Customers looking at netbooks at a Gome Group store in Beijing. Cheap, portable and document-processing friendly, netbooks seemed to meet all the needs of professionals. But today they are losing out as touch screen tablets including the iPad and many of its clones prove to be more popular. [Photo / China Daily]

Computer fight moves on to portability and touch screen

SHANGHAI - Technology leaps occur almost on a daily basis. That is why you can be forgiven if you have forgotten the last big thing in computing: netbooks.

A netbook is often referred to as a mini laptop computer with a slender price tag as low as 2,000 yuan ($317), as opposed to a normal notebook PC that sells for around 6,000 yuan.

There are arguments over whether it was ASUSTeK Computer Inc or Samsung Group that manufactured the first such gadget, but the term "netbook" was coined by computer chip maker Intel in 2008 as a new category of personal computers separate from its more profitable notebook PC businesses.

Cheap, portable and document-processing friendly, netbooks seemed to meet all the needs of professionals. But today they are losing out as touch screen tablets including the iPad and many of its clones prove to be more popular.

Netbook vendors have started to feel the pinch in their changed fortunes. For Liu Qi, a salesman for Acer Inc in Shanghai, the notable change started with the uniform style and color of netbooks.

"You can find only one type of netbook under one particular brand now. But two years ago, there were at least three to four styles with varying colors for you to choose from," Liu said.

Liu was in the industry for only three years, but that was long enough to witness the meteoric rise of the mini notebook. Netbooks were then seen as an earth-shattering force in the industry, Liu said, reducing sales of normal notebooks by 20 percent.

"During the peak in 2009, one booth alone could sell 40 to 50 devices a month," Liu recalled. "Most customers were girls who were picky about color and weight but they all went home satisfied."

Global sales of netbooks hit an historical high in that year, reaching 34 million units, according to research firm IDC. But the torrid growth soon ceased, partly due to the fact that tablet PCs hit the market the following year.

The trend became even more evident in 2011 when Liu sold only one-third of the number of netbooks a month than he was managing two years previously. "To some degree, the likes of iPads supplanted netbooks. They appear more stylish and provide a new form of computing," Liu said.

Currently, only a handful of PC makers bother to mass-produce netbooks, said Jiang Xiaokun, a sales manager with Shanghai Lankun Information Technology Co Ltd, a company that sells franchised computers from Lenovo and Samsung.

According to Jiang, 40 percent of the market share is occupied by Samsung, followed by two Taiwan-based companies, Acer and ASUS, which take the second 40 percent. A range of other companies account for the final 20 percent.

Prices range from 1,500 yuan to up to 3,000 yuan, with distinctions in battery life and screen performances. But netbooks almost unanimously use the Intel Atom processor, making the market largely homogenized.

Lower margins deter PC manufacturers from innovating and upgrading netbooks.

Jiang said the average profit for one unit is 50 percent lower than for a normal laptop. Liu said he got 20 yuan as a kickback for every netbook he sold and 50 yuan for every notebook PC.

Despite decelerating sales, the netbook business is far from dead. Touch-screen tablets are hardly substitutes for the mini notebook, considering their price and functionality, said Sun Peilin, an analyst from IT research firm Analysys International.

Unlike netbooks, tablets are largely regarded as an appealing luxury, Sun said. But more importantly, netbooks allow portable surfing under a security framework, while tablets, even though portable, fail to ensure a safe operating system.

"Most online transactions and futures trading software are coded in compliance with the Windows operating system. So businessmen cannot rely on a tablet to do all those important things," Sun said, adding that a netbook's battery performance is an asset over tablets and ordinary laptop PCs.

But it is too early to say what the future holds for netbooks.

"For manufacturers, there are multiple approaches to realize a portable and secure surfing experience. You can make a laptop ultra thin or turn it into a touch screen and a keyboard. Reducing its size is only one option," Sun said.

The real challenge lies in a web-based future where everything can be delivered through the Internet. A case in point is Google's Chromebook, which has a browser through which applications and data can be used.

"In the era of the cloud, the value of any form of terminal will be watered down," he said.