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Netbooks no longer appeal to first time buyers says Intel

The world of microprocessors is dominated by Intel with secondary players like AMD coming in far behind. Intel helped to usher in the era of the netbook with its wildly popular Atom line of CPUs and still has little in the way of competition.

Intel has announced that it sees the netbook market shifting. The company said that it no longer expects netbooks to appeal to first-time buyers. Intel says that it sees netbooks as a secondary computer for users or an option for kids needing their first computer.

Intel's Sean Maloney said at a media event, "I don't think first-time buyers are going to buy netbooks. The first time you buy something you want the real deal. It's consistent not just in China, but all around the world. If you're going to spend your hard-earned money for the first time, you're going to put a computer in your house."

Maloney said that he doesn't see the trend of netbook sales changing soon. The machines have traditionally sold to users with one or two PCs in the home already. He also adds that the market for kids 7-11 years old is underserved. Disney for instance is offering a netbook for kids that is festooned with Disney characters and software right out of the box.

EWeek reports that Q2 revenues for Atom processors and chipsets spiked 65% from the first quarter to $362 million. This was also the quarter where Intel had to pay the massive EU fine, which it is appealing. Intel also still maintains that netbooks will allow new people to be introduced to computing, which is particularly important in emerging markets. Netbooks, according to Maloney, are now a well-established market.

He said, "There is a new category established. That category is, to an extent, maturing. It is not so much in the early phases."

Much of the netbook focus isn't on the U.S. market with the economy still in a recession. Intel says that it sees the economy in areas like India and Brazil improving.

He says, "If you are dependent on the U.S. consumer, or U.S. business alone, obviously you are in one box. If you are global, you're in another. There are a number of countries, Brazil included, that actually seem to be coming back pretty quickly."

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By crystal clear on 7/31/2009 3:51:14 AM , Rating: 2
If Intel is talking then Microsoft is also talking,here a few topics discussed-read full speech on link below.

Financial Analyst Meeting 2009
July 30, 2009

Steve Ballmer
Chief Executive Officer

and what's a netbook? A netbook is a PC. Nobody wanted any netbooks that didn't have Windows on them. So we went from nothing to about 95–96 percent attach on netbooks. And I will tell you the other 4 percent probably have Windows on them also.

These new ultra-thins—as Intel likes to call them—devices are essentially like high-end netbooks. So we will have a range, and then when our business customers say, "Can we buy a netbook? We want it to have a bigger screen and a little more performance," we'll say, "Yeah, here's a thing called an ultra-thin." It is a high-end netbook. That's very important because we're here to talk about revenue and shareholder value. It is very important. That machine might not sell for $299 or $399. That machine will sell for more money, and it will have all of the best performance and power characteristics. So the dynamics of this will continue to change.

We are a high-volume player. We do not, say, like Apple, believe in low volume, very high prices, very—Apple is a great company, does a fine job. But their model says high margin, high quality, high price. That's kind of how they come to market.

And at least when Apple attacks us, the primary attack that comes from Apple is, hey, at the end of the day, we have the coolest hardware.

When you see the hardware, the PC designs that will come out this Christmas with Windows 7, I think that conventional wisdom can begin to really change. There is some really amazing, amazing work. So it is possible to get great hardware innovation, even when hardware and software comes from separate companies.

And are the ads working? In an independent survey, we asked 18- to 24-year-olds—or they were asked, "Who offers the best value, Apple or Microsoft?" You can kind of see Apple was comfortably ahead despite the fact they —well, despite whatever the facts are. Our ads started in April of '09. You can see kind of what the perception changes have been so far.

This is a piece of data. There is more. All I'm trying to do is tell you I think we're making a difference, which means as shareholders, I'm also telling you to expect us to continue to invest heavily in Windows marketing which is new. We didn't do that three, four, five, six years ago. So it's a new element of the overall Windows P&L cost structure.

Microsoft Financial Analyst Meeting 2009

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller
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