Forrester: Netbooks fill a niche, but branding is dangerous

Netbooks are more than a fad, and fill an important niche in the market for consumer PCs, according to a Forrester Research report.

Netbooks are more than a fad, and fill an important niche in the market for consumer PCs, according to a Forrester Research report. However, the report warned that manufacturers were confusing consumers with "dangerous" branding strategies.

Forrester Analyst J. P. Gownder said more than a third of U.S. consumers are interested in netbooks as a second or third PC they can use on the go. A quarter of consumers would consider giving one of the ultra-light, low-powered and inexpensive (most cost between US$200 and $500) portables to their children.

"Netbooks are therefore more than just cheap alternatives that can hurt sales of traditional PCs -- rather, they serve a distinct purpose," wrote Gownder. "In fact, netbooks represent a third form factor in the consumer PC space, in addition to laptops and desktops."

Helping drive netbooks' success is the fact that half of all U.S. consumers believe that mobile phone screens are too small for data activities aside from messaging, said the report. "For typing long emails, surfing the Web, or using Web-based applications, the netbook offers a clear advantage over most mobile phones. For these consumers, netbooks represent a logical device that's in between a PC and a mobile phone."

Another trend in netbooks' favor is aesthetics. "Netbooks, like mobile phones, are even stronger fashion accessories [than designer laptops] -- they fit in any bag or purse and can be carried around nearly 24x7."

HP's high-fashion netbook, the Mini 1000 Vivienne Tam edition, has a hot pink peony exterior and could pass for an evening clutch. However, it also costs more than other netbooks at $700.

Netbooks do face some hurdles. One is poor marketing: So far most vendors have given their netbooks names too similar to their notebook lines, such as the Dell Inspiron Mini and the HP Mini-Note. "This branding strategy is dangerous -- it cultivates consumers' confusion about whether netbooks are, in fact, laptops or something else," wrote Gownder.

The marketing problem seems borne out in the report's statistic that almost a quarter of U.S. consumers think of netbooks as replacements for a more expensive laptop. These consumers might not realize that screens and keyboards are much smaller and that netbooks' weak processors limit them to Web-based pursuits such as e-mail, Google Docs and Flickr.

Netbooks are decidedly not just small laptops. On a performance scale of 1 to roughly 100, PC World places netbooks at around 35, compared to scores of more than 100 for full-size laptops with the latest dual-core Intel processors.

The most successful netbooks will be those bundled with synchronization services like Microsoft's Live Mesh, said the report. Vendors should also consider selling netbooks to kids bundled with full-size laptops for their parents, complete with management software that lets mom and dad monitor Internet usage.

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