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Summary:

I am in a unique position in that I get to speak with the teams at major OEMs that make notebooks and netbooks.  These conversations are often frank discussions that prove how these companies are trying to understand the new low-margin netbook segment and how they […]

I am in a unique position in that I get to speak with the teams at major OEMs that make notebooks and netbooks.  These conversations are often frank discussions that prove how these companies are trying to understand the new low-margin netbook segment and how they can serve their customers.  I see a recurring theme to these discussions that show me that major OEMs are having trouble deciding how to attack the netbook market.

I’ve written about the netbook problem before and how it’s tough for the OEMs to distinguish themselves on an ever-crowded playing field.  The OEM reps I speak with are really struggling to come up with a way to distinguish their own netbook products from all of the similar devices that are popping up all the time.  I must reiterate what I’ve said before and what I tell these companies in private: price is everything in the netbook segment.  The sales numbers required to make it worthwhile for large OEMs like HP and Dell to participate in a low-margin segment will only be realized when netbooks hit the big box retailers.  When mainstream consumers can walk into a Best Buy and see, touch and interact with a netbook is when these will start flying off the shelves.  I still contend that $400 is the tipping point price-wise for this to happen and I understand why HP and Dell are having a hard time coming to grips with that.

I am asked over and over by these guys how they can make their product stand out when netbooks are pretty much the same.  They keep asking me what special function or feature they can add to their netbook to set themselves apart from the crowd.  My answer is always the same to them: do not add "special" anything as that can only add to their price.  I can’t state strongly enough that price is everything so while it might be cool to add special feature X to your offering it will only hurt you in the marketplace as that will make your price higher than a lot of the netbooks coming out of Asia.

Their response to this statement is invariably "then how do we set our product apart from that crowd?".  Listen up HP and Dell to what I have to say.  This is the easiest question to answer for you guys and I’m surprised you don’t get it yet.  Mr. HP netbook guy you already have the single best advantage over the many OEMs releasing netbooks today:

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Yes, that’s right.  You are HP and your logo represents the quality and innovation behind it.  It represents the global support infrastructure you have operated for years and years that proves you stand behind your netbook, even though it’s cheap by notebook standards.  So what else do you need to set yourselves apart from the crowd?  You already have an advantage so produce a solid netbook at a competitive price and tell the world why yours will be supported better than the others.  When you have an advantage then press it! 

If you really want to distance your netbook from the rest then add to that advantage.  Make sure it comes standard with a 6-cell battery, produce a line of accessories that augment the user experience should they desire.  Offer a reasonably priced augmented support package that can be purchased at the time of the original netbook sale that removes any doubt in the buyer’s mind that your total package is better than the rest.  Press your advantage.  If you build it, they will come.  I am certain of that.

The netbook segment will grow huge I predict and you ignore it at your peril.  You will start to see your notebook sales drop as a result so you’d better be in the netbook market, and soon.  Imagine this scenario:  consumer is in Best Buy (or similar retailer) looking for a simple computer for the home.  They see two similar netbooks side by side, an Acer (or Medion, or MSI, etc.) next to an HP netbook.  Both are roughly the same component-wise and both are $400.  Which one will they buy?  The HP of course because it is a known brand.  They have used HP products before and they know you’ll be around should they need support.  Get it now?

  1. And either make them in assorted colors or sell color swap kits. (And by color I don’t mean your choice of black or white, Dell! You sell another affordable laptop in a variety of colors, so snap to it!)

  2. James, I agree with you 100% on HP/Dell/Compaq/Toshiba having an instant advantage due to name recognition.

    I’m looking for an 8.9″ Netbook with a touch screen and a Fast SSD or HD and a 6 cell battery.

    I was leaning towards the MSI Wind, but as I have two brand new 14″ Dell D630s from work (one locked down as a desktop, and one open for my experimentaions), I feel that the current ever increasing screen size is of less importance to me.

    Indeed, a 8.9″ slate tablet with netbook specs would be great…

  3. something i disagree with you on is price, all you ever say is “cheap” & leave it at that. while i agree they do need cheap models i find NOTHING at all wrong with them offering “extra features” for a higher price. it will offer more variety to pick from & some of us dont mind paying a little more to get what we want. even these $700 & above netbooks are a bargain compared to what ive been paying for ultraportable PC’s all these years.

    your “advice” does nothing but saturate the market with me-too devices. essentially all you told them was to offer netbooks at the same price as the other guys with NO separating features & hope that their “support” will sale them. maybe its true, maybe it will sell them. but then if HP/Dell are the only 1’s in the game the prices will go back up & innovation will stop.

    the single best advice i can offer HP/Dell & what will absolutely set them apart from the crowd is to make their devices AVAILABLE. i am so sick of going on netbook treasure hunts. while Asus has done a decent job Acer/MSI have royally F’ed up their entire production line.

  4. Price is an EXCELLENT suggestion, leaving features that differentiate it from others as upgrades. We all end up upgrading anyhow, making that $399 really end up being $699. But having that $399 price is what forcefully snaps our head around to the product as we walk by it in Best Buy… “that netbook is how much?!?”.

    The one thing I think is INDISPENSABLE in a netbook is a touchscreen. Preferably with a screen that swivels and lies flat on the keyboard tablet style. I’m waiting for a nice name brand touchscreen tablet style netbook that has a decent sunlight viewable screen for $399, then I will happily upgrade the crap out of it and walk out with a dream netbook for what I figure will be $699 or so.

  5. Britt, I am not talking about the enthusiast consumer who is often willing to spend more for advanced capability. I am referring to the mainstream consumer who is focused on price solely. For these large OEMs the netbook is not going to be their only device on the market so they will continue to offer all the choices we want.

    No, I am strictly referring to the $400 netbook category which are all “me-too” devices, which they have to be to meet that price point. That’s why I say pric is king. quite frankly the enthusiast consumer segment is not large enough to keep these OEMs making netbooks. They have to hit the mainstream and that’s the market segment this article addresses.

  6. I think it is very telling that HP is selling the Mini Note on their small business web site rather than their consumer site. They know it is not targeted at the same market as the Asus Eee. What is funny about this is that when HP started spreading the rumors about the Mini Note they were referring to it as an accessory that would be a no brainer for any of us to purchase.

    But you know, HP has a history of higher priced handheld devices. If I recall some of their Jornada handhelds were significantly higher in price than other products.

  7. I agree, price is an issue, 400 bucks is the magic price on the low end. But, there are those in the mainstream that remember spending 1200-1500 bucks on a laptop with decent features, warranty, etc. This is not a high end laptop, most spend about this price for a Dell or Apple 13 inch.

    So a netbook for 500-600 bucks that is decently priced, has all the features you might need, solid build, and with the name brand will sell.

    The biggest thing are the reviews, what does jkontherun, cnet, laptopreview, all of them think. I read 12 of them before making a purchase. My parents come to me for advice. I’m sure those that are mainstream know an enthusiast to go to for advice. Once you impress us we can help those that dont know. If I tell someone mainstream that this is a bad product, they listen and will even tell others.

  8. one thing ive learned from these opinion based pieces is that no matter how many people disagree, you will always respond twisting your original statement.

    you keep pushing for this idea of a single cheap $400 device, which is just silly. all people have been telling you is that while its okay to have a cheap entry level device for the mainstream consumers that YOU are talking about, there is nothing wrong with having more expensive add-on extras for the enthusiast. that is exactly how the regular PC market works as well. why would you want a company to deny the consumer choices? you already complain about these devices being to similar well forcing them too all be $400 would make them even more similar.

    for people who think that they will wind up buying the more expensive models anyways, well of course because obviously their an enthusiast visiting these boards. but most mainstream consumers will be fine with the entry level device.

  9. limiting device to a single boring vanilla build is stupid. no company does that – no consumer wants that.

    $300: barebones entry level – 512MB RAM, 8GB SSD (nothing smaller so grandma can fit XP)

    $400 – $500: mainstream level – 1GB RAM, 8-16GB SSD/80GB – 160GB HDD, expanded battery

    $500 – $700: enthusiast level – 1GB+ RAM, 16GB+ SSD/160GB+ HDD, expanded battery, cell-based net, high rez, touch screen, convertible*

    ALL models should offer Linux or XP

  10. WOW James, I think I disagree with you.

    The problem here is you seem to not reconize the inherent advantages to netbook size while still running a full version of windows. The OEMs need to play up these advantages thus making a netbook purchase not a replacement for a bigger notebook but in addition to a notebook.

    The guts of a netbook dont need to be attached to a screen or even a keyboard. HP can sell them inserted into 100 things

    HP should start offering bundles with their Projectors for making presentations. Preload the netbook with Powerpoint or a viewer and then offer a carrying case so the projector and netbook are all in one.

    Build a netbook into a projector for a true all in one package.

    Build a netbook into am HP TV. Offer a Bluetooth keyboard.

    Install netbook guts into HP Business Copiers. they can contol the copier and also be used to pull up web pages right at the machine or contact other users on the network via IM or email.

    Install netbooks into Business phone systems.

    Install netbooks into fax machines.

    Install a bar code reader into it and make it a portable point of sale device.

    Install it into a TIVO or other recording device.

    Hang it on a wall and make it control my HVAC and burglar alarm system.

    Stick it into kiosks and let it run 24 / 7 in malls and displays.

    Give me a holder and let me install it, the entire netbook, in my car.

    HP can differintiate themselves by putting their netbook guts everywhere. I want the power of my netbook in my jogging machine at the Gym. Built into the door of my Refrigerator where I can pull up recipies and show my scanned in kids art work. I want those guts running my cloths washer and dryer. ( A washing machine with 50 cycles you can fine tune for temp and time and spin speed and then emails me when it is done.) James you seem fixated on the netbook form factor. It has much power beyond that if it is just unleashed. Just my thoughts.

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