January 9, 2004 10:05 AM PST

Consumers keep notebook sales on a roll

Notebook PC shipments are expected to mushroom over the next three years thanks to falling prices and booming sales to consumers.

The portable PCs are expected to make up nearly half of all PC shipments in the United States and almost 40 percent of PC shipments worldwide by 2007, according to the latest forecast by market researcher IDC.

The company, which revised its long-term PC shipment forecast upward in December, believes that notebook sales are gathering steam mainly because of adoption by consumers. Many of these buyers have chosen notebooks over desktops, a trend that's expected to continue. Meanwhile, others have purchased notebooks as a second or even third PC, said Alan Promisel, IDC's notebook analyst.

Showing their popularity in the United States, notebooks steadily gained between one and two percentage points of overall PC shipments during 2003. Notebooks reached 29 percent of U.S. PC shipments in the third quarter, Promisel said.

Although, "We don't expect them to gain...two points every quarter, I think it's a pretty good indication of where the trend is going, given ASPs (average selling prices), sales to consumers and the prospect of increased business buying, along with the turnover of desktops to notebooks," he said. "The adjustments also reflect prices coming down on the consumer side. You can get a Dell notebook, now, for less than $700, as well as from other brands."

IDC's unit shipment forecast for the United States predicts notebooks will reach 47 percent of units shipped in 2007, an increase of about 10 percentage points from its previous prediction, Promisel said.

Breaking that down by year, IDC predicts that notebooks will make up 27.5 percent of PC shipments in the United States in 2003, 33.7 percent in 2004, 40.7 percent in 2005 and 44.3 percent in 2006.

Notebooks are not expected to approach the 50 percent mark as quickly in the worldwide market. Instead, they are forecast to grow from 26.9 percent of PC shipments in 2003 to 37.3 percent in 2007, IDC predicts, hitting 30.4 percent in 2004, 33.8 percent in 2005 and 35.8 percent in 2006, he said.

A homecoming for notebooks
By adopting notebooks en masse, U.S. consumers have helped notebook makers achieve higher unit sales, but have also generally shifted the market.

So-called desktop replacement notebooks, fitted with 15-inch or larger screens and relatively fast processors, have taken up a good portion of consumer sales, PC makers and analysts have said. Consumers have been drawn to the fact that the machines are somewhat portable and can be stowed out of the way, but still offer performance and screen sizes that are similar to a desktop. Such notebooks typically don't cost much more than a desktop, either, when adding the price of a desktop flat-panel display.

The trend has Hewlett-Packard executives calling the company's HP Pavilion 5000--a notebook family that includes several 8-pound models fitted with 15-inch screens--the company's "mainstream" computer for consumers, said Jonathan Kaye, product manager for HP notebooks.

HP added two new models, the Pavilion zx5000 and the Pavilion zv5000, to the family this week. Adhering to the bigger-is-better philosophy, the machines offer a 15.4-inch screen--a standard feature on the zx5000 and an upgrade on the zv5000--that allows people to more easily view wide format DVD movies or two documents side by side.

The Pavilion zx5000 starts at $1,399, before rebates, and comes with the 15.4-inch screen, a 2.8GHz Pentium 4 from Intel, 256MB of RAM, a 40GB hard drive and a DVD-ROM drive.

HP isn't alone in offering new models this week. Toshiba also launched three new desktop replacement notebooks. The Satellite A45 models offer Pentium 4 processors and 15-inch screens, starting at around $1,000. The Satellite A45-S150 comes with a 2.4GHz Pentium 4, 512MB of RAM, a 60GB hard drive and a combination CD-burner/DVD-ROM for $1,399, the company said.

HP plans to one-up its notebook competitors, soon, by adding Intel's 3.2GHz Pentium 4 Extreme Edition processor to its Pavilion zd7000, Kaye said.

The notebook, designed for customers who want the largest screen and best Pentium 4 processors, comes with a 17-inch, wide angle display. It starts at $1,499 before rebates. The Extreme Edition Pentium 4 comes with an extra helping of cache, a feature designed to increase its performance.

While many in the PC industry believe that consumers will ultimately begin shifting back toward lighter, more mobile notebooks over time, the reign of the desktop replacement is likely to last awhile, as first time buyers enter the market looking for relatively cheap, high-performance models to match their old desktops.

To that end, HP and other PC makers are expected to continue adding faster processors and bigger screens to their notebook lines. HP, for one, is likely to offer Advanced Micro Devices' Athlon 64 processor as well as Intel's forthcoming Prescott processor, a new version of the Pentium 4 chip, in its notebooks over time. However, Kaye declined to comment further on the company's processor plans.

 

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