its share of the space eroded to less than 10% in a breath-taking decline.

The netbooks market was effectively born in October 2007 when Asus released its first Eee PC 701 in Taiwan running a customised version of the Xandros Linux distribution. By the end of 2007, an estimated 1 million Eee PC units had been shipped.

A Microsoft XP version of the Eee PC was released in Japan in January 2008 and hit the rest of world around April. Microsoft, which had been caught flatfooted, by the netbook phenomenon, hastily resurrected Windows XP to meet the challenge. Despite coming from behind, Microsoft's strategy appears to have worked, according to executives at several major PC makers.

Acer, which has sprinted past Asus as the world's leading netbook vendor, shipped approximately 2.15 million units of its Aspire One netbook in Q3 2008. The total market for the quarter was approximately 5.6 million units, giving Acer 38.4% market share.

The Acer Aspire One, with an 8.9 inch display, is available with either Windows XP and Linpus Linux versions pre-installed. However, sales of the Windows version are dwarfing sales of the Linux version of the popular netbook.

"Our Windows XP netbooks are outselling Linux machines by more than 9 to 1," Henry Lee senior product manager - retail channel manager, Acer Computer Australia, told iTWire.

"That's pretty much the case both in Australia and worldwide.

"The Linux netbooks sell particularly to hardcore Linux users who want to customise their system.

"What we have seen when we launched the Aspire One around mid-year we found that the Windows numbers increased over time. Six months later, the percentage of Windows sales appears to have peaked and stabilised at a very high level."


According to Lee, Acer's netbook sales are growing 20-30% quarter on quarter.

"By Q3 2009, we're looking at selling more than 4 million netbooks worldwide for the quarter," said Lee.

Lee also dismissed claims by some industry commentators that netbook sales are cannibalising the market for higher end computers, thus eating into the margins of PC vendors, as well as Intel and Microsoft.

"The Aspire One is not a full function notebook but for its design and capability is absolutely suited to the Internet," said Lee.

"People are buying it to surf the net, check their email and view photos online.

"Overall what we're seeing with our numbers is that netbook sales haven't cannibalised the full-sized notebook sales. Because of the functionality of the netbook you do have limited performance in what it can do whereas the entry 15 inch type notebook allows for better graphics, optical drive suitable to watch videos and so on.

"The netbook has become a new category and a new market and it's correct to say that people are buying a netbook in addition to a notebook."

Managers at other major netbook vendors have echoed the sentiments of Acer's Lee concerning sales of Windows and Linux netbooks and the emergence of a new market segment.


Toshiba, which released its NB100 in September, has seen sales of the company's debut netbook soar, despite some relatively lukewarm reviews for the new product.

"From a units perspective, it's already accounting for about 5% of our business," Matt Tumminello, Toshiba's notebooks product marketing manager Australia and New Zealand told iTWire.

Tumminello says that early indications are that Toshiba netbook sales are tracking the Windows market for desktop and notebook computers at about 92% of the market.

"We've launched our netbook locally with Windows (only) but I know that our European counterparts have launched it with both Linux and Windows. And I also know that in Europe from what we've been shipping from the factory that something similar to that 92% Windows mark would be true.

"We're still obviously watching what happens with the sell-through and what becomes popular but I expect it to take the same Windows path because of the familiarity point of view."

Like Acer's Lee, Tumminello sees netbooks developing as a brand new market space, quite distinct from notebooks.

"The target market is that very first time user or perhaps a second computer for more experienced users," said Tumminello.

"There's obviously some limitations around the product. A good description I heard the other day is that a netbook is an information gatherer and viewer but not an information creator."

A similar story is reverberating out of Dell, which like Toshiba, launched its netbook - the Inspiron Mini 9 - in September.


Again, like Toshiba, Dell has launched its new netbook in both Windows XP and Ubuntu Linux versions in the US but only the Windows XP model in Australia.

Evan Williams, Dell's Australia and New Zealand consumer sales and marketing general manager told iTWire that the company decided to release only a Windows XP version of its netbook in Australia after gauging customer demand in Australia and overseas.

"In Australia, when we evaluate what products we bring to the market, we've got a limited number of models we can bring in," said Williams.

"We chose what we thought was most popular based on what customers were telling us.

"We're evaluating it and we're particularly looking at the US response to their models. On the website that US customers buy from you can see the customers' feedback on the models. We can simply look at that feedback and evaluate what models we should bring out."

So what sort of feedback is the Australian office of Dell getting from the US?

"If you look at the number of models on the site, there's a small number of Linux models compared to the XP models. That probably tells you intuitively where the demand is at the moment," said Williams.

When asked for a comment about the growth of the netbook market for Asus, the company's spokesman for Australia Shawn Yen told iTWire that sales are steady but had no further comment. A request for additional comment was not forthcoming at the time of publishing.

UPDATE: Asus has since responded.

Most netbook makers are not prepared to write off the future of Linux netbooks for the mainstream consumer market just yet. However, it is telling that Linux netbooks are becoming harder to find in consumer retail stores.

One of Australia's largest retail chains Harvey Norman has given its verdict to iTWire about the way it views the state of play in the netbook market space.

"Windows is definitely the dominant platform in netbooks, currently the Asus Eee PC 701 is the only model Harvey Norman carry with Linux," said Rick Seymour, product manager computer hardware at Harvey Norman.

It is perhaps a worrying sign for the future of Linux in the consumer space that Seymour also said that the quantity of netbooks being sold at the store has been increasing steadily over the last few months and has had a real spike since mid November. Despite this ramp up, the only Linux model that this major retailer has seen fit to stock is the very first netbook to hit the market.

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Stan Beer

Stan Beer assists with Digital Advertising installation and monitoring of advert performance. With 35 plus years of experience working in IT and Australian technology media, Beer has published articles in most of the IT publications that have mattered, including the AFR, The Australian, SMH, The Age, as well as a multitude of trade publications. Any previous news story submissions should be director to editor@itwire.com and advertising enquires to andrew.matler@itwire.com

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