The settlement between Intel and Advanced Micro Devices isn't just a matter of business between companies.
Sure, it's a big financial deal when the biggest chipmaker in the world forks over $1.25 billion to its closest competitor. And the settlement, announced Thursday, officially puts an end to a five-year battle over licensing disputes and AMD's complaints of unfair competition.
Beyond that, there will also be an effect on the two chipmakers do business with PC makers, and how they price their chips. Still, the settlement won't likely foment major changes for consumers shopping for a new laptop or desktop.
Choice
AMD processors are readily available from most PC makers, the major exception being Apple. If you really wanted one before the settlement came along, it's not like you couldn't get an AMD-based machine in stores or online. Intel now has agreed basically to not punish PC makers that choose to put AMD chipsets in some of their machines, but that doesn't mean Hewlett-Packard, Dell, Acer, Apple, and others will suddenly want to use AMD's latest chip in their flagship products. AMD will probably continue to be used as the "value" option for PC makers looking to offer cheaper notebooks.
PC prices are already pretty low thanks to the Netbook movement brought on by Intel, Acer, and others.
(Credit: Acer)That said, there is room for AMD to increase its share in processors used in laptops. The company has made improvements in that area recently, particularly in the ultrathin category, according to observers. So if you're paying attention, you might see more from AMD when shopping for a new laptop.
Prices
My colleague Brooke Crothers made an excellent observation last week, that Intel, while accused of dampening competition with AMD, has actually kept prices very low for consumers buying laptops. Thanks to the Netbook movement, which Intel spurred with its Atom chip starting in late 2007, the average price of the small, lightly featured Netbooks is now below $500. While not everyone is in the market for a Netbook, all shoppers have ended up benefiting. In order to recoup some of the lost profit due to the popularity of Netbooks, the industry--led by AMD and its consumer-ultra-low-voltage chips--has now focused on selling ultrathin laptops, which typically cost somewhere between $500 and $900.
Though one might assume that Intel and AMD hitting reset on their competition and going head to head would bring prices down, that's not likely. If anything, prices may actually go up a bit, said Gartner analyst Martin Reynolds.
"This [settlement] potentially means that products cost a little more to manufacture because we don't have this irrational competition between the two," he said. "[PC makers] won't be able to pit the two against each other as much."
Speed to market
What matter to consumers most are price and capability. What matters to Intel and AMD is getting faster, cheaper processors that enable better battery life in laptops into as many new computers as possible. The speed of this cycle is very important. The faster the two companies come out with new products, the more often people will go shopping for new laptops.
AMD's product road map has severely suffered in comparison to Intel's over the last several years. Intel whips out new products on a regular yearly schedule. A quick infusion of $1.25 billion from Intel should do a lot to help AMD fund new product design in order to better keep up. Again, there won't be a significant change immediately, but over time we may see their speed to market pick up, Gartner's Reynolds noted.
Besides money, the end of the legal squabbling also means that AMD is freed up from focusing on the lawsuits and what Intel has done wrong, and can help the company focus on the task at hand: making good products at reasonable prices. So if not directly, the settlement will at least indirectly benefit those looking for laptops and desktops at their local retailer or online.
Of course the vast majority of shoppers, outside of those tuned into technology, probably won't pay much mind to whether there's Intel or AMD inside the laptop as long as it meets their expectations, said analyst Michael Gartenberg.
The buying decision is actually very simple usually, he said. "Does it even matter anymore? It's about who's delivering the cool machines at the price that I want."
Netbooks continue to soar in sales at the expense of the venerable notebook, according to a new report from DisplaySearch.
Revenues for Netbooks, or mini-notebooks, rose to $3 billion in the second quarter of the year, a leap of 264 percent over the second quarter of 2008, according to the new "Quarterly Notebook PC Shipment and Forecast Report" released Thursday. With those gains, Netbooks now enjoy an 11.7 percent share of the portable PC market.
(Credit:
DisplaySearch)
Though traditional notebooks still command an 89 percent slice of the market, their second quarter sales fell to $23.2 billion, a 14 percent decline from the second quarter of 2008.
Measuring 2009's second quarter against the prior year's quarter, sales fell in all subcategories of the portable PC market, including ultraportables and desktop replacements, the report noted. PCs in the 13-inch to 16-inch range managed to eke out a gain, but only measured against the first quarter of 2009.
The low prices of Netbooks appeal to consumers looking for a second PC and to those in emerging markets who don't need the rich and costly features of a large laptop. The market has also been buoyed by cable and telecommunications providers who have doled out Netbooks to customers who sign up for lengthy contracts.
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It's still dog days for those in the business of making and selling PCs.
Global PC shipments fell 2.4 percent in the second quarter of the year compared with the same quarter last year, and the value of those shipments dropped 19.1 percent over the same period, according to a report released Wednesday by IDC.
Desktop shipments dropped 17 percent for the quarter as more and more people continue to opt for portables, according to IDC's Worldwide Quarterly PC Tracker report. Consumer laptops and Netbooks accounted for the only bright spot, with overall shipments growing 44 percent over a year ago from a low of 28 percent.
However, the growth in portables came at a cost. Traditional laptops saw shipment growth of 13 percent for the quarter, but the financial value of those shipments declined 6 percent.
Netbooks proved the most popular, with shipments rising almost 25 percent, from 5 percent a year ago. But again, this trend brought down overall value, with Netbooks costing around $400 compared with $900 for traditional laptops.
(Credit:
IDC)
IDC sees better times ahead, expecting the market to improve for both unit growth and value. Desktop volume is forecast to be flat in 2010, but portable PCs will grow 16.5 percent, said the report.
The Netbook market will continue to rise. But the trend toward thin, light laptops using CULV (consumer ultra-low voltage) processors will limit the market share of Netbooks, boosting the value of overall PC shipments.
"Although mininotebooks have hurt margins of traditional notebooks, we can expect Ultrathin Notebooks based on new low voltage processors from Intel and AMD to somewhat stem the tide," said Jay Chou, research analyst for IDC's Worldwide Quarterly PC Tracker.
Over the longer haul, shipments of portable PCs should rise 17 percent on average through 2013, delivering 11 percent growth in total PC shipments and close to 5 percent in the value of those shipments.
Lenovo's ThinkPad T61 is one of several notebooks known to have an error-prone battery.
(Credit: CNET)Lenovo on Friday said it will replace batteries on several of its ThinkPad laptops that show error messages.
Some users are reporting batteries are displaying error messages that read "Irreparable damage" or "Battery cannot be charged," and others are reporting their battery runs only for a very short time or experiences a sudden drop in its fuel gauge. It's known to occur on these ThinkPad models: T60, T61, R60, R61, X60, and X61.
Though it does not pose a safety risk, and it is not a product recall, Lenovo said, it will give those affected a replacement battery.
The One Laptop Per Child operating system is now available for free downloading for "any" PC or Netbook, according to its maker.
The XO-1 user interface
(Credit: Sugar Labs)Sugar Labs, responsible for building the low-cost device's XO-1 operating system, released it online last week for loading onto any USB flash drive greater than 1GB.
Called "Sugar on a Stick v1," Sugar Labs hopes it will help spread the use of the OS in classrooms, without the need for the OLPC machine.
An IDC analyst said earlier this year that the OS would be one of the OLPC's more attractive aspects that vendors would be interested in copying for the Netbook market.
It is based on the Fedora Linux kernel and can be booted from the USB stick without needing to be installed over the hard drive's existing OS.
According to Sugar Labs, its OS is used by almost a million students ages 5 to 12 in some 40 countries. Its social-oriented interface recognizes other Sugar-based PCs around it and interacts with them without the need for Internet connection.
Sugar Labs was spun off a year ago after Walter Bender, now its executive director, left the OLPC initiative to start the nonprofit spinoff.
Victoria Ho of ZDNet Asia reported from London.
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After two reports of flaming laptop batteries, the Consumer Product Safety Commission announced Thursday that Hewlett-Packard is voluntarily recalling 70,000 lithium-ion batteries that shipped with several models of its HP and Compaq laptops.
HP's Pavilion dv9500 is one of 21 HP laptops affected by Thursday's battery recall.
(Credit: CNET)The recall affects nine models of HP Pavilions, nine models of Compaq Presarios, two models of HPs, and one HP Compaq laptop model sold between August 2007 and March 2008. For the full list, see the CPSC's site.
There were two separate reports of batteries that "overheated and ruptured, resulting in flames/fire that caused minor property damage" but no injuries, according to the CPSC report.
HP is instructing consumers who may be part of the recall to remove the battery from their notebook and contact HP to find out if theirs is affected. HP says it will provide a free replacement battery. For more information, see HP's Battery Replacement Program site.
Palo Alto, Calif.-based HP is the world's largest computer vendor, and like many of its peers in the industry has been part of several similar battery recalls. The most recent incident involved 100,000 Sony-made batteries faulted for overheating late last year. HP had sold 32,000 of the affected batteries in its laptops. But that was tiny by comparison to the massive recall caused by Sony batteries in 2006.
As bad as the second half of 2008 treated the PC industry, 2009 is shaping up to be even worse.
PC shipments worldwide will drop 8 percent in the first half of this year, according to a forecast update Thursday to IDC's Worldwide Quarterly PC Tracker. The fourth quarter saw a 1.9 percent decline, driven in large part by large enterprise companies delaying buying replacement PCs during the recession.
But after a rocky start, the industry should turn around a bit by year's end. IDC predicts that shipments will improve over the second half of the year, resulting in small, but positive growth in the fourth quarter, ending with a 4.5 percent decrease for the year. That's a change from the 3.8 percent overall growth for 2009 the company had predicted in early December.
IDC's reasoning that the PC market will have to rebound is because it's driven heavily by replacement cycles, and though companies and individuals may be holding back during this volatile period in the economy, computers don't last forever, especially laptops, whose life spans tend to be shorter than those of desktops.
Though the current economic cycle is bad, it will get better, assures Loren Loverde of IDC. "Pricing will become more aggressive, and there will be further consolidation, but the PC industry will not go the way of the financial or auto industries in this cycle."
What should be more concerning, though, is the plummeting average selling price of those PCs, which is led by an increase in cheap laptops and Netbooks. Prices of PCs sold by Apple, Dell, Lenovo, and Hewlett-Packard dropped 5 percent during the fourth quarter of 2008, which led to an 18 percent drop in revenue for those companies, according to a report also released Thursday by Technology Business Research. But unlike shipments, which have dropped due to current economic factors and are expected to rise again--people will always need to replace their computers--prices aren't likely to rebound.
"The decrease in ASPs is structural and permanent," said TBR PC analyst Ezra Gottheil in a note distributed Thursday. If the industry is to rebound, he says, the most successful PC makers and software providers will figure out how to provide services after sales to increase their currently dwindling profit margins.
The XO laptop.
(Credit: OLPC)The One Laptop Per Child project announced Wednesday that it is slashing its workforce by 50 percent, reducing salaries for the remaining staff, and restructuring its operations.
Nicholas Negroponte, founder of the group that aims to provide low-cost laptops to children in developing countries, announced the cuts in a company blog post:
Like many other nonprofits that are facing tough economic times, One Laptop per Child must downsize in order to keep costs in line with fewer financial resources. Today we are reducing our team by approximately 50% and there will be salary reductions for the remaining 32 people. While we are saddened by this development, we remain firmly committed to our mission of getting laptops to children in developing countries. We thank team members who are departing for their contributions to this important mission.Restructuring brings with it pain for some of our friends and colleagues who are being let go. These are people who have dedicated themselves to the advancement of a noble cause, and to say that we are exceeding grateful for the time, the ideas, the energy and the commitment they have given OLPC does not -- cannot -- adequately express our admiration or our gratitude. The fact that there are 500,000 children around the world who have laptops is testament to their extraordinary work and is already a key part of OLPC's legacy.
Negroponte wrote that the company will focus on development of its second-generation device, but will hand-off development of the Sugar operating system to the open source community.
The project recently revived its two-for-one deal on its low-cost laptop. Amazon.com was tapped to handle its Give One, Get One program, launched initially in 2007. Through the program, anyone can pay for two XO laptops; one is shipped to the buyer, and the other is sent to a school kid in a developing nation.
The device comes loaded with both Windows XP and the Linux-based Sugar operating system created for the XO. The inclusion of XP stemmed from concerns that developing nations that wouldn't buy the laptops for its classrooms without the world's dominant OS on it.
However, the Cambridge, Mass.-based group has faced its share of challenges in the three years since it was formed. Its XO laptops initially cost $188 each instead of the anticipated $100, some countries are scaling back their deployment plans. Intel, which was briefly part of the project, quit in January 2008, claiming OLPC was pressuring it not to compete with its own laptops.
Intel and Asus have launched a site that seeks collaborators for "community designed" PCs.
The two companies say consumers can become product designers at WePC, a Web site launched Wednesday. Participants can collaborate with each other and with Intel and Asus to "design innovative new products," the companies said.
The plan is for the two companies to deliver to market what could be the world's first community-designed PCs.
Visitors to the site can share ideas with community members about the qualities of a "dream" PC and vote on submitted concepts, Intel and Asus said.
Consumers can submit ideas to the community.
(Credit: Intel, Asus)"Intel believes the spark for innovation can come from anywhere," Mike Hoefflinger, general manager of Intel's Partner Marketing Group, said in a statement. "That's why Intel is working with Asus to tap into the creative energy of consumers as they share ideas on designing their ideal PC."
The community will be divided into three conversation groups, addressing three of the most popular consumer PC categories: Netbooks, notebooks, and gaming notebooks.
The PCs will be powered by Intel's Atom, Centrino 2, and Intel Centrino 2 Extreme processors.
Prizes will be rewarded to select participants for their creative role in this project. Details on prizes will be announced at a later date.
Turns out, the sky isn't falling on the PC industry.
That's according to an update from IDC, an analyst firm that tracks the global PC market. Despite economic sluggishness in the U.S., PC shipments have actually increased worldwide more than expected.
Worldwide PC shipments are expected to grow by 15.7 percent this year to reach 311 million units, according to a report released Wednesday by IDC. Growth will slow slightly, but remain above 9 percent through 2012. IDC says that amounts to annual PC shipments reaching more than 482 million in 2012.
This growth is to come despite rising energy costs, slowing IT spending in the U.S. and Western Europe, and the increasing saturation of the PC market in Japan, the U.S., and Europe. So what's behind this recent positive outlook?
Those tiny, Atom-based Netbooks, according to IDC.
Western Europe PC shipments almost doubled to reach 23 percent, up from a 12 percent growth rate in 2007. And it was led by "the wide appeal of low-cost portables" like the Asus Eee PC, the analyst firm says. Western Europe consumer portables grew 60 percent during the second quarter of 2008, and are expected to remain high throughout the rest of the year.
It's important to note that IDC has been fairly conservative when it comes to the potential growth it sees for the low-cost portable market. Rival firm Gartner is predicting 5.2 million Netbooks will sell this year, but reach 50 million in 2012. IDC has said recently it sees 3.5 million Netbooks shipped this year, 5 million next year, and 9.2 million by 2012.
Perhaps with every major PC maker entering this space, it changes things. With more options in choosing a portable PC--different form factors, performance, capability, and cost--consumers are branching out from buying just one PC.
"The right way to gauge the success of consumer PCs is no longer the adoption rate of households with PCs, or even the number of PCs per household, but rather the number of machines per individual," according to Bob O'Donnell, vice president of Clients and Displays for IDC.
