Tag: PC Industry

How the Paradox of Choice Will Impact Holiday Tech Sales

The concept of buyer’s remorse in the world of technology is not new. For decades companies have rolled out new TVs, stereos, PCs, laptops and more recently tablets and smartphones and as soon as a person bought one a new model or something better came onto the market.  One of the reasons Steve Jobs moved his product launches to a full year apart was because of this issue. When he updated products every six months, he got highly negative feedback from customers who were mad that the product they just bought would be obsolete so quickly.  PC and CE vendors still hear this lament all the time as the world of technology has become so competitive they feel compelled to update their products often, thus creating some buyer’s remorse within their user community. 

I suspect we are about to enter a period where the number of choices in laptops, laptop convertibles, 2 in 1’s and tablets will offer so much with new models coming out almost monthly, we may have perpetual buyer’s remorse for at least the next six months if not longer. For the first time in my memory, when a user goes out to buy a laptop or a tablet, the amount of products they will have to choose from will be enormous. I believe it will make the decision even harder for consumers to figure out what to buy during this heavy tech buying season and cause a lot of buying confusion.

In the past, if a person were going to buy a laptop, the key criteria would be screen size, processor speeds, hard disk space and price.  Except for Apple laptops, brand loyalty was low on the buyers list as they all pretty much looked alike. It was a clamshell with screen and keyboard and not much more. But this year users will also have a plethora of products called convertibles or 2 in 1’s to choose from. These are products in which the laptop screen can either be folded under or used as a tablet or it will be a clamshell design where the screen pops off the keyboard base and can be used as a stand-alone tablet. 

At the same time users will have access to new lower priced Ultrabooks which are laptops that are very slim and lightweight. Also up this year will be products called Ultra-lights, which are similar to Ultrabooks but are much cheaper and not as high powered. And, consumers will now have non-Windows based laptops called Chromebooks to pick from. Bottom line is that there will be dozens of new designs to choose from when buying a new laptop. 

It gets even more interesting if you want to buy a tablet. The 7″ tablets will be as low as $79 but the bulk of the really good ones will be $139 to $249. Some will be WiFi only while others will have 4G wireless radios in them. Some will have screens with medium resolution, others with very high HD resolution. And the 9-10″ models will be more powerful than ever, something that suggests they could be used more as an alternative to a laptop or PC. In fact, one thing we see happening with a lot of families is that the tablet in most cases has now become their primary computer in the home and the laptop is relegated to being used less often usually just for tasks like paying bills, long emails, document creation, media management and long form writing.

There is a great book on the market called the Paradox of Choice-Why More is less Written by Barry Schwartz. In the book’s description it says:

“We assume that more choice means better options and greater satisfaction. But beware of excessive choice: choice overload can make you question the decisions you make before you even make them, it can set you up for unrealistically high expectations, and it can make you blame yourself for any and all failures. In the long run, this can lead to decision-making paralysis, anxiety, and perpetual stress.”

In the tech world, it could mean perpetual buyer’s remorse as the product a person buys may not actually meet their needs. It may also be a new, updated version could come out just weeks after they buy it. I have talked to a lot of people who need to upgrade their laptops but are actually dreading going out and buying one given the amount of choices they face and the fear they will buy the wrong thing.

We are also seeing concern from folks about how they use these products in their work/home lifestyles. At work they can’t get away from using a PC. But at home they can now do about 80% of what they used to do on a laptop on their tablet. So the question that comes up is “should I buy a better tablet and a cheap laptop, or even consider one of the new convertibles or 2 in 1’s that will be out this holiday?” On the other hand, consumers are weighing another scenario in which they buy a cheap tablet and an updated but cheap laptop or Chromebook.

What I see happening this holiday season is a lot of consumer perplexity when it comes to what to buy. While price is always an issue with consumers, how they use the products in their lifestyles is becoming equally important. What I suspect might happen is that consumers will have a lot of choices, which may cause some confusion in the buying process and we could see the highest return rates of original purchases of PC’s we have ever seen.

What could happen in some cases is for people will get whatever they buy home and quickly realize it does not meet their need. They then take it back and try something else until they find the exact product that fits their digital lifestyle. While this may happen with a only a minority of buyers, it still could be a real problem for all PC vendors since any amount of returns for any reason is a big headache to them and their retailers and hits their bottom line.

While tech products will be high on consumers shopping lists this holiday, this is the first time they will have to consider a huge amount of products coming out in a whole host of shapes and sizes with new features and functions rather than in the past just having to figure out what the best laptop, iPad or basic Android tablet was to buy. I see the paradox of choice being a huge issue this holiday season, something that could especially impact PC/laptop sales while cheap and mid-priced tablets will probably be the big winners in this next quarter.

I Need a PC and I Know It

One of the fundamental characteristics of a mature market, is mature consumers. These consumers are mature in the sense that they know what they want and more importantly they know why they want it. This kind of maturity can only come with a defined sense of needs, wants, and desires.

That defined sense, can only come when you have experience with a product. Owning multiple generations of a product or category is required to fully understand not just what you want but why you want it. For many consumers they know by now whether they value a traditional PC like a desktop or notebook and they know why. These consumers know they need a PC and have a sense of what they want. Interestingly with smartphones and tablets, I don’t believe we have fully mature customers. ((I’ll dive into this in a future column, but some of the experimentation we are seeing in platform switching or experimenting demonstrates this nuance of the consumer market. ))

The Screens That Rule Our Lives

When the iPad joined our world, we knew it was more than a screen to entertain us. We knew it was a profound new kind of computer. At the same time, recognizing that the tablet will not replace the PC is a key understanding. For many, the tablet can and will become a primary computing device, but I doubt the presence of a more powerful computing will cease to exist in most consumers home in some way or another. But as important as the tablet is, there are many hundreds of millions of consumers who depend on the traditional PC to make a living. What is interesting for this class of customer is that they need a PC and they know it.

We are fond of saying we are in the post PC-era. What this term simply means is that the PC is no longer the only computer in which we can perform computing tasks. But the metrics of how a PC is valued has changed. One can make a strong argument that there are many consumer who don’t value the PC and will rather value the tablet and that may be true. But for those who need a PC, and know it, value has shifted from processing power to battery life.

Battery Life is the New MHZ Race

The raging question throughout the PC industry has been “what is going to get consumers to upgrade their PCs?” The answer is iPad like battery life.

At last weeks WWDC Apple released new MacBook Air’s running Intel’s 4th generation core processor. At one point in time when a company released a new PC, they proudly announced how much processing power it had, and the crowd would applaud. At WWDC last week when Apple discussed the MacBook Air, the crowd did not cheer or applaud when they announced the speed of the processor. Instead, the crowd went wild when they announced the new metrics for battery life. The new 11″ MacBook Air now has 9 hours of batter life, and the new 13″ MacBook Air now has 12 hours of battery life. Even now, we learn that after some benchmarking and reviews those battery life claims may even be conservative. No computer on the market comes close to these battery life claims and I will be interested to see if a battery life competitor to the MacBook Air comes to market this year.

Casually read some of the reviews of the new MacBook Airs and you will see how the reviewers are raving about their experience having more than all-day battery life in a notebook.

Without question there is a huge opportunity waiting for the PC industry with regard to notebook upgrades. Many consumers and corporate workers are using PCs that are out dated in nearly every major category. Yet it is not the high-definition screens, the touch screens (or lack there of on Macs), the ultra-thin design, or the overall look that will give their new owners a profound computing experience–It is the battery life.

Apple has set the bar high with these new battery benchmarks. All PC makers are making progress in this area and the new processors from Intel and AMD will help push this needle forward. ((If Windows RT can gain traction, ARM processors can be a solution for even longer battery life)) One thing I will be watching very closely with the fall lineup is the battery life claims from all the new notebooks. I am convinced this is the feature-of-all-features for the PC industry this year.

The PC Industry of the Past Is Not the PC Industry of the Future

We are, without question, an industry in transition. The 500 lb. gorillas who once dominated the technology industry are experiencing and undergoing major transitions and a new type of growing pain. And for many, this is extremley painful. These titans will rise or fall based solely on their ability to manage this transition and these new types of growing pains. So what is growing exactly? The opportunity.

From Business to Consumer

For the past 30 years, the computing industry only appealed to a small group of people–namely the business community. Many companies from Microsoft, IBM, Dell, HP, Intel, RIM, etc., got their start bycreating products and solving problems for a business user. What many of these companies are learning is that business users are as different as night and day than ordinary consumers. In fact, I specifically peg Apple’s turnaround to this observation. Apple has and always will be a consumer company. They simply struggled until there was a true consumer market. Now they find success where others have not simply because they have always had a vision of creating products for ordinary folk. Apple simply had to wait more than two decades for their true market to emerge. Now, emerge it has and it is billions strong.

A key point signaling this shift was the recent news about the PCs decline in Q1 sales. Who usually bought PCs in bulk in the first half of the year? It wasn’t consumers. It was businesses. In years past the bulk purchases of enterprise and business buyers helped offset the lack of consumer spending for PCs in this buying cycle. With business shifting to BYOD, it’s doubtful the first half of the year will yield the volumes it once did. What we are witnessing in clamshell PC sales is not really massive declines. It is simply the new normal.

The consumer market will dwarf the business/pro market by magnitudes. The PC industry of the past, is not the PC industry of the future. The opportunity has shifted from business to consumer and it is growing faster than many anticipated. Many were not prepared and the pain of this reality has been life changing for all PC vendors.

From Stationary to Mobile

We were not meant to sit at desks. Yet that is exactly the paradigm that desktops and notebooks brought. Innovations around mobile devices are among the most important innovations for the PC industry of the future. When we first learn to ride a bike we don’t just sit on it and not move. We take it out and explore the world. Smartphones and tablets deliver on a truly mobile computing vision and we are barely scratching the surface of mobile computing. There is still massive software innovation ahead and we still don’t have devices that truly know anything about us. Anyone who believes innovation is dead is wrong and lacks vision. We still have billions of new customers to bring into the digital age and they want innovative products, Many that have not even been invented yet.

At the moment, we are in an adoption cycle phase, not an innovation phase. Why should we expect revolutionary new smartphones, for example, when half the planet doesn’t even have their first smartphone? Do we expect revolutionary new cars every year or even every few? Until the advancements of hybrid technology the industry had hardly changed in decades. People don’t freak out and scream about the collapse of Toyota because they don’t release a revolutionary new car every few years. It’s not a perfect analogy, I admit, but I do believe the consumer market for automobiles brings out applicable insights for the PC industry of the future.

The companies I am not worried about and the ones who will be in the PC industry of the future understand mobilility and understand consumer markets. Right now that is a very short list.

This is also the crux for many who are experiencing growing pains. They have the wrong definition of mobile computing. Couple that with a lack of understanding of consumer markets and it is bad news for the traditional PC vendors unless they really get the mobile religion and deliver mobile products that meet the needs of all their current and future customers.

Why IT buyers are Excited About Convertibles and Hybrids

[dc]W[/dc]hen Steve Jobs introduced the iPad in 2010, he went to great pains to emphasize that the iPad was mainly for content and media consumption. Interestingly, he never even suggested that it could also be used for any form of productivity. But in a subtle way, he did push its role in productivity. That came via a very short announcement handled by Apple’s Sr. VP of marketing, Phil Schiller when he stated that Apple would also create versions of Pages, Numbers and Keynote for the iPad when it launched.

From the iPad’s entry into the marketplace, consumers immediately determined that they would like to have productivity apps and business related programs, along with their music, videos and basic email. Within two months of its launch, companies like SAP, Oracle, Salesforce.com and many others started to buy iPads and began writing business related apps as a part of their pilot programs. Also, many IT managers anticipated quite correctly that the iPad would be added to the list of consumer devices they would need to support based on the BYOD trends that started with smartphones.

Of course, the key to supporting smartphones and tablets in IT is MDM (mobile device management) software. Apple was smart enough to put hooks available for most 3rd party MDM programs thus making it possible to adopt iPads within IT programs relatively quickly. Surprisingly, Google and its Android OS did not architect these hooks in early releases of this OS and consequently, it missed the early stages of IT integration of tablets into their programs. Only recently has Google addressed this issue and we should see more Android tablets being modestly accepted into IT deployments in the future.

Once the iPad got into business settings, the work-flow of a user changed. In the past, they would take a laptop to meetings and use it to access information they might need for that meeting. But once the iPad came out, the laptop stayed on the desk and instead they took the iPad with them. This is especially true for companies who wrote their own programs so all of the key data a person might need in a meeting was available now on their iPad too.

But there is one technology developed for the iPad that I don’t think Apple anticipated. Almost from the beginning, Bluetooth keyboards designed specifically for the iPad started showing up. Over time, companies like Logitech created keyboards that even look like a cover for the iPad in its design as they did with their Logitech Ultrathin keyboard cover. In fact, the addition of a keyboard to an iPad virtually assured that an iPad could now be a real productivity tool in its own right.

But there is an 80%-20% rule that is in play here that makes life for IT managers more difficult. This rule states that 80% of what you can do on a laptop can now be done on a tablet. However, that 20% is tied to what we call heavy lifting tasks, such as graphic design, large spreadsheets, data management, creating major reports or documents, etc. The bottom line is that business users still need a laptop or desktop even if they have a tablet to supplement more of their mobile computing needs during the day.
This means that they now have to support a laptop, tablet and/or smartphone, and with many of these coming in the back door via BYOD (bring your own device).

New Corporate Hardware

In our research discussions with some IT managers, they have told us that they would like to minimize the amount of products that they support and are seriously eyeing what we call hybrids or convertibles that can do heavy lifting, yet serve as a truly mobile tablet in a single device. We define convertibles as a tablet/laptop combo where the screen does not detach, such as Lenovo’s Yoga. Hybrids we define as tablet/keyboard solutions where the screen does detach and serves by itself as a pure slate tablet. At the moment the industry interchanges these definitions but that should sort it self out in the near future.

The Good News and the Bad News

The good news is that the PC OEMs also saw this demand and consumer/IT interest in these types of products and are all moving forward with innovative designs. Lenovo, HP, Dell, Acer and others all have solid offerings in place that give the IT directors an option to have a single device that works as a full PC as well as a stand alone tablet. Given IT managers desire to streamline the amount of products they have to support, we believe that hybrids and convertibles are a sleeper device that will be in great demand next year by business users of all types, including SMB. It would not surprise us if consumers who want to do more productivity on their laptops increase the demand for hybrids and convertibles as well.

The bad news for these OEMs is that this could impact demand for traditional laptops in the future. The PC market has declined this year and its growth going forward will be anemic at best. Tablets have been a major disruptor in many ways. For example, consumers tell us if they can do 80% of what they do on a laptop now on their tablet, they may just extend the life of their current PC or laptop since it mostly sits idle. Or, if they do buy a new laptop or PC, they will buy a cheap one with updated processors and memory knowing full well it will be used less and less as tablets meet most of their needs.

But for IT managers, merging the two into one has a lot of merit for them, especially if the hybrids and convertibles have enough power and battery life to handle the heavy lifting tasks that will continue to be important to a business user. The fact that these products will be serviced as a single device, instead of two, is a key reason that we believe hybrids and convertibles will become a major growth segment in IT sales. It would not surprise us if savvy consumers move in this direction too since a dual-purpose product in many ways can be attractive to them to for similar support and economic reasons.

Mac Attack

At the Apple Special Event held on Wednesday, September 12, 2012, Tim Cook announced these facts regarding Apple’s Mac Computers:

1) Mac notebooks rank #1 in market share in the U.S. for the last 3 months.
2) Mac notebooks had 27% market share in July.
3) The Mac has outgrown the PC for 6 straight years.
4) The difference in the rate of growth between the Mac and the PC for the last quarter was significant – 15% to 2%

Four observations:

First, I think we can somewhat discount points 3 and 4, above. The Mac is growing from a smaller base, so it’s mathematically easier for its percentage growth to be greater than that of the PC.

Second, Apple is cherry picking their most favorable numbers here since this is only in the U.S. and it’s only notebooks. Still 27% notebook market share in the U.S. is significant. Notebooks are where the action is in PCs today and the U.S. is an important market. With 27% sales, the Mac should no longer be deemed a “niche” product.

Third, there isn’t a Mac sold for less than $999. Apple’s critics are always harping on the fact that Macs are too expensive but consumers obviously don’t think that is much of an issue.

Fourth and finally, if Mac notebook market share is #1 in the U.S. for the past 3 months, where does that leave, Dell, HP, Asus, Toshiba, Sony, Lenovo, Acer, etc? As noted before, the Mac is sold for $999 and up. It’s always maintained high margins while most other computer manufacturers have been involved in a profit destroying “race to the bottom”. If the Mac, which dominates in margins, is starting to take market share too, there will simply be no profits left for the other PC manufacturers. They’re surviving on crumbs already.

The PC industry is losing unit sales to the iPad from below and having their profits skimmed by the Mac from above. Based on the facts that we currently have, that trend is only going to accelerate. What are the PC manufacturers to do?

Ultrabooks have not been the answer…yet. So I can only assume that PC manufacturers are putting most of their faith in the various Windows 8 tablet form factors. That’s an awful lot of “eggs” in just one basket. Will customers “shell” out the big bucks for the new PC form factors? Or will the the “yolk” be on the PC manufacturers?

Notebooks are the Past, Tablets are the Future

This may be one of the more controversial columns I have written in sometime, although my goal is not to be controversial but to spur thought- so please hear me out. It is no secret that I am very bullish on the tablet form factor.

I have written extensively about them since the launch of the first iPad about my beliefs in this product’s role in the future of computing. But there are still many in the industry who have long watched, predicted, and benefited from the evolution of the desktop computer to the notebook and its success world wide that disagree with the more bullish thinking about tablets replacing laptops eventually.

At analyst meetings I attend and during many conversations with industry folk, I constantly hear a theme of tablets turning into notebooks. In essence there is a belief that the tablet form factor will evolve in form and function to look more like a notebook rather than less. This device is in essence the convergence of a notebook with a tablet. There is a good chance that with Windows 8 this form factor will appeal to a segment of the market. Even if that happens, and because of Windows 8, I believe that it is inevitable that all major software going forward will be re-imagined for touch interfaces first and foremost.

Notebooks of Old Will Become Relics

Because of the incredible growth of the iPad and smartphones over recent years, nearly all software developers have turned their eyes to touch. I have been one of the foremost proponents of touch computing and I firmly believe it is the foundation of our computing future. With that reality in mind, it seems clear to me clear that the software industry has been reborn around touch computing–R.I.P Computer-Aided Display Control (aka Mouse).

It is because of this new computing paradigm built from the ground up around touch that when I see notebooks I feel like I am looking at the past. Yet when I see how kids, elderly, non-techies, first time computer users in emerging markets, and more, all use the iPad, I am convinced I am looking at the future.

If you read my column on the new era of personal computing, I made the statement that notebooks are not actually mobile computers but are really portable desktops with compromises made on behalf of portability. In fact it was fascinating to hear Apple’s COO Peter Oppenheimer refer to the Mac business as desktops and portables–that’s my kind of industry terminology! Many desktop use cases are the same on notebooks. The only difference between the two is that one is portable and one is not. The iPad is however much more of a personal mobile computer than a notebook ever was or will be and the drastic change in use cases between the iPad and notebooks is significant.

I don’t know anyone who owns an iPad who has stopped using their notebook or desktop entirely. Sometimes there are times when you want a larger screen and a keyboard to accomplish some tasks. This is the best argument for the hybrid tablet / notebook computer. However, acknowledging that for some tasks a larger screen and keyboard are convenient, there is another scenario I can see playing out that may make the notebook form factor irrelevant for many consumers.

The Desktops New Role

Believe it or not, I see desktops making a comeback due to a role change. There is an interesting trend emerging around desktops. Consumer all-in-one Desktops (Like the iMac) are being designed to be showcased prominently in the house rather than stuck in the den or office. These computers will be very elegant, very powerful, and very affordable. So rather than try to converge a notebook and a tablet, I think a better solution is to pair a desktop all-in-one with a tablet. This would especially be interesting in consumer markets.

In this solution, when you want a big screen, keyboard, etc., you get it in a no compromise package with more processing power, graphics, memory, and storage than you would ever get in a converged tablet / notebook or a laptop. Then when you want a mobile computer you get a no compromise mobile computer with a tablet. I think this makes a lot of sense, perhaps even more than a converged notebook / tablet for the mass market.

Without fully testing one of these converged notebook / tablet devices it is hard to say this with absolute confidence but my fear with this converged form factor is that it will be a compromised notebook and a compromised tablet. Even though it is trying to be the best of both worlds, my fear is that it fails at both, or at the very least is heavily compromised on both fronts. Plus, if you buy my logic that a notebook is just a portable desktop, then the notebook becomes irrelevant in a desktop / tablet solution.

Of course the cloud and specifically the relationship between a desktop and a tablet would need to evolve quite a bit more than it is today for this to work. That is why I refer to it as a solution because it would need to have solution based thinking for this particular scenario to be done right.

This even works in a family setting where each person of the house has their own tablet screen and the desktop remains the communal screen for more “heavy lifting.” Each person’s cloud would have to work harmoniously on a personal level and also at a family level.

I have in fact been trying this experiment for myself at my house. Using a desktop as my primary big screen computer and a tablet for all my other mobile use cases. It is surprisingly sufficient already even without being built with this specific use case in mind.

Now realistically the notebook form factor will always exist for a certain segment. This model may not work for business users or mobile professionals. But I am beginning to wonder whether this desktop paired with a tablet solution may be a very attractive proposition for the mass consumer market. In this scenario everyone in the home has their own personal tablet rather than everyone having their own personal notebook. This scenario is not tomorrow, next year, or even a few years away but I would not be shocked if this solution gains traction at some point in time in the future.

This topic again is meant more of a thought exercise around a scenario that I could see playing out. Rarely am I struck with such a feeling that when I look at the excitement from many vendors around notebooks that I am sensing they are investing in the past, not in the future. But that is exactly the feeling I am having of late.

A PC is a Truck and Sometimes You Need a Truck

Steve Jobs said of the PC as he was developing his post PC theme, “PCs are going to be like trucks; less people will need them. And this is going to make some people uneasy.” Well he was right, if not accurate. A whole lot of trucks are sold. In just the US in February 2012 612, 145 cars were sold, and 537, 251 light duty trucks were sold, plus an additional 225,621 Cross-over trucks. So more trucks sold than cars, and even if you add SUVs (97,825) to the cars, there were still more trucks sold in the US, and that’s not counting the bigger ones that chew up your streets and bring stuff to your shopping center or gas station.

No doubt about it tablets and smartphones are popular and selling well. What most folks seem to miss (or want to miss) is we do have cars and trucks, and motorcycles, and we will continue to have smartphones (motorcycles), tablets (cars?), and PCs (trucks?) Because Tablets are popular doesn’t lead to the conclusion that PCs suddenly aren’t. But if all you’ve got to sell is a tablet, well then the world looks a little different. And even if you have a truck to sell, if it’s getting hammered by the competition, but your car or motorcycle is showing a better margin and/or shipment level, well your interest and emphasis is pretty predictable isn’t it?

So Apple wants to promote the “Post PC” concept as a way of casting the PC in a no longer important, been there done that, obsolete technology. And because they are Apple, the only company capable of original thought or charisma, and the role model for all other computer, electronics, and phone companies, the term “Post PC” will be adopted, and heralded as the coming, the new era, the I’ll follow Apple into hell slogan of all the wantabees—which is everyone from Microsoft to the smallest Chinese cloner.

Actually, Apple makes life so much simpler for the rest of us. We don’t have to invest time and money in clever ideas, or marketing, we just have to wait for Apple to tell us what’s cool now and then copy it as best we can.

The PC/Tablet/Phone industry reminds me of a bunch of teenage girls, watching the cool girls in order to find out what is in and what’s out. Nobody wants to get caught with something that’s out and not cool, that’s worse than a zits breakout on prom night. And it’s a caution to the buyers of all this non-Apple, Apple defined cool stuff. If the company you’re considering buying something from is an Apple follower you should think twice about buying anything from them. It’s unlikely they are going to be a faithful supporter of that currently cool copycat thingie—you’d be better off buying the real deal from Apple.

But it’s tough not being Apple when it’s so big, so rich, and so trend setting. Right now the only company that seems to have a chance at standing up to Apple is HP. All the rest are still in the beige/black box PC world where this year’s machine looks just like last year’s machine and the year before it. Where this year’s big breakout product is an Ultrabook that looks like every other Ultrabook which in turn is trying to look like Apple’s Air. It’s pathetic.

So if the PC industry turns into the unexciting truck industry, regardless of shipment numbers, it’s its own fault for being lazy and scared – get some backbone PC makers, take a chance—do something original. You might find you actually like it.

Are Netbooks Poised for a Comeback?

The answer to this is no, and yes. Let me explain.

In 2007, Netbooks took the market by storm. These small low-cost laptops hit the market at the beginning of the recession and were instant hits. Although first versions with Linux were panned once a low-end of Windows was made available they really took off. By 2010, we were selling about 30 million a year.

But in 2011, demand for Netbooks took a major hit. Many attributed this to the intro of Apple’s iPad and other tablets but in truth, the real reason for the decline is that once the vendors realized there was serious demand for low powered, low-cost laptops, they went full-bore in creating full-sized laptops in this price range. Last I checked you could get a 15.6 inch AMD Dual Core E-300 accelerated processor based laptop for around $329. Although Netbook customers liked their small sizes and low weight, they valued even more laptops that had extra power and full keyboards.

But if you try hard, you can actually trace Ultrabooks back to Netbooks. Indeed, at the WSJ D conference a few years back, when Netbooks were all the rage, the late Steve Jobs told Walt Mossberg that nobody really wants a Netbook. While he did not downplay demand for a smallish type laptop, he felt that people wanted a small laptop with a full keyboard and the same power as their mainstream laptops. Three months later, he and Apple introduced their first MacBook Air and of course, this successful product is the reason all the vendors are creating Ultrabooks now.

But Ultrabooks have one big problem. On average, they will be mostly in the $699-$999 price range and well outside of the realm of what we call value PC pricing. That range is from $299-$599. But to say there is still demand for an ultra-thin and low-cost laptop in this value price range would be an understatement.

What you can expect to happen is, in a way, the rebirth of the Netbook in the form of value priced ultra-thin PCs. These will not meet any of Intel’s Ultrabooks specs, but instead, will have low-end mobile processors, perhaps the home version of Windows 7 and a low-density hard drive. But they could be relatively thin and really cool, just with lower end chips and low-cost screens. In many ways, these will speak to the same audience who wanted a Netbook, namely those who desired a really low-cost laptop for basic computer usage.

This low-end category could get an interesting boost later in the year in the way of Windows on ARM. Arm chips are already low-cost, but with long battery life and some pretty good processing power. You can believe they will shoot for use in ultras-lims as well.

So while Netbooks as we know them are mostly dead, expect to see them return in the form of ultra-slims, ultra-thins, or some type of name the vendors will give them that targets this low-end value segment of the market. While I don’t believe it will have a heavy impact on the more full featured laptops in the value end today since these will sport much better processors, higher quality screens, etc. these low end thin laptops will hit the nerve of a part of this value market and could actually become big hits on their own.

The PC Landscape is About to Change – Here’s Why

One of my favorite quotes about change is:
“Life is a journey, and on a journey the scenery changes.”

The technology industry is also on a journey and on that journey the scenery will change. Whether many industry insiders recognize it or not the scenery is changing and it’s happening quickly.

The line is blurring between what is a PC and what isn’t. Devices like smart phones and tablets are proving to many that computing can take place on a number of different form factors. It is important for those who watch the personal computing industry closely to realize that the landscape as we know it is about to change drastically.

Tablets Take the Computing Challenge
It all began with the iPad. In as many times, in as many years, Apple again released a product that challenged the industry and forced many companies to turn introspective and re-think their product strategy.

The iPad has done quite a bit more than just challenge the industry, it has also challenged consumers to re-consider what exactly a personal computer is and what their needs are with one. What I mean by that is that our research is indicating that many consumers bought an iPad as a partial PC replacement. Meaning they were in the market for a new PC but instead bought an iPad, relegating their old PC as a backup for when they need a mouse and keyboard experience for certain tasks. What is interesting to the last point is that once integrating an iPad consumers realize they need the PC less and less for many tasks, especially when the iPad is paired with a keyboard. There are however, a few tasks like writing long emails or using certain software that these consumer still want a traditional mouse and keyboard experience for, only their observation is that those use cases do not occupy the majority of computing time for them on a regular basis. For that they remark the iPad suffices for their needs the majority of time.

As those in the industry who make PCs are already figuring out, tablets are a viable computing platform and having a tablet strategy is essential for anyone currently competing for PC market share.

We expect quite a bit of innovation in hardware, software, and services in the category over the next few years. Tablet / PC hybrids, which is a tablet with a detachable keyboard, could be one of the most interesting form factors we will see over the next few years. This product, if done right, will give consumers a two-in-one experience where they can have a tablet when they want it and a traditional mouse and keyboard experience when they want it, all in the same product. The big key – if done right.

Anyone Can Make PCs
Tim made the observation last week in his column that a fundamental issue within the technology industry is that the bulk of consumer product companies are simply chasing Apple rather than emerging as leaders themselves.

As companies look to duplicate the iPad and the MacBook Air this point becomes increasingly clear. What this creates is the opportunity for new entrants to create new and disruptive computing products by bringing fresh thinking to the computing landscape.

Perhaps a glimpse at this reality is Vizio’s announcement that they are getting into the personal computer game. With much of the hardware design for electronics moving into the hands of the ODMs, it makes it possible for anyone with a brand, channel, and cash to start making any number of personal electronics.

This is perhaps the biggest evidence about the change we are about to see in the PC landscape. The reality that the traditional companies, who were historically the leaders in this category may get displaced by new and emerging entrants.

Simply put, those who we expected to lead the PC industry may not be those who lead in the future. The truth is innovation does not stand still and if the traditional companies don’t want to do it someone else will.

Why Apple Will be #1 in 2012

A couple of weeks ago, market research firm Canalys made a significant prediction that by the end of 2012, Apple would be the number 1 PC vendor in the world. To get to this number, they recognized the iPad as a personal computer and pointed out that if you include iPad’s, Apple would be the #1 PC vendor as well as #1 mobile computer vendor in the market by the end of next year.

Although this prediction came from a respectable research firm, this same line of thinking was given even greater weight last week when HP’s CEO, Meg Whitman, told French reporters, when asked about the Canalys report, that she too believed that Apple is on track to replace HP as the #1 PC vendor in the world, although she hoped that HP would retake this position in 2013.

For the last 10 years, Apple has been all of the OEM’s worst nightmare. They became #1 in portable music players, and then became the #1 handset maker. And with the iPad they emerged as the #1 tablet maker. Now these OEM’s have to put up with the reality that Apple is on track to become the #1 PC vendor as well. And there is something else that Apple does that really irks them too. The fact that while they are having to live with margins of about 5-8% on almost all of their products sold, Apple is making margins well above 25% on everything they sell.

There is some controversy in the market research world about this idea of adding iPads into the overall mix of computers sold since most PC market researchers put tablets in their own category and do not count them as a PC. But that is very old line thinking and if Meg Whitman is counting them as part of the way HP judges PC market share, then the researchers who count PCs in general will need to adjust their thinking on this also.

But Whitman’s comment that they can overtake Apple in 2013 is an interesting one. For one thing, I suspect she is hoping that by that year, their ultrabook will be a big hit and help bring their market share back up in laptops. Also, I am sure she is counting on their Windows 8 tablet to be a big seller in 2013 and that they can create a branded Windows 8 tablet that businesses and consumers want. I believe this is a good goal, but one that may not be realistic.

Keep in mind, Apple’s mantra is to stay two years ahead of their competition at all times. What this means is that they are not standing still. Although we don’t know what is in the iPad 3, I have no doubt that it too will help extend their lead in tablets well into 2013. By 2013, when the first generation of Windows 8 tablets are just hitting stride, Apple will introduce the iPad 4 (or 3S) and could have significantly lower prices by then.

We are hearing that Microsoft’s fee for Windows 8 tablet version could be as high as $68. If that is true, right off the top the BOM costs of Windows 8 tablets will most likely force prices higher than Apple’s low-end iPad is today. And if Apple starts lowering their prices in 2013 as I suspect they will, Windows 8 tablets would be at premium pricing.

Also, while Microsoft and Intel and their partners are excited about ultrabooks, their current pricing is too high for consumers. The good news is that by the end of 2012, we could see some really solid ultrabooks as low as $599 (without SSDs). But the bad news is they don’t know what Apple has up their sleeves with their MacBook Air line for Q4 2012. While Apple will never try to beat the competition at pricing, they still could lower their Air prices significantly and market it to consumers as getting more bang-for-the-buck by then.

And even if Android tablets start gaining market share in consumer markets in the future, most of them are coming from non-PC vendors. The major PC vendors are winding down their Android tablet programs and all the big guys will be backing Windows 8 by the end of 2012. They must hope that Windows 8 tablet is a hit for this to give them any market share boost over Apple.

That means that all of the PC vendors will most likely lose ground to Apple next year, and knowing Apple, once they get to the top of the PC market share mountain, they just may have enough new products in their upcoming arsenal to keep them there for some time. If this happens, the big PC companies may have to get used to playing second banana to Apple in this new role of #1 PC vendor, something that they would never have dreamed would happen.

Who Really Needs a PC Anyway?

James Kendrick at ZDNet wrote a post asking an interesting question: Who really needs a stinking tablet anyway? His post is well articulated but misses the bigger picture of what tablets are and more importantly what they represent. So rather than look at the world today where tablets are in their early maturity stage, I would rather look to the future, at which point my title, –Who Needs a PC Anyway?– will be a valid question.

In my TIME column today I shared some perspective on what I am calling the Great Tablet Debate. Similarly I wrote a TIME column in June on Why Tablets Represent the Future of Computing. Going back even further when the iPad was first announced and demonstrated I wrote a column (I am quite proud of) for my friends at SlashGear called From Click to Touch – iPad & The Era of Touch Computing. I reference those three articles because they represent a much more holistic view of my thinking than I can get into with one single column – although I will try.

Along those lines I also strongly encourage a read of MG Sieglers post on how Tablets are Computers too.

The key to this whole discussion is to understand the mainstream part of the consumer market and their relationship with technology. If we use the diffusion of innovators theory then we have a start at understanding how technologies move throughout the consumer adoption cycle. What that theory doesn’t deal with, however, is how each group has different demands and expectations with technology.

The innovators and early adopters bring a very different mindset to their tech products than do the early majority, late majority, and laggards to a degree. I think studying the innovators and early adopters (a group I am in) is interesting but the early and late majority are the most important because they represent the largest part of the market.

In Crossing the Chasm, Geoffrey A. Moore dives deeper into this topic by pointing out how most technology products fail to cross the “chasm” – to move from early adopters to mass audience. He also points out, in this classic book, how each market of the diffusion of innovators has very different needs.

So the key is to understand the different needs of each of these markets and especially the early and late majority. We have done research with this category and found that more than 90% of the time consumers primarily use less than 5 applications with the top two use cases being checking email and browsing the web. None of those top 5 applications used 90% of the time are CPU intensive. In fact most PCs today have significantly more processing power than a consumer regularly uses. I’d actually argue that todays PCs are overkill for the majority of tasks consumers do regularly. They simply use them because prior to tablets they had no mobile computing option.

When it comes to my firms consumer research on the topic of using a tablet or using a PC we are finding that more consumers observe they can do everything they regularly do on a PC with an iPad. The reverse is true with the innovators and the early adopters whose technology demands and expectations are very different. Most in that category still want or use a PC due to those demands. James’s observations in his column more closely represent our research with the early adopter category but not that of the mass market.

The trend we are seeing, that is quite frankly fascinating and potentially dangerous, is that we are hearing consumers buying iPad’s instead of upgrading an older desktop or notebook PC. Their logic is that the iPad will give them more portability and ease of use in the majority of tasks they do regularly, leaving their old notebook or desktop to fall back on for the small use cases where they need it.

This is fascinating because it means that for the time being iPad’s are extending the life of desktop and notebook computers. Consumers are realizing their desktop and/or notebook is good enough and are using the iPad for the new experiences in portability and lean back and lean forward modes. It is also dangerous because my intuition is that as consumers realize how the iPad (or tablets) suffice for most of their major use cases they may realize they never need a clamshell PC again. Also, after a case can you guess what the second most purchased accessory with an iPad is? If you guessed a keyboard you are correct.

Our analyst colleagues at Canalys have for the first time lumped tablets into their overall PC industry tracking. A move I applaud, because in my opinion tablets should be counted as PCs because that is what they are and more importantly that is what they represent to consumers. The tablet should simply be viewed as a form factor evolution of the PC. I expect even more form factor evolution of both the tablet and the PC in the years to come. Tim dives deeper into this in his Monday column on Tech Trends and Disruptors for 2012.

Furthermore, I strongly believe that the limitation in productivity observed by some with the iPad, is not a function of the hardware but the software. As more apps get developed to increase productivity on every front and for every vertical, I believe the industry will have its “a ha!” moment. Shockingly–or not–more and more consumers we speak to have already had this moment, I am just waiting for the tech industry to catch up.

Tech Trends and Disruptors to watch in 2012

You may not know it yet, but when we end 2012, we will look back on it and realize that it was the most disruptive year we will have had in personal computing in over a decade. In the next 12 months, the market for personal computers of all shapes and sizes will have changed dramatically and I believe we will see at least one of the top 10 PC vendors leave the PC consumer business completely.

So what will be the major disruptive forces that could re-shape the PC business starting in 2012? There are four technologies and trends in the works that I believe will force the computer industry in a new direction.

The first will be Intel and their partners huge push to make ultrabooks 40% of their laptop mix by the end of 2012. Although I don’t believe they will achieve that goal, especially if ultrabooks are priced above $899, the fact is that ultrabooks are the future of notebooks. Instead of thin and light laptops driving the market for laptops as they are now, ultrabooks, which are thinner and lighter with SSDs and longer battery life, will eventually be what all laptops will look like within 5 years. The heavier and more powerful laptops that exist now won’t go away completely as there are power users who will still need that kind of processing power. But ultrabooks will be the laptops of the future and 2012 will be the first year of its major push to change the portable computing landscape.

There is an interesting twist with ultraportables that could be even more important starting next year. This will be the introduction of ultraportables with detachable screens that turn into tablets. In the past, this hybrid as it is called, ran Windows when in laptop mode and Android when in tablet mode. But this approach was dead in the water from the start. But with Windows 8 tablets ready to hit the market next fall, you will see ultraportables with detachable screens that will run Windows 8 with the Metro UI on the laptop and Windows 8 tablet version with the Metro UI in tablet mode. This would bring a level of OS consistency across both device modes and I think that this concept is a sleeper. In fact, if done right, this alone could reshape the traditional PC market in the near term.

The second major disruptor will be the acceptance of tablets in enterprise in greater numbers in 2012. Although IT directors will still be buying laptops, there is a real push by some to add tablets to their overall business use cases. At the moment, Apple has a huge lead here with 475 of the Fortune 500 either buying iPads for deployment or pilot programs and some, like American Airlines, United Airlines and SAP have each bought 10,000+ iPads for use in their IT programs already. As for Android in IT, that boat has sailed. Google screwed up their version releases of Android and not one IT director I have talked to is willing to trust Google with their Android roadmap always being a moving target. And don’t get me started on Android’s security risks. Recent reports that 37% of all Android Apps have some sort of bogus code or malaware has pushed Android out of most IT discussions.

Instead, the option to the iPad that is really on their radar is Windows 8 for tablets, especially the version done for Intel processors. What they want is the ability to run Windows apps as is on a tablet even though they may actually write their own custom programs for Windows 8 and its Metro UI as well. But this is sort of comfort blanket to them and this Windows 8 tablet has many, especially hard-core Windows shops, waiting to see how good Windows 8 will be when it debuts in Oct of 2012 before making a final decision on what device/platform they will integrate into their IT programs over the next 5 years.

The third disruptor will be the proliferation of tablets at the “low” end of the pricing spectrum, which will give birth to the “good enough” category of tablets. There is no question that the iPad will pretty much represent the higher end or “most” desired tablet, but for many, $499 is still too steep a price for them to buy into a product category that they want to participate in. Even with this competition, Creative Strategies has still forecasted that Apple will sell north of 70 million iPads in 2012. But the Kindle at $199 and the Nook Tablet at $249 has opened up the tablet market to millions of new users who will jump on the tablet bandwagon in 2012. This will be the most explosive year for tablets yet and by the end of 2012 we estimate that well over 120 million people WW will be using a tablet of some kind for personal and business use.

The fourth disruptor that will impact the 2012 computing and mobile market is related to processors. By the end of 2012, Intel should have its latest version of Atom that will have it greatest level of processing power and low voltage efficiencies built-in. That means that for the first time, Intel can aggressively compete with the ARM processors for smartphones and in some tablets where low voltages is important. Although Intel is very late to the mobile processing party, you can’t count Intel out, as they are known as a very powerful competitor. And, being this late, they could be very aggressive in pricing to buy into this market in a big way.

The other thing related to processors is the fact that Windows 8 for ARM should debut in 2012. That means that, at least in principle, the ARM guys can start going after the ultraportable market as well. On paper this is good news for the consumer as it could help rapidly bring prices for ultrabooks down. However, Windows programs cannot run on ARM processors as is and apps will need a lot of re-written code as well as UI enhancements to work on this new device platform. But the ARM camp is pretty excited about being able to move their chips upstream and supporting Windows 8 and this dynamic alone will shake up the market in 2012.

As for a top 10 PC vendor pulling out of the consumer PC business, I think that this is inevitable. All of the PC vendors are working on 5% or lower margins for their PC’s sold and given their costs of advertising, overhead and channel support, it is really hard for any of them that do not have a major enterprise business to help bolster profits through software and services, to compete. That is why I believe that at least one of the top 10 PC vendors pull out of the consumer market by the end of 2012.

Yes, 2012 will be a most interesting year in computing. And with these disruptions in the works, it is poised to perhaps become most explosive year we have seen in some time when it comes to altering the direction of the PC market.

Will an HP PC Spinoff Make a Stronger Competitor?

I have been having conversations with key executives around the industry about HP’s decision to explore spinning off their Personal Systems Group, which is the group that makes their business and consumer PC’s. An interesting question that has come up is whether or not spinning off PSG will make for a stronger or weaker competitor in the PC industry?

The logic goes that PSG was so tied up in big company atmosphere, who as of late was prioritizing software and services over hardware. Knowing how large companies often move slow and conservatively I can see how this could be an issue for a group who wants to act more like a startup.

So the real question is if HP does decide to go ahead and spin off PSG, will this move put them in a better position to compete?

I certainly can see and sense the desire from my PSG colleagues to move and innovate faster. The PC marketplace is changing rapidly and competition is getting fierce. But PC’s are not going away and can still be a legitimate business if managed well and they innovate in a more timely manner. So it makes a fair bit of sense to build a case that if spun out they could innovate, create and compete in a fast moving market.

It is also very difficult in today’s changing technology landscape to run a business with a successful enterprise and consumer division. Both require very different mindsets, strategies and leadership.

The fact of the matter however is that whether or not an HP spinoff can make for a stronger competitor in the industry will depend on the leadership and the talent that goes with it or is acquired as a new organization.

If the spinoff is approved by the board and moved forward with, this new entity would start its life as a Fortune 60 company with over $40 billion in annual revenue and it would be the #1 PC manufacturer (if you dont’ cound tablets).

That is not a bad way to start off. However the real test of the leadership will be not just to maintain but to grow their percentage of market share in all the areas they choose to compete.

Although execution will be critical and will be what others affirm as the challenge, what may be even more important is the right vision.

HP’s slogan has been the “PC is personal again.” However the real challenge of the companies who aren’t Apple is to make the “PC interesting again.”

Intel is hoping they can assist makers like Dell, HP, Acer, Samsung and others with their UltraBook initiative. Will UltraBooks Make PCs Interesting Again?

If HP does decide to spin off PSG what we will look for is their vision. What categories will this new entity focus on? Where do they believe the growth areas are? How will they compete, differentiate and add value?

Those questions and more will be what we look for as analysts in order to come to an opinion on how successful and competitive this new business will be in the marketplace.

6 Ways Apple Has Influenced the Last 30 years of the PC Industry

On Aug 12th, the industry celebrated the birthday of the IBM PC and its impact on our world of information. But we would be remiss if we did not also point out some of the key technologies Apple brought to the PC industry and how some of their pioneering technology and decisions actually pushed the PC industry towards stronger growth.

Credit: Austin Computer Museum

The first technology was the Mac and its graphical user interface. When the Mac was introduced in January of 1984, the IBM PC had been out for three years already, and its UI was still text based. But Apple shook up the computing establishment by introducing the Mac with its GUI, mouse and voice feedback and forever changed the man-machine interface for good.

The second major thing they did is toss out the 5 ¼ inch floppy disk and move to what quickly became the next major storage medium for PC’s. Jobs and company decided that the Mac should have a 3 ½ inch disk. At the time, the computing establishment smirked at Apple’s bold move, but soon after realized that this smaller disk size allowed them to create smaller PC’s and by 1986 this smaller floppy became the mainstream industry standard.

Their third major decision was to introduce a Postscript laser printer at an affordable price. This was a huge industry breakthrough. Most laser printers at the time cost well over $50,000 and took up a large space in an office. Not only did Apple bring this laser printer in at a price under $10,000, but also their laser printer actually sat on a desktop. Then, they were smart enough to link Aldus’ Pagemaker to the Mac and this laser printer and desktop publishing was born. From a historical perspective, you cannot underestimate how much this desktop publishing solution has impacted the world of publishing, graphics and even movies.

The fourth major thing they did was introduce Mac’s with CD Rom drives. Again, this was a revolutionary move at the time and in fact, this ushered in the era of multimedia computing. I had the privilege of being a part of the first multimedia roundtable held at UCLA in 1990 that was co-sponsored by Apple and saw first hand the potential that a CD ROM would have on computing by allowing a PC, for the first time, to deliver a storage device that could integrate text, images, audio and video into a storytelling medium. Again, the traditional PC vendors smirked at Apple’s move and said it was just another unneeded expense. But within two years they got the message and started to integrate them into mainstream PC’s as well. And, with the CD rom in PC’s, for the first time, the PC garnered serious attention from mainstream consumers. If you know your PC history you know that it was multimedia computers that finally got the PC into homes and the consumer PC market was born as a direct result of the role the CD ROM played in bringing multimedia content to the PC experience.

The fifth major influence on the traditional PC market came with the introduction of Apple’s colored Mac’s not long after Steve Jobs came back to run Apple in 1997. In fact, this major move to make industrial design a cornerstone of all Apple Macs has, over the last decade, forced the PC industry to completely rethink what a PC should look like and again, it took Apple to lead the way and help them see the future of the PC.

And now they have introduced the iPad. While Jobs likes to say that this is product of the post PC era, I beg to differ with him on one point. If you open up an iPad, it has a motherboard, CPU, memory, IO’s, screens, etc. In my world, that is a PC. And in that sense, Jobs and team again is influencing the PC market in an even more dramatic fashion.

While over the 30 years of the IBM PC, Apple did not achieve the type of market share of the HP’s, Dells, Acer’s etc. And during much of this time, the company actually struggled to remain relevant. But nobody can deny their impact during this period and now, it is the Dells, HP’s et all who are all chasing Apple.

Why Apple Scares the Wintel Vendors

You might think that this is a trick question. On the surface, the answer should be the iPad and its eco system. But the iPad is a new category and while it is true they fear Apple’s potential of owning this market and making it hard to create products that are competitive, this is not the product that they fear the most.

The product they fear the most is Apple’s MacBook Air. When Apple first introduced the MacBook Air, a lot of the PC vendors thought it was a gimmick. While it was very thin and light it was very underpowered. And well over $1000. PC Vendor’s thin and lights (their definition, not mine) had broken $1000 and PC”s under $700 were dominating the overall market for laptops. And this first generation MacBook Air had no impact on their laptop market at all.

The only company to kind of take this Apple move serious was Dell, who created the Adamo XPS, supposedly their version of the MacBook Air. But while it was relatively thin compared to all of the other “thin and light” laptops on the market, it was also so high priced that people stayed away from it in droves. At least for the short term, Apple’s MacBook Air was considered the thinnest and lightest laptop albeit slightly underpowered and with Apple’s upper end pricing scheme behind it.

In the mean time, the demand for cheap PC’s started to take off. In fact, a new category of thin and lights called netbooks was all the rage for about two years. And while Steve Jobs considered netbooks toys, he watched its growth with interest. While he publicly said Apple would never make a netbook, it was pretty clear that Jobs and company had decided to make the next MacBook air lighter and thinner than a netbook yet as powerful as most mid to high end laptops. And, while their starting model is $999, their proprietary unibody casing and integrated graphics chips still make these the most powerful ultralights on the market today.

But when Apple also decided to kill their MacBooks, or their entry level laptops and only bring to market MacBook airs at prices close to their older entry level models, the PC vendors sat up and took note of this quickly. To them it signaled that Apple is getting ready to start a full out assault on what has been sacred territory for them. Sure, they can still create laptops under $500 and sell them all day long. But they also realized that Apple is now setting the bar for laptops at a new level by using the MacBook Air to help define the next generation of laptops and, they know that with Apple’s buying power and International reach Apple could price them even more aggressively in the very near future.

The PC industry itself had somewhat anticipated this and is working on creating what they call Ultrabooks, Windows based systems that are much like the MacBook Air. But the one that is on the market today that is the closest to the MacBook Air is the Samsung 900 3X which is priced about $1600 Euro’s in Europe and well over $1800 in the US. Apple’s comparative model is $1599. Although the Samsung 900 3X is a solid product, Apple’s lead in these types of “ultrabooks” along with their stores will help them sell even more of these in the future. In fact, in the last earnings call, Apple said they sold about 4 million computers in the last quarter and that 73% where laptops. And we believe that 75% of those where MacBook Airs.

Given the MacBook Air’s pricing and Apple’s apparent commitment to be even more competitive with the mainstream PC vendors with this model, signals to me that they really want more of the hallowed ground that traditional PC vendors tread today. And it looks like Apple is about to crank up their laptop supply chain prowess, industrial design skills and marketing and retail emphasis and will go right at the heart of these PC vendors most profitable laptop segment.

Oh yeah, and they will soon have their iCloud offering that will bring their eco-system in sync to their laptops and desktops as well, another value added piece of technology that I am sure will strike a chord with users. And given the possible halo effect of the new iPhone 5 when it comes out as well as the iPad and the iCloud, I am certain that Apple will drive even more people into their stores and will put an even greater effort on selling MacBook Airs and MacBook Pro’s in the future.

Yes, the iPad is a real concern for the PC vendors as Apple has a huge lead in tablets and strong demand. But if Apple starts eating into their laptop market share, this will have the greatest impact on these PC vendors in the future and make it even harder for them to make strong profits on this part of their laptop business.