Low-cost notebooks won't become best-sellers

IDC forecasts worldwide shipments of the ultra low cost notebook PC will grow from less than 500 thousand units in 2007 to more than 9 million in 2012. But with low average selling prices (ASPs), worldwide revenues will be less than $3 billion in 2012. As a percentage of the total consumer PC market, these devices will remain under 5% throughout the forecast period. In fact, even if ultra low-cost system were shipped in 9 million quantity in 2007, they would be just 3.3% of over 271 million machines supplied. However, ultra low-cost notebooks could eventually capture more than one third of the education market by 2012.

IDC believes ultra low-cost notebooks make the most sense as secondary computing devices, used primarily for online activities and carried around more often than "regular" notebook PCs. While the devices offer most of the functionality that many typical users want, a true Web browsing experience is one of the primary features distinguishing ultra low-cost notebooks from smartphones and other smart handheld devices. The one opportunity where IDC expects that these devices could function as primary computers is for school-age (K-8) children.

“Despite its potential, the ultra low-cost notebook will not receive a universal embrace from consumers. The price gap with fully featured notebooks will be small and many consumers will opt to pay just a little more for a fully featured, full size notebook PC. And PC vendors, wary of the very small margins on these very small devices, will promote ultra low-cost notebooks as additive products, not replacement products, and will still face challenges in making them a profitable business,” added Mr. O’Donnell.