Dell, Hewlett-Packard Adapt to Netbook Nemesis
NEW YORK ( TheStreet) -- Netbooks could be cooling off, but the netbook effect continues to chill the PC industry.
The arrival two years ago of the lightweight, stripped-down, $300 mini-laptops made by Asian shops like Asus and Acer exposed a vulnerable underside to the PC industry.
Now, in response, giants like Dell (DELL) and Hewlett-Packard (HPQ) are courting the close-to-cheap market with new models that run on faster chips with bigger memories and have smaller price tags in the $600 range.
"We're already seeing the big PC makers responding in two ways: by getting into the netbook game themselves, and by pricing their notebooks more competitively," says Peter Rojas, co-founder of consumer-tech Web site gdgt.The race to the bottom has placed average PC selling prices on an even steeper slope than usual. And while today's cheaper devices certainly fit a leaner, more recessionary time, the netbook's influence on the industry will drag on for years. "The sub-$500 average selling prices stand to be a deflationary force for all notebook PCs over time," wrote JPMorgan analyst Mark Moskowitz in a research note last month.
Feature inflation meets price deflationFor years, in an effort to keep prices up, the PC industry kept piling on more hardware capacity, software muscle and processor speeds. But the sudden success of the netbook revealed how far PC technology had overshot the user, says long-time industry analyst Ashok Kumar. Netbooks gave people cute, portable devices on which to do most of their daily tasks such as checking email and viewing the Internet. And the prices, at about a third of those of laptops, were killer.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV