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HP Enters The Mini-Notebook Market

Posted on: Wednesday, 29 October 2008, 13:05 CDT

Hewlett-Packard Co announced its newest member of its line of computers – a mini-notebook, marking its intent to cash in on the growing market of trimmed down PCs.

So-called netbooks have scaled back features and are designed for light duty. They appeal to consumers looking for a portable PC at a more affordable price during a period of economic woes.

Prior to HP’s announcement, computer firms such as Acer Inc and Asustek Computer Inc lead the way by introducing the first affordable mini PCs to be produced on a large scale.

At the cost of around $400, HP’s new Mini 1000 features Intel Corp’s Atom processor, which is designed primarily for netbooks and small mobile devices.

Weighing in at less than three pounds, the new netbook will start at $399 for a version running Microsoft Corp's Windows XP, jumping to $549 for a fully loaded model. The company's first netbook, the 2133, starts at $599 and tops out at $749, features a Via chip and runs Windows Vista.

Analysts have been predicting a price war among firms pedaling their own netbooks for some time. Acer gained ground on HP and Dell Inc, with a big assist from mini-notebooks in third quarter earnings.

According to industry tracker IDC, Acer's total shipments leaped more than 50 percent, and the company's share of the overall PC market climbed more than 3 percentage points to 12.5 percent.

Bob O'Donnell, vice president at IDC, estimates 10.8 million netbooks will ship in 2008, out of the more than 300 million overall PC shipments forecast for the year. He expects netbook shipments to jump to 20.8 million in 2009.

Carlos Montalvo, vice president of marketing in HP's managed home business, said the Mini 1000 is a superior product to the "second- and third-tier" offerings from competitors, which he said have been "over-optimized" for size and price, and lack HP's consistency and quality.

HP remains as the world’s top-selling PC maker. However, its overall market share dipped slightly to 18.8 percent after being outsold in European markets by Acer. Analysts attribute this slight lag to HP’s delayed entry into the mini-notebook market.

Without releasing specific numbers, Montalvo said HP's first netbook, which was targeted at the education market, was "phenomenally successful." However, he said the Mini 1000 is aiming for a broader audience.

HP will also offer a Mini 1000 that runs Linux for $379, as well as a special edition designed by fashion designer Vivienne Tam for $699.

Montalvo said he believes netbooks are complementary devices which consumers will own in addition to a full-scale laptop or desktop PC, but analysts tend to disagree with this notion.

"I don't think any of us knows yet whether it's a substitute product or a complementary one," said Jayson Noland, an analyst with Robert Baird. "In some markets in a mature economy like the U.S. or Western Europe it could be complementary, and in an emerging market it could be substitute."

IDC's O'Donnell fully expects to see a price war in netbooks, as companies try to boost sales to make up for the low price points.

"If you're down to $300, then your profit margin goes away, so you have to make it up in volume. Their goal is all about high volume, low margin, and I think that's going to be a challenge."

Noland said both HP and Dell have been a little late to catch on to the appeal of netbooks, but he expects them to regroup without much trouble. Dell introduced its first netbook in September.

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On the Net:

• Hewlett-Packard Co
• HP Mini 1000

Source: redOrbit Staff & Wire Reports

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