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The Future of Subnotebook Pricing
Posted by
Soulskill
on Sat Jun 07, 2008 09:13 AM
from the cheap-things-come-to-those-who-wait dept.
from the cheap-things-come-to-those-who-wait dept.
Corpuscavernosa recommends a story from InternetNews about the development of the subnotebook market. The author notes the beginnings of a trend toward selling the devices bundled with certain services rather than as standalone products. He notes two examples; a free Asus Eee PC with a broadband package, and another for opening a bank account. Quoting:
"Soon, the market will be overwhelmed by what I like to call 'mini me too' laptops -- commodity Asus clones that will drive margins for all players toward zero. There will be no real money to be made in direct sales of cheap mini-notebooks to consumers. I'm predicting that the successful pricing model for 'mini me too' laptops will look nothing like the notebook pricing model (where you always pay full price for the hardware), and a lot like the cell phone pricing model where you buy a service, and the hardware is heavily subsidized or given away free."
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Cell Phones (Score:4, Insightful)
Re:Cell Phones (Score:5, Insightful)
Going the route of the cell phone means there will be few 'unencumbered' laptops floating around and they will all be tied to some service, which will limit what you can and cant do with them.
Parent
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Re:Cell Phones (Score:5, Insightful)
Not in the US they don't...most people in the US have no idea what a 'locked' phone means. They just accept it as normal that you sign up for 1-2 years, and each time you do that...you get a free, or cheap (price wise) phone.
If you tried to sell my US citizens a unsubsidized phone at what they really cost....they'd be flabbergasted...and then ask why the hell you'd want to do that?
Parent
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And it is the only way you can get a device with a decent OS (Linux) in a typical large store. Most of us don't like/hate/will return Vista so it makes since to support an OS we all like by getting a subnotebook as about the only other way you can get Linux pre-installed is go to a specialty computer store or online.
Low end minis (Score:3, Insightful)
Ever lug around a heavy laptop all day on service calls? Id have loved to have some of these things back then..
Calculator Redux? (Score:5, Interesting)
Re:Calculator Redux? (Score:5, Informative)
Long answer:
The article is completely off with its "There will be no real money to be made in direct sales of cheap mini-notebooks to consumers. " statement. Tell that to every business who has taken a smaller per-item profit to dynamically increase revenue via volume.
It's the truth of all business and a continually evolving economy and the technology underlying: building something expensive, make it cheaper, sell tons, build something better to replace it.
Once this occurs and computers/laptops/asus eee equivalents get to be in the range of "absolutely anyone can afford one for a decent one", everyone will have one just like how everyone can afford a cellphone nowadays.
Parent
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If someone really wanted to build something that ran, say Puppy Linux, fairly well with a small screen then it seems pretty doable if someone was willing to gamble t
I'm not sure the author understands economics (Score:5, Insightful)
Over the long-term, companies don't play in markets that don't have zero economic profit or better - because they have better options to put their time and money into.
Now, these mini notebooks aren't going to be a truly competitive market because, like standard laptops, there is significant product differentiation. People do have a certain amount of brand loyalty, they want different features (20GB vs 16GB, Windows vs GNU/Linux, screen size, subjective thoughts about aesthetics and the like). This is very similar to the laptops most people use today - they're vastly the same, but have little tweaks to them that cause consumers to favor one over another.
If these mini notebooks achieve the same level of product differentiation as current laptops, margins should be similar. In fact, if the mini notebooks are sold with service, that offers the chance for more differentiation. I mean, when people buy mobile phones, they usually choose their carrier first (usually). That means that the margins for the device can be higher because the different service is adding another level of differentiation.
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It sounds to me like you're completely in agreement with the claims in the article. There is differentiation in subnotebooks if they're sold with other products or services. He compares with cell phones, which have differentiation because they're sold with other products or services. Cell phone hardware is basically free, but cell phone service is expensive. He's predicting the same thing with subnotebook
Why there are no economist billionaires. (Score:2, Interesting)
This is why I wanted to slap my econ teacher in B-school around.
There are no billionaire economists - but they know it all, don't they? And yet, an uneducated man from Arkansas became o
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Normal profit, of the cash-money variety, is *subtracted as a cost* when calculating economic profit. Sam Walton had zero economic profit because in his very competitive market *after subtracting monetary profit*, he was (approximately) break even. This is a measure of economic systems in a more holistic view, rather than a "money in the bank view".
So
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Name one.
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Now that's classic economic theory. The reason an economist didn't do it? Translating theory into practice is a whole 'nother ball game.
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There are no billionaire economists - but they know it all, don't they?
Most of the big billionare money (the new money, not the stuff you inherit, at least) is in organizing people to actually get stuff done, making big deals with other companies (and, for that matter, convincing people to put you in charge and pay you money if you're not there already). Anyone can learn how business works. It's another thing to actually pull it off. That's people-skills.
I'm sure there's nerds who could tell you all about, oh, say, the physics of football, the biological processes that occ
Re:Why there are no economist billionaires. (Score:5, Insightful)
Do you honestly believe that because we switch dominant economic theories every "few decades" that it is less of a science? I mean, we flip-flop on issues like anti-matter every few years for physics.
Of course, I'm replying to an anonymous coward, so I get no mod points and no one ever reads my refutation. *Sigh*
Parent
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Subnotebooks like Cell phone plans? (Score:5, Insightful)
Computers one buys from a store does not. Microsoft and a few other companies have played around with "software as a service", but the smart ones snubbed it. Instead, it'll stay Linux and get cheaper and cheaper.
Re:Subnotebooks like Cell phone plans? (Score:4, Interesting)
Parent
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Re:Subnotebooks like Cell phone plans? (Score:4, Informative)
And then we have the people who feel they want to be able to be online anywhere and everywhere. They don't need it but they want it and think it's worth paying something for.
They're not anywhere near a majority. But it all adds up to a sizeable market anyway.
Parent
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Imagine just opening your device anywhere and "being on" without further research into free Wi-Fi or hotspots. That's where we are heading, internet is becoming a commodity like radio or TV. 3G is most certainly not the end of the story but an important step towards bringing the infrastructure into place and providing gapless service, at least in urban areas, for a start.
Landlines at home will eventually die out jus
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Computers one buys from a store does not. Microsoft and a few other companies have played around with "software as a service", but the smart ones snubbed it. Instead, it'll stay Linux and get cheaper and cheaper.
You are talking the demise of Microsoft, but you know that and I concur. The operating system is now a commodity, and already we see 2 tiers breaking out. EeePC and similar appliance PC on the low end, and Apple at the top end. The question is how fast will this deteriorate the current Microsoft pricing models. I suspect the next quarter financial for MSFT are going to show the trend and it will continue to deteriorate for years.
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My ass (Score:2)
I mean, who wants the liability of having to continue to meet your contractual obligations for near the cost of the device, in exchange for having to use it their way.
Stupid argument. (Score:2, Insightful)
A portable computer is tied to no such service. It's useful without any internet service in particular, and there's thousands of FREE places around the world to get free Wi-Fi internet. So tell me again why this bundled business model i
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You can get 3G internet for £15/month if you take the modem on its own. Taking the "free" laptop alongwith it pushes the cost up to £35/month, and you are tied into a two year contract. In other words, the "free" laptop costs £240. You can get it for £220 elsewhere.
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Honestly, how long do you think the open nature of personal computers is going to last?
Forever. How long do you think the open nature of lumber is going to continue?
The only reason personal computers have become as popular as the are is because of the open nature of them. Take that away, and the gravy train is over. Honestly, any market moves towards being MORE open and less proprietary as time goes on. 30 years ago you couldn't buy a non-AT&T approved phone and attach it to your phone line. People
Schools (Score:2)
Yo! Asus! Listen up! (Score:3, Interesting)
Part of it is due to a clueless webdesigner, who loaded it up with flash, javascript and all sorts of other crap. Add to that a big rise in people visiting, and suddenly their servers are dog slow (at best) and down (too often).
In fact, it's a classic example of what not to do with web design and IT planning.
So, Asus, could you PLEASE put some bright people on this, and give them the resources they need?
At to the bright people: could you PLEASE not make having Javascript and Flash mandatory? Not all of us are smoking the Web 2.0 crack.
Thanks.
Mini mee too products (Score:2, Insightful)
Repeat (Score:3, Interesting)
Merging of notebook and cell-phone? (Score:2)
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I can call people, send/receive emails and ssh into linux boxes, all with the same piece of kit.
Good for Linux, bad for Windows... (Score:2)
It's not unlikely that major vendors will now put some effort into a user-friendly Linux, something that the volunteer crowd has failed at terribly in the past 10 years.
The real future - commodity laptops (Score:2)
In most big US drugstores and office supply stores, and in every WalMart, there is a section that has pocket calculators, pocket dictionaries, low-end PDAs, and other small electronics. Some of those devices are quite sophisticated, even though they're very cheap.
Soon we'll be seeing laptops in that section, in a blister pack hanging from a hook. During "back to school" season, there will be big piles of the things. We'll see this as soon as the price can be brought below $200.
There will still be hi
Won't happen. Here's why. . . (Score:4, Insightful)
The things which I think are cool, either die early or succeed only in limited niche markets with other don't-quite-fit people like myself.
Stuff which I find lame and un-appealing, (like iPods, cellphones, Facebook and instant messaging, for instance), go gangbusters and change the shape of reality as we know it.
I think the eee PC is super-cool, therefore it is doomed to be an awesome device which will enjoy a respected but mediocre public presence at best. --And I can see the pattern emerging already; a massive squirrely investment panic by all the big companies based on early excitement for a market model people are already backing off from. Read the engadget comments under the UMPC's sometime. People are already bitching about the various decisions made by Asus and the new designs put forth. That must-have magic is already kaput, the market force now running on the steam from geeks like myself and that's it. Sure, they've sold a million or so units already. But there are a million or so geeks in the world. I said 'niche'. I didn't say non-existent.
The only way UMPC's will take over on the kind of level the big players are all terrified of missing out on is if the average girlfriend can't live without one. --And they're Oh-So-Almost, what with their lids which beg for stickers and funky colors. Sadly though, Hello Kitty, and Power Puff Girls, and Sailor Moon are old hat and there's nothing new driving sticker sales at the moment. And girlfriends, pardon the sexist broad-stroke generalization, aren't practically minded when it comes to tech gear. They want to talk and squeal and giggle over dramatic fluff with their friends and they want to have what their friends have and they want fashion statements. The UMPC come SOOO close, but sorry. Mini PC's which take half a minute to boot up, and need to be fiddled with and need to be sat down with and don't fit neatly into a purse aren't cool. They're lame. Sitting down and focusing is for when you're at home after work or school, and you already have a PC for that.
The eee PC came close, with their pink 700's, but they've moved in a direction which pleases people like me; better screens, better keyboards, better functionality, etc. I am very happy about this. But take-over the world appeal? Neh.
Now if there was an animated TV series sensation featuring empowered teen-age girls in cute outfits and dippy soap-operatic themes which sported hundreds of brilliant stickers which desperately needed to be affixed to a shiny mini laptop lid, then perhaps AT&T would have a chance to get their evil claws in. But until then, nope. Cell phones do it better, faster, longer, cuter and easier. And you don't have to wait thirty seconds for them to boot up. (Though, hopefully before the other shoe drops and the UMPC market is abandoned, somebody will have worked out the 'instant-on' thing.) --But I do find it wonderfully amusing to see all the big manufacturer's lose money because of catastrophic mis-readings of the market. Frankly, that's the only real way for me to get the device that I want at the price I want; for big companies to mis-read things. Seriously, this is enormously fun to watch, and by the end of it all, I'll have a cool little writing tool with a decent battery life and internet access for maybe $350.
Of course, I could be wrong. It's Mercury Retrograde month, so I probably am, and in directions I can only guess at now even as I reach to click the 'submit' button. . .
-FL
Sounds good (Score:2)
Bring it on, I say!
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From my experience the biggest difference is in Europe you get decent phones for free on a contract where as it's more common to pay something for the phone *and* have a contract in th
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In the UK it's free on a £20 per month 18 month contract.
£20 is roughly $40 USD so you could say that per month it's the same cost except the US contract is 6 months longer and you paid $250.00 for the phone.
That's with a quick browse. I'm sure I could find someone offering half price line rental for x amount of months too. I think I did quite well wh
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http://www.linux-hacker.net/cgi-bin/UltraBoard/UltraBoard.pl [linux-hacker.net]