Netbook Scoop

At its inception, the Ultra Low-cost PC (ULPC) market was one dimensional. In the beginning, all ULPCs were Asus Eee PCs priced between $299 and $399.

Over a period of mere months, the ULPC market has exploded to include a wide range of products from multiple manufacturers with price points from $299 to around $599. ULPC customers no longer fit a single profile.

The early Eee PCs were wildly pursued by customers because they were sexy, fully-functional, ultraportable computers.  Most importantly, they were priced significantly below the economy notebook computers.

Most early ULPC buyers already had full-sized notebooks computers.  The low price made it easy to justify the purchase.  After all, it was about the price of a PDA or high-end cell phone.

Today’s ULPC customers fall into three segments.  I call the three groups: downsizers, casual users and bargain hunters.

Downsizers

The largest segment are those buyers who plan to replace the computer that they currently use for travel with a ULPC. These are primarily people who travel frequently.  They may have purchased purchased an early model Eee PC, but it does not quite meet their needs.

Downsizers are interested in a ULPC because they see an opportunity to travel lighter.  They want to perform all the things they did with their old laptop and maybe more.  But they realize that they don’t need the 15 inch screen or the dual core processor.

Here are the key features that these customers want:

• Small size and lightweight
• Professional-looking (not toy-like)
• A display that is as big as possible without sacrificing the ultraportable size  (the 10-inch display will win out here)
• A functional keyboard that facilitates normal touch-typing
• A traditional hard drive
• Battery life of at least four hours in the real-world
• Built-in 802.11n wireless support
• A 1+ megapixel webcam

Regarding the hard drive, downsizers want as much capacity as possible.  So the biggest wins, as long as it does not increase the price, is quiet and does not generate any extra heat.

So while solid state drives offer many advantages (they are more shock-resistant, quieter, produce less heat, require less energy and weigh less), they can’t provide the desired storage capacity at a price that will work.  There will be a future for solid state drives in ULPCs in this segment, but not today.

Downsizers want Microsoft Windows as their operating system. They are comfortable with Windows.  Even if a Linux-based system costs a little less, it is not a big enough differential to get them to switch.

Windows XP is fine.  It is what most downsizers are running on their existing notebook computers.

There are a lot of downsizers who are ready to make a purchase now.  They are salivating over the new offerings just now coming to market.  A product that offers the above features at a price point around $500 will be snapped up.

One last comment about downsizers.  Today, the percentage of users who are replacing their existing notebook by downsizing to a ULPC is a small percentage.  As these early downsizers rave about their purchases, this percentage will increase, resulting a phenomenal growth for the ULPC market over the next 12 months.

Casual Users

The casual user does not use a notebook computer as heavily as a downsizer.  Many use a desktop most of the time and only plan to use a ULPC for occasional travel.  Some simply want to use their ULPC to surf the Internet untethered around the house or while sunbathing in the back yard.

The common link between casual users is that they are ecomony-minded.

Casual users still want many of the same features as downsizers, but to save a $100 or so, they are willing to give up something.  The specific something may vary between casual users.

Many casual users will be willing to buy a Linux-based system that has a slower CPU and/or less RAM.  Some would be happy with a slower wireless adapter.  Some don’t need a webcam.

The size of the casual user segment is smaller than the downsizers, but it is still significant.  This group will seek ULPCs in the $400 range.

Bargain Hunters

Bargain hunters will make their purchases almost exclusively on price.

They may be late adopters who have a full-size notebook computer that they plan to keep.  Or they may be students getting their first PC.  Or maybe that old notebook computer they have used for years just died.

Bargain hunters primary needs are Internet surfing, email and the lowest-possible price.  Advanced features are not important.  Any operating system will do.

There will be lots of bargain hunters who will buy ULPCs priced around $300.

Summary

The ULPC market segment has progressed to having three distinct groups of buyers: downsizers, casual users and bargain hunters.  Each of these groups make their purchasing decisions based on different criteria.

The ULPC manufacturers who understand this and tailor their engineering and marketing efforts appropriately will reap the biggest share of this burgeoning segment of the notebook computer market.