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Best Buy is set to launch its lowest-advertised-price laptop to date--an Acer model based on Intel's venerable Celeron chip.

Acer laptop

(Credit: Best Buy)

Thought Netbooks were as low as a laptop's price can go? Another category of ultra-low-cost laptops has quietly emerged. These aren't small or ultra-thin or frugal with power consumption. There's nothing remarkable about these laptops--except price.

Best Buy said it will start selling on Wednesday the $249 Acer laptop--the retailer's lowest-advertised-price laptop ever. The laptop comes with an Intel Celeron processor, 15.4-inch screen, 2GB memory, a 160GB hard drive, and Windows 7 Premium. The model is available while supplies last.

Currently, the lowest-priced laptop listed on Best Buy's Web site is an Acer Aspire with an Advanced Micro Devices Athlon Processor (model: AS5532-553). On Tuesday, it was selling for $329.

Why the proliferation of low-cost laptops? "It's gone from one PC per household to one PC per person," said Justin Barber, a Best Buy spokesman. "And sometimes more than one laptop per person," he said, referring to Netbooks, which are marketed as companion devices to a higher-end PC.

At the core of the low-cost Acer laptop is an Intel Celeron Processor 900--not an Intel Atom chip, which is standard fare for sub-$300 Netbooks. The Celeron is a faster design than Atom: the 900 series packs 1MB cache of cache memory and is rated at 2.20GHz.

By comparison, the Z550 Atom is rated at 2.0GHz and integrates only 512K of cache. The Atom's performance is also hampered by fundamental design constraints: it is built for power efficiency not speed.

Netbooks continue to be the most popular low-cost laptop category, however. Best Buy lists dozens of Netbooks on its Web site from Hewlett-Packard, Asus, Samsung, Gateway, Nokia, Lenovo, and Toshiba, among others. Most are priced around $350.

Acer recently outpaced Dell as the second largest PC seller in the world. Is No. 1 Hewlett-Packard next on the list?

Acer Chairman J.T. Wang reportedly intends to ship 40 million notebooks in 2010, a number that could help the Taiwanese company challenge and even overtake current champ Hewlett-Packard for the top spot in portable PC sales.

To achieve this goal, Acer is looking to kick up revenue by more than 70 percent over the next three years, said Wang in an interview with Reuters.

Credit: Acer

J.T. Wang

Much of that revenue growth is likely to come from an anticipated 50 percent gain in sales for low-cost Netbook PCs. As the economy improves, Wang expects to sell an ever greater number of low-priced, portable PCs, a segment that has been very kind to the company.

As chairman since 2008, Wang has led Acer as its sales and market share have shot up over the past year. And with revenue expected to hit $18 billion this year, he's already targeting the next milestone.

By not coughing up a low-cost MacBook, as some had expected, Apple has ceded a potentially huge market to PC makers. But is this just all part of Apple's marketing genius?

$999 is as low as Apple will go.

(Credit: Apple)

The announcement Tuesday of the $999 white polycarbonate MacBook was pretty ho-hum as product refreshes go (same price, same color as before) but the implication was important: Apple is surrendering a large, emerging laptop market to Microsoft and its coterie of PC makers.

Not that it's necessarily a bad strategy. Market researcher Gartner said recently that Apple's shipments in the U.S. grew year-over-year by 6.8 percent to total 1.57 million during the third quarter, putting it right behind Hewlett-Packard, Dell, and Acer. Comparatively, overall PC shipments in the U.S. grew by 3.5 percent from a year earlier.

But among those unimpressive overall PC numbers (HP's third-quarter shipments grew only 2.7 percent), was an impressive statistic for Acer: buoyed by Netbooks, Acer's shipments grew by 61.4 percent year-over-year, and it blew past Dell to become the No. 2 PC maker worldwide based on this growth.

Granted, Netbooks are a relatively low-profit segment (i.e., profit on a $400 Netbook is going to be a lot less than that on a $999 laptop). Nevertheless, they're a hot market. Intel CEO Paul Otellini has stated numerous times that Intel was able to create a market that grew faster than either the iPhone or Nintendo Wii. Case in point: Windows 7-based Acer Netbooks are now big on the Home Shopping Network--which claims to have sold more than 5,000 in one segment on Saturday.

And that's not the only market Apple is punting on. A new category of inexpensive, thin laptops has emerged with the roll-out of Windows 7 on Thursday. Like Netbooks, these laptops are light (typically 4 pounds) and don't include an optical drive. But they are relatively powerful and full featured. The 15.6-inch Acer Aspire Timeline, for example, with a 320GB hard disk drive and dual-core Intel processor is fairly well-endowed at only $500.

Apple is not receiving a lot kudos in the mainstream business press ... Read more

Dell, Acer, Intel, and others together are, in effect, creating a muddle of light laptop categories as part of a not-so-well-orchestrated marketing strategy, according to an analyst. This is expected to become particularly acute when a deluge of new Windows 7 laptops hit the market this week.

Acer 11.6-inch ultrathin looks like a Netbook but it's not.

(Credit: Acer)

Acer offered a graphic example of this recently when it introduced a small, inexpensive Windows 7 notebook--the Aspire Timeline AS1810T--that, from all outward appearances, looks like a Netbook. But it isn't--at least as defined by Intel. It's a new category of laptop called an ultrathin.

"There's a lot of confusion that Intel has created and they haven't really segmented the market that well," according to Bob O'Donnell, an IDC Research vice president.

And it gets more complicated. The inexpensive ultrathin is, in turn, competing now with the expensive luxury laptops, like the Dell Adamo, according to O'Donnell. "Ironically, what's actually happening we think is that the (ultrathin) is actually killing the high-end ultraportable," O'Donnell said.

Here's the problem: any given Windows 7 laptop with an 11.6- or 12-inch screen could be a Netbook, an ultrathin, or a high-end ultraportable, each with distinctly different price-performance characteristics not readily apparent to consumers.

"There's too many overlapping products," according to O'Donnell. Intel tried to prevent this from happening by declaring that any laptop with a screen larger than 10 inches diagonally is not a Netbook. That policy is fine in theory but does not carry over to the real world of head-butting competition among PC makers where even the subtlest production differentiation can mean a leg up on the competition.

Intel says look at performance and price. "Which offers the best performance overall? That's important," said Intel spokesman Bill Calder. "Pricing is a factor too. While some ultrathin laptops including 11.6 and higher are very affordable, none are in the $249 to $399 range that typically defines a Netbook," Calder said.

Some consumers might say it's not a big deal. But ... Read more

The chief executives of Intel and Advanced Micro Devices indicated this week that competition will heat up in the market for sleek, inexpensive laptops running Windows 7.

Both CEOs addressed this new market during conference calls after their companies reported earnings this week. Ultrathin laptops are inexpensive, light laptops--typically between $500 and $800--that are sold in a market segment just above less expensive Netbooks.

Intel CEO Paul Otellini on Tuesday said his company is gearing up to supply more power-efficient chips that contain two processing cores for better performance. "The bulk of the units that have shipped to date were single-core versions of the products," Otellini said. "You'll see a number of laptops show up in retail with the dual-core versions for the holiday season...more ergonomically designed, thinner, lighter," Otellini said.

HP's Pavilion dm3 starts at $549 with an AMD processor and $649 with an Intel processor.

(Credit: Hewlett-Packard)

And AMD's CEO Dirk Meyer chimed in on Thursday. "You'll hear more...next month about the product lineup that we'll be rolling out over the next two years, which will include increasing focus on those small form factor notebooks," Meyer said during AMD's conference call. In the more immediate future, Meyer said AMD will have a "broader assortment of (ultrathin) platforms walking into the Christmas cycle."

To date, this new category of laptops has had a minuscule market-share impact because there was little perceived difference between a Netbook and an ultrathin, according to Bob O'Donnell, IDC research vice president. "A lot of people said this is not actually that much faster, so you're going to see a very rapid transition to all dual-core," he said.

Windows 7 should accelerate sales too. "I think we will see better sales next year," O'Donnell said, as HP, Dell, and others bring out ultrathins with Windows 7.

The category received a boost recently with the rollout of HP's Pavilion dm3, which starts at $549 with an AMD processor and $649 with an Intel processor. The dm3 is expected to be available starting October 22 with the launch of the Microsoft Windows 7 operating system.

Other high-profile ultrathins include the $548 Acer Aspire Timeline (at Wal-Mart) and the $549 Dell Inspiron 13.

Because ultrathins are more expensive than Netbooks, they are more profitable for Intel. "Part of Intel's strategy is to pull people up from a Netbook," said O'Donnell.

AMD, on other hand, is focusing solely on the space "between Netbooks and mainstream notebooks," Meyer said, adding that AMD, in effect, created the ultrathin category with the introduction of the 12-inch HP Pavilion dv2 back in January. "We created that category really in partnership with the HP," Meyer said.

It made a splash with the Eee PC. Now Asus, once known chiefly as a components maker, is looking to make the leap to consumer gadget maker.

One of the largest manufacturers of motherboards for two decades, albeit it a largely unsung one, the Taiwanese company finds itself smack in the middle of a transition from components maker to serious contender in PCs and accessories. Asus (pronounced "ah-soos") is attempting to establish itself as a brand name worldwide while making new forays into software and design.

The original Eee PC, launched in 2007.

(Credit: Erica Ogg/CNET)

In addition to creating a new line of consumer products like TVs, VoIP phones, e-readers, and streaming Web video gadgets, the company's leadership has its sights squarely set on being the third-largest notebook manufacturer in the world by 2012, while remaining the world's largest supplier of motherboards. While it sounds somewhat ambitious for a company known more for nuts and bolts, there's precedent: Fellow Taiwanese company Acer was in a very similar position a few years back and was able to transition from microchip maker to one of the largest laptop producers in the world.

Could Asus could be another Acer in the making?

Repeating Acer's success is, no doubt, difficult. But the two companies have a lot in common: Both started as components makers in Taiwan, and made the leap into making PCs and smartphones (Acer acquiring E-Ten, Asus partnering with Garmin). Asus' very existence was also made possible by its rival--it was founded by former Acer engineers.

In terms of market share, Asus is about where Acer was in 2004. Back then, Acer had a tiny, 3.6 percent share of the worldwide PC market, according to data from IDC. Today, Asus is in a remarkably similar place, with just 3.63 percent share. Meanwhile, the surging Acer has tripled its hold on PC buyers from where it was five years ago to more than 10 percent, right behind perennial leader Hewlett-Packard, and Dell.

Acer, of course, is one of the PC industry's most recent success stories, quietly blossoming from computer parts maker to established player in the PC world. It put the rest of the industry on notice when it scooped up Gateway in a $710 million deal, which included the E-Machines brand, and later acquired Packard Bell. It's a collection of lower-tier brands, but one that's been able to sell a lot of machines.

Acer's best-selling Netbook, the Acer Aspire One.

(Credit: Acer)

Asus, in building its Eee family of computers and gadgets and Asus-branded laptops, is relying on its team of Chairman Jonney Shih and CEO Jerry Shen to transform the perception of the company into a recognizable brand. Shih, who came over from Acer (along with Asus' original founders in 1989) is the ideas guy, and Shen puts them into action. It was Shih's idea for the Eee PC and the upcoming Eee Keyboard, and Shen is responsible for making sure the company's vast design and engineering teams make it happen.

But while Asus has some things going for it at that same point in their history that Acer did not--a recognizable product in the Eee PC--it's also facing very different challenges.

Acer was able to ride the huge growth in notebook PCs in the middle part of this decade. Eventually, it was able to buy its way into brand recognition in the U.S. with Gateway and in Europe with Packard Bell. Acer also timed the Netbook craze perfectly with its Aspire One, and was one of the first Netbook makers to strike deals with mobile carriers to offer 3G service on subsidized Netbooks.

Netbooks now make up one fifth of the PC market and are still chugging along--unit sales are expected to double from 16 million last year to 33 million by the end of 2009--but there's less room for dominating the market now because there are so many brands in the space, including much more recognizable names. Asus, for its part, is not intimidated. "We're used to it," Shih said recently in an interview. "Starting from the motherboard industry, competition is very normal."

Instead, it continues to churn out new versions of its Eee PC Netbook, with larger screens, better design touches, and slightly different form factors, like the convertible touch-screen version that debuted at CES this year.

More focus on aesthetics
But what Asus really has going for it are the leeway to be creative and the ability to come up with genuinely interesting ideas. Apple, they are not, but the company culture is now focused on making better-looking products.

"We're moving from our original culture of fundamentals and results, and we're now focused on innovation and aesthetics," said Shih.

It showed that with the Eee PC and graphics cards that are designed to resemble a Formula One race car. And now it's thinking beyond the personal computer with plans for a line of e-readers, televisions, and a streaming video device. Sound familiar? Acer also ventured outside of laptops when it bought smartphone maker E-Ten last year, in an admittedly less ambitious plan to diversify.

The upcoming Eee Keyboard.

(Credit: Asus)

The Eee Keyboard also shows something which Taiwanese component companies aren't normally known for--ingenuity. The Eee Keyboard looks like a standard desktop keyboard but it has a computer inside, as well as a small 5-inch touch screen where the number pad should be. Using a wireless high-definition signal, it allows anything on the computer, like a Web page, or a video site like Hulu or YouTube to be viewed on a larger TV or monitor via a small adapter. You can also multitask while watching video and check Twitter, Facebook, or e-mail in the smaller touch screen in the keyboard.

It's a computer masquerading as a home appliance, an area we'll see Asus operate in even more. Since the initial success of the Eee PC, Asus has introduced a number of Eee-branded products, including the Eee Monitor, the Eee Box, Eee VoIP phone, and soon the Eee Keyboard and even the Eee Reader.

"We had to grow and diversify. But we didn't want to do things that are too far apart. We have to do technology that is related: communications, video, audio," Shih said. "The whole world is changing because of the Internet. Everything digital is converged. We have to take our vision for the whole Eee family there."

Updated on August 23 at 6:45 a.m. PDT: adding updated $299 price of Toshiba laptop.

Netbooks based on Intel's Atom processor faced a fresh assault this week: the $279 AMD-based Acer laptop.

Here's the $299--or this case, the $279---question: do you want a Netbook or a Notebook?

The choice: a Netbook with a 10-inch screen, an Intel Atom processor, no optical drive, and Windows XP that weighs about two pounds? Or, a notebook with a 15.6-inch screen, a higher-performance AMD or Intel processor, an optical drive, and Windows Vista that weights about six pounds?

Best Buy was selling a 15-inch Acer laptop for $279.99 on Wednesday.

(Credit: Brooke Crothers)

On Wednesday, Best Buy was offering an Acer laptop (AS5516-5474) that had been previously listed at $299.

A Best Buy salesperson in a Southern California store said these deals typically last a week.

Acer $279.99 laptop

(Credit: Best Buy )

The specifications: an AMD Athlon TF-20 64 processor, 15.6-inch WXGA display, 2GB DDR2 memory, DVD-RW drive, 160GB hard disk drive, ATI Radeon Xpress 1200 graphics, 802.11b/g wireless, 10/100 Ethernet LAN, and Microsoft Windows Vista Home Basic Edition.

Pretty close to basic mainstream-laptop hardware with the exception of the low-end AMD-ATI silicon and the older "g" wireless.

It weighs in at 6 pounds and measures 1.5-inches thick.

Earlier this month, Best Buy was offering a $299 Toshiba laptop sporting a 15-inch screen but then bumped the price up to $329.

Update: As of August 23, the price of the Toshiba Satellite with an Intel Celeron Processor (Onyx Blue, model: L305-S5955) had been cut to $299. The laptop showed wide availability, as of August 23.

But whether it's a $279, $299, or $329, it's a laptop design that has legs. And a real competitor to the 10-inch Netbook, which costs about the same.

And here's another question: As more of these $279-$329 deals are seen at Wal-Mart and Best Buy and as more ultra-thin laptops appear that approach $600 in price, what will happen to the popularity of the Netbook?

(Credit: Gateway)

The $299 Netbook club is getting a little bit bigger with the announcement of Gateway's 10.1-inch LT2000. Gateway calls it "a sleek and compact," system that will, "let mobile customers maximize their time on the go to stay connected and productive." We call it a Gateway-branded version of corporate-cousin Acer's popular Aspire One (also available for $299).

Like the Acer models, the Gateway LT2000 supports some basic multi-touch gestures on its touchpad, and it will be available in red and black (sorry, that's actually "NightSky Black and Cherry Red").

Look for it to be available to order starting today. Click through for more pics and specs.... Read more

Best Buy has listed a 15-inch Acer laptop with relatively robust specifications for $299. But try getting your hands on one.

Though listed among the "new arrivals" on Best Buy's Web site, it is currently not available at stores or online. But there is anecdotal evidence of its existence. Very-recent user comments indicate that people have purchased the laptop and other stores, such as Wal-Mart Stores and Amazon (which shows it in stock), list it at a higher price.

Acer laptop comes with most of the fixins' for $299

(Credit: Best Buy)

And the specifications? An AMD Athlon 64 processor, 15.6-inch WXGA display, 2GB DDR2 memory, DVD-RW drive, 160GB hard disk drive, ATI Radeon Xpress 1200 graphics, 802.11b/g wireless, 10/100 Ethernet LAN, and Microsoft Windows Vista Home Basic Edition. Pretty close to mainstream-laptop hardware with the exception of the low-end AMD-ATI silicon and the older "g" wireless.

When contacted by phone, a Best Buy sales representative said the reseller has fielded a number of calls already about the laptop and confirmed that it was currently unavailable.

By comparison, what do you get for $299 when buying a diminutive Netbook? An Asus Eee PC at this price comes with an Atom N270 processor, 1GB memory, 10.1-inch screen, 160GB hard disk drive, Intel 950 graphics, a Webcam, no optical drive, and Windows XP.

And there are good deals on other, more-mainstream laptops at Best Buy. A Toshiba Satellite is listed at $349 with an Intel Celeron processor, 15.4-inch display, 2GB DDR2 memory, DVD-RW drive, 160GB hard disk drive, Intel 4500MHD graphics, 802.11b/g wireless, 10/100 Ethernet LAN, and Microsoft Windows Vista Home Basic Edition.