Already hot sellers, laptops will represent an increasing percentage of PC sales in the coming years, exceeding analyst estimates, according to a senior Intel executive.
A combination of lower prices, longer battery life and integrated wireless networking has helped spur sales of notebook computers over the last year. Sales will continue to rise as a result of improvements in technology attracting more users and a recovery in corporate spending, said Anand Chandrasekher, vice president and general manager of Intel's Mobile Platforms Group.
"I really believe the next cycle of (corporate PC) upgrades is going to be notebooks," Chandrasekher said.
Laptop sales have helped brighten the prospects of PC vendors. After languishing amidst a slowdown in demand that has lasted for more than two years, PC shipments have posted double-digit growth over the last two quarters, largely because of surging demand for notebooks, according to market analysts IDC and Gartner Inc. (IDC is a division of International Data Group, parent company of IDG News Service).
Rising laptop shipments are good news for vendors and hardware makers, like Taiwan's Quanta Computer, one of the world's largest contract notebook makers.
Quanta is currently shipping around 1 million notebooks each month, with around 30,000 units leaving its factories every day, said T.J. Fang, an assistant vice president at Quanta, crediting Intel with helping to spur notebook demand.
"Because of Intel's Centrino, the notebook business is growing," Fang said, referring to Intel's Centrino package, which bundles a Pentium M processor with a wireless LAN chipset.
This increase in demand for notebooks has come despite a "depression" in corporate IT spending, Chandrasekher said. While corporate spending on IT has remained low, consumers have been snapping up laptops at rates that have never been seen before, he said.
Historically, corporations have accounted for around 70 percent of laptop sales, Chandrasekher said. However, sales this year have been almost evenly split between consumers and corporate buyers, he said. Chandrasekher expects to see notebook shipments once again tilt towards corporations in the coming years, with consumers accounting for around 40 percent of the market.
This shift will happen as corporations embark on a long-awaited cycle of PC upgrades, Chandrasekher said. These upgrades could happen soon, as the cost of maintaining PCs purchased in 1999 and 2000 rises and IT managers move to eliminate security holes that exist in Microsoft's Windows 98 operating system, he said.
When that cycle of PC upgrades happens, Chandrasekher believes companies will buy more notebooks in a bid to raise the productivity of employees whose jobs are not tied to a single location.
IDC also foresees an increase in the percentage of overall PC shipments represented by notebook sales. Notebooks are expected to account for 25 percent of worldwide PC sales in 2003 and 27 percent in 2004, said Kitty Fok, director of personal systems research at IDC Asia-Pacific, noting this figure is expected to continue rising.
"In 2007, we are expecting notebook sales to account for 30 percent of the market," Fok said.
Chandrasekher believes that forecast is conservative, however. He expects to see notebooks account for more than 35 percent of PC sales by 2007 as demand for notebooks rises in emerging markets.
In particular, China holds out the prospect of a surge in notebook demand over the next five years. Chandrasekher predicts that notebook sales in China could soar from a "low single-digit percentage" of PC sales to around 20 percent by 2007.
While IDC doesn't expect notebooks to account for 35 percent of PC sales before 2008, Fok said rising demand in emerging markets is the key to boosting notebook sales to this level. "This really depends on China or some other emerging markets. If the price goes down, it will reach 35 percent quite quickly," she said.
That is exactly what Chandrasekher expects to happen. Notebooks currently carry a price premium of around US$500 when compared with a desktop system and that difference will fall to as low as $250, he said.
Alongside lower prices, further technology advances will help increase sales, Chandrasekher said.
One area that can make an important difference for users is battery life, Chandrasekher said. As battery power lasts longer, mobile users are able to get more use from their laptops. This is one of the reasons why laptop demand has been so strong, he said
Hoping to extend battery life even further, Intel has invested in the development of fuel cells, low-power OLED (organic light emitting diode) displays and advanced memory technologies, hoping to find a breakthrough that can drive battery life far beyond current levels, Chandrasekher said.
Intel is also developing ways to stretch battery life using existing technologies in a bid to reduce overall notebook power consumption from 12 watts or more to less than 10 watts. As part of these efforts, the company is working on ways to reduce the power consumption of TFT-LCDs (thin film transistor liquid crystal displays), which account for around 30 percent of a notebook's power consumption, Chandrasekher said.
The latest advance in this area is Intel's 855GME chipset, which contains an integrated graphics controller and incorporates the company's Display Power Saving Technology. This allows the 855GME to reduce the power consumption of a notebook's display from 5 watts to 3 watts, Chandrasekher said.
"Because the graphics is integrated (with the chipset), we know exactly what's in the frame buffer," Chandrasekher said. "Because we know what's in the frame buffer, we can develop our own mathematical algorithm, which scans the frame buffer pixel by pixel. Then we know which of those pixels we can dim the backlight on, and by dimming the backlight we save power."
And there's more to come. Intel is working on other ways to reduce the amount of power consumed by the display, Chandrasekher said. Those technologies will be incorporated into chipsets that will be introduced next year, he said.