Nanotech - The Circuits Blog

Cages at Best Buy are stocked with new models preloaded with Windows 7: behind bars until October 22.

(Credit: Brooke Crothers)

Best Buy is locked and loaded for the Windows 7 launch.

And I don't use the phrase "locked and loaded" figuratively. "Locked" in that all the new Windows 7 machines are locked down behind cages. And "loaded" in that all the cages are full. (See photos.)

I visited a Best Buy Friday night in Southern California where the cages were loaded exclusively with new models preloaded with Windows 7. And I learned a few odd tidbits from a stoked salesperson who had definitely been drinking the Windows-7-is-totally-awesome Kool-Aid. Let me add that the information was conveyed to me at one store in Southern California and may not necessarily apply to all stores nationwide.

Friday night at a Best Buy in Southern California--maybe not the hippest place to be, but some interesting dynamics were at work.

HP 'Mini' promo: more than a few of the newer Netbooks are not low quality

(Credit: Hewlett-Packard)

A typical flow of people passed through the laptop section in the 20 minutes I was there. Toward the end, all of the remaining customers (a few men and women, each) were marveling at all the cute, inexpensive laptops. Cute, inexpensive laptops to them, Netbooks to us in the media who like cut-and-dried categories.

I was mildly shocked to see these people ignore the 50 or so standard laptops behind them and focus solely on Netbooks. So, I began querying the sales guy and one of the customers. It came down to essentially two things: price and selection (surprise, surprise). Best Buy now has a large selection of Netbooks--10 or so on display. A far cry from the Best Buy display of six months ago: a single, tiny, neglected Asus Eee PC pushed into a corner.

And I visited a second Best Buy where a sales guy gushed about Netbooks. "They're extremely popular," he said, adding that "almost all of my customers" just want to do e-mail and surf the Web.

That is circuitous way to get to my point. The Intel Netbook is not going away and is just getting more popular as this marketing research report indicates. Apple's Tim Cook dissed Netbooks back in April for what seemed like acceptable reasons: cheap, "junky hardware" (Cook's words) equates to downmarket, shoddy products. But that Apple reasoning needs an update--the fall 2009 version: a lot of the newer Netbooks coming out now are not shoddy or cheap feeling. (And I am hereby updating my previous pessimistic take on Netbooks too per this post.)

People like cute, light, and cheap--especially in a laptop. This sentiment won't be overcome, as Intel believes, by the emerging ultrathin laptop category, which ranges from about $500 to $1,000 (formerly called CULV or consumer ultra-low-voltage). Certainly not this year. Ultrathins are not different enough in appearance from a standard laptop and not cheap enough. (And recent reports indicate that the ultrathin category is not taking off as expected.)

Intel will never admit in a thousand years that it has created, in the Netbook, a Frankenstein monster of sorts. Intel will, of course, take credit (which it should) for the creation of a new category of computing devices, but my sense is that the company is not head over heels about the Netbook business model--and this is also a reason for Apple's very conscious decision not to make a Netbook. And, as many people are predicting, its reason for pursuing a more upscale tablet-like touch device.

Best Buy has a large Netbook selection

(Credit: Best Buy)

Intel's sales chief, Sean Maloney, has intimated in the past that Netbooks are not huge money makers. Speaking about the expected emergence of the ultrathin laptop category back in May he said that this is "an opportunity for upsell. We don't need to give this stuff away. The industry doesn't need to give this stuff away. We can reach new price points and we can also get paid for it."

But there is just too much marketing momentum now behind Netbooks at large PC makers--and in retail. Hewlett-Packard, Dell, Toshiba, Sony, and Acer all are pushing Netbooks. And in Japan, easily one the largest PC markets in the world, the Netbook is a hit--despite initial resistance from Japanese PC makers--for all of the same reasons cited above: small, light, inexpensive--and add fashionable. Major Japanese tech Web sites (such as ASCII) and large retailers (like Yodobashi Camera) have a significant Netbook focus now because that's what readers and consumers are demanding.

And I just don't think performance is that much of an issue for many consumers. Some, of course, will return a Netbook because their expectations were too high (I heard this from a sales person at Frys Electronics), but a lot of people across all consumer segments (kids, students, business people) will continue to buy these things by the boatload (unless Intel intentionally sabotages the category--which I hope Intel is savvy enough not to do.)

Apple's products and marketing are good but not infallible. And the lack of a Netbook may come back to bite Apple at some point. Maybe not tomorrow. Maybe not next month. But maybe next year. One of the Best Buy customers eying a Netbook made a comment that was a powerful counterpoint to all the Apple Mac-PC ads. To paraphrase: "You have to pay an arm and a leg for Apple (pointing to the Apple corner), I'm trying to make a practical business decision here."

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?

Is $299 too much for a laptop? Wal-Mart has answered Best Buy's $299 laptop challenge with a $298 offer.

Wal-Mart's $298 laptop.

(Credit: Wal-Mart)

"For the first time, a 3GB memory laptop from a well-known brand has ventured below $300," Wal-Mart said in a statement Thursday.

Starting July 26 (this coming Sunday), Wal-Mart will begin selling a $298 Compaq Presario notebook (CQ60-419WM) with the following specifications: a 15.6-inch display, 3GB of memory, a 160GB hard-disk drive, a CD-DVD drive, and Windows Vista pre-loaded. The laptop will use a 2.10 GHz AMD Sempron SI-42 processor and Nvidia GeForce 8200M graphics.

The $1 discount gets you a Compaq-branded laptop versus the Acer (subsequently sold out) from Best Buy. And the Compaq bests Acer with 3GB of memory versus 2GB.

A Wal-Mart blog said that quantities "are limited and will begin selling at 8 a.m. on Sunday, July 26," adding parenthetically, "May want to pass that along because we expect this one will be quite popular."

Wal-Mart will also begin offering, on the same day, a 15.6-inch Acer ultrathin laptop for $548. The AS5810-4657 model will sport Windows Vista Home Premium (qualified for free Windows 7 upgrade); an Intel ULV (ultra low voltage) SU2700 processor; 3GB memory; a 320GB hard-disk drive; and "all-day" eight-hour battery life, according to a Wal-Mart statement.

In August, Wal-Mart will sell the new 10.1-inch HP Mini 110-131NR Netbook too.

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.

After Best Buy mega-stored Circuit City to oblivion, the hapless retailer has quickly gone to pieces.

On Friday, Circuit City said it was liquidating all of its stores. Then, on Saturday, there was a big liquidation sale at my local Circuit City--up to 30 percent off. The checkout line was almost as long as the lines you encounter on a typical Saturday at Fry's--the mostly California- and Texas-based sprawling electronics warehouse. (The line actually snaked to the back of the store.)

Understand that I'm not giving Fry's any backhanded praise. Fry's is so big, so unwieldy, and, in some respects, its sales policies so lax that, as a rule, I avoid it (unless I need a nuts-and-bolts item like a Torx screw).

But Fry's is still a going concern. Circuit City isn't. The store that I visited on Saturday had been taken over lock, stock, and barrel by the liquidator. I interviewed (very briefly because she was on checkout duty) the "store manager" who said that, as of Saturday, her new immediate boss was the person from the liquidation company. That person, in effect, was now running the show, she said.

My local Circuit City (in southern California) on Saturday had lines inside as long as Fry's--though that isn't necessarily a compliment

(Credit: Brooke Crothers)

Inside, it was close to pandemonium. (The manager would not let me take pictures inside the store.) Consumers swarming everywhere: every one of them with at least a few breathless questions and scant employees to provide answers. And consumers seemingly snapping up anything that wasn't nailed down. (I've never seen so many HP wide-screen monitors in one checkout line.)

One male employee in the section I was browsing, spent most of the time I was there (about 15 minutes) pleading ignorance and searching for a manager who never (apparently) materialized.

A female employee I talked to outside (she was on break) said no one knew it would happen--until it happened.

What was ironic (and sad) was that I had been to this same Circuit City a few weeks before and an employee had boasted that this store would not close (in the wake of the limited nationwide store closings Circuit City had announced in November) and would be around for a long time.

My take as a consumer? The sheer scale, selection, organization, and relative attention to display detail that one senses at Best Buy proved to be a huge disincentive for going back to Circuit City--and CompUSA for that matter. Statistics don't lie. I have been to Best Buy dozens of times in the past two years. I've been to Circuit City--even though it's closer--maybe six times, and always as a last resort.

Ask your casual consumer, who is familiar with both stores, why Circuit City failed and the answer is often summed up in two words: Best Buy. Others will say Amazon--but that's another story.

How about a 64-bit operating system with that 64-bit processor?

The 64-bit version of Windows Vista is not new. It arrived when Vista did. But making it standard on a crush of new consumer laptops being sold at Best Buy is a recent change.

HP's new Pavilion HDX model ships standard with 64-bit Vista.

(Credit: Hewlett-Packard)

All PCs now ship with Intel or Advanced Micro Devices 64-bit processors. Until recently, however, most consumer laptops have come with a 32-bit version of Vista. There are many reasons for this, two of the biggest being a lack of driver support and the larger memory requirements for the 64-bit OS.

But memory is no longer an issue. Many of the new sub-$1,000 laptops at Best Buy, for example, now come with 4GB of memory standard. Out of the 11 HP laptops listed as "new arrivals" at Best Buy, 9 come with 4GB of memory and 64-bit Vista. Ironically, the other two new-arrival HP systems come with "Windows Vista Business downgraded to XP Pro."

In other words, you get either XP or 64-bit Vista: 32-bit Vista is not offered standard at all in this list of new arrivals.

What's the difference between 32- and 64-bit Vista? Here's what Microsoft says: "The 64-bit versions of Windows can utilize more memory than 32-bit versions of Windows. This helps minimize the time spent swapping processes in and out of memory by storing more of those processes in random access memory (RAM) rather than on the hard disk. This, in turn, can increase overall program performance."

One potential problem is driver confusion. Some buyers of retail laptops may not be aware that they are getting a 64-bit OS that requires 64-bit drivers. HP, for its part, provides plenty of 64-bit drivers. For the HP Pavilion dv5t laptop, drivers include those for the Nvidia GeForce 9200M and GS/9600M GT graphics chips, as well as those for the Mobile Intel 4 Series Express chipset family. Keyboard, mouse, network, and storage drivers--among others--for 64-bit Vista are also listed.

Also, Microsoft publishes software compatibility lists at its Windows Vista Compatibility Center. Though photo-editing applications such as Adobe Photoshop and CorelDRAW are listed as compatible, many applications are listed as not compatible or "unknown." In particular, a number of games are tagged as "status unknown" or "not compatible." Popular games, such as Crysis and World of Conflict are compatible, however.

One other thing to keep in mind: older "legacy" hardware could be a problem on 64-bit Vista. Although many older devices have 32-bit Vista drivers, that's not necessarily the case for the 64-bit version.

Advanced Micro Devices may have been demoted on Dell's Web site (though three AMD-based notebook models are still listed). But its chips aren't collector's items yet.

A quick inventory of Best Buy, the largest U.S. electronics retailer, is telling. A search on the reseller's Web site greets you with a page full of AMD-based notebooks. Ten to be exact. Some are fairly attractive too. Many are models in Dell's svelte Inspiron line. (Correction: not Dell's XPS line). Granted, Best Buy may not have the turnover of Dell's Web site but it's not Radio Shack either.

HP dv9715

(Credit: Best Buy, AMD)

Then there's Hewlett-Packard. If the perception is that AMD is fading at Dell, that's not the case (at least not yet) at the largest PC supplier in the world. "AMD represents a good value from a price/performance ratio," an HP spokesperson said.

In addition to the AMD-based notebooks available on HP's home-and-small-office site, a crush of systems is listed on Best Buy. If you're keeping score: AMD 9, Intel 4. Go to Staples online, and it's nothin' but AMD in HP.

And let's not forget Toshiba. In addition to listing seven AMD-based notebook on its Web site, almost half the Toshiba notebooks at Best Buy use AMD chips.

What about the brick-and-mortar Best Buy? At a Southern California Best Buy (just south of Orange County), there were 34 notebooks on display. Exactly half (17) of these used AMD chips (mostly dual-core Turion processors). And most of the AMD systems were placed at the front where people browse. But here's the catch. The salesman was pitching Intel. He volunteered that Intel's Core 2 beats AMD's dual core. "Intel runs cooler too," he said. And he had nothing positive to say about AMD. That's a problem.

Which brings us to another problem AMD may face. Last fall, Intel CEO Paul Otellini said in a conference call that his company has "walked" away from "a lot of low-end business" in mobile and desktop because it's not profitable. This is a real danger for AMD: getting relegated to the budget bin where profit margins are typically thin. (Many of the AMD systems are below $900.) But that story--whether AMD's profit margins are in fact razor thin or not--will be told in upcoming earnings statements.

The bigger problem may be Intel's Silverthorne and its low-cost x86 derivatives. These chips are designed specifically to compete at the very low-end--and make money there--unlike current Intel processors. Though nobody knows at this point whether Silverthorne will be competitive or not, its mantra is worth noting: low cost is good. "Because they are so small, literally thousands of them can be cut from 300mm wafers at 45nm. Thus, their economics are incredibly good," said Roger Kay, an analyst at Endpoint Technologies Associates.

And Otellini said more or less the same thing during Intel's fourth-quarter conference call. "We're embracing this trend with Silverthorne and will take the pricing down even lower...A tailored product for ultralow cost notebooks is a new thing for us," he said.

Gateway's GM5664 uses the Phenom quad-core chip

(Credit: BestBuy.com)

Let the quad-core competition begin. The arrival of consumer systems based on AMD's quad-core Phenom processor at retail stores will finally bring much-needed four-core rivalry to the high-end PC segment, where, until January, there was only one choice: Intel. Gateway Computer's Phenom-based models had a widely publicized debut at Best Buy this week, making the Irvine, CA-based company the second major U.S. PC vendor after Hewlett-Packard (HP) to adopt the Phenom processor. Earlier in January, Wal-Mart began selling the HP Phenom-based Pavilion M8330F desktop (which, according to Wal-Mart's Web site, is now out of stock).

Gateway's lineup boasts two high-end machines that use the Phenom 9600 (2.3 GHz), as listed on Best Buy, the largest U.S. electronics retailer. This marks a subtle but important shift in retail segmentation. Traditionally, AMD has done very well against Intel-based PCs at the low end but had little or nothing to show--in the last 12 months--at the very high end. The latest Phenom arrivals, however, sit at the top of the gaming and entertainment segments, a coveted Intel quad-core haven. For example, one well-equipped Gateway Phenom model is priced at a whopping $1,439.97, high for an AMD retail system. And, more generally, AMD is succeeding in the numbers game, too. Though the ratio of systems using AMD or Intel CPUs can swing radically quarter to quarter or even month to month, out of the 18 Gateway desktop models and package deals listed by Best Buy, 14 are based on AMD processors and only four on Intel chips as of January 31st. Out of the 21 HP models and package deals listed, 13 use AMD processors and eight have Intel chips. Granted, some of those systems are low-end, low-margin models, but the Phenom processor has given more balance to AMD-based lineups. Best Buy also lists three HP systems using the Phenom processor. And add Acer to the list too. Gateway's parent company now sells Phenom systems here. (Note: The combined entities now comprise the third-largest PC company in the world.)

A few qualifiers are warranted, however. AMD needs to prove that it can ship quad-core processors in volume and be ready to face up to problems if they arise. Shipments of AMD quad-cores have been plagued by manufacturing delays and--according to AMD--a rarely occurring TLB bug. The company has said it won't be shipping the B3 stepping (the version that fixes the bug in silicon) of its quad-core processor until late this quarter or early next quarter. Let's hope the current B2 stepping (which relies on a software fix) of the Phenom is available in quantity and that the bug proves to be a non-issue for PC users (as opposed to server customers who use the Barcelona processor in applications more sensitive to the bug ).