NYT- notebook makers concerned about cheap mini-notebooks

Hp_mininoteWe’ve been saying this would happen since the first cheap mini-notebook hit the scene, that notebook OEMs were going to be getting a bit nervous about the low margins these little laptops are exposing.  The New York Times agrees and has published an article that looks at this concern in detail and sheds light on what some of these big OEMs are thinking today.  The article looks at Dell, Acer and HP and describes what they are feeling and how the explosion of this market has forced them to produce products of their own. 

A quote they have from a conversation with Fujitsu that explains why they haven’t entered the "netbook" market:

“We’re sitting on the sidelines not because we’re lazy. We’re sittingon the sidelines because even if this category takes off, and we getour piece of the pie, it doesn’t add up,” said Paul Moore, seniordirector of mobile product management for Fujitsu. “It’s a product thatessentially has no margin.”

That’s the biggest factor impacting the big guys, the low margin that cheap mini-notebooks have by design.  There’s not a lot of wiggle room in the margin when some of these netbooks are going for $300 and more importantly there’s not a lot of room for the OEMs to distinguish their product from the competition.  Anything new you add affects the cost and even a small price increase ends up being a large percentage increase for the consumer.

I agree with the author of the article that the notebook OEMs have long been looking to produce and sell the most powerful and thus feature-laden products.  This keeps prices up high and margins equally as high and these cheap laptops fly in the face of that plan.  This is what I think is giving Microsoft so much trouble with Vista currently, they’ve long convinced consumers that more bells and whistles mean a better product but this mini-notebook genre is flying in the face of that logic.  Thin and light is in, at least for the foreseeable future.

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