Embedded 3G netbooks will boost business adoption, analyst says

Businesses may start paying more attention to netbooks as computer manufacturers release higher-end products and offer more connectivity options, says a Canadian analyst.

Related story: Rogers, HP embedded notebook now in Canada

As the categories between netbook and laptop computers continue to blur, businesses will buy portable PCs directly from the retail space, says Tim Brunt, senior analyst of personal computing and technology at IDC Canada.

PC makers, he says, will focus on winning market share in a space that’s proving a diamond in the rough for a challenged computer sales market.“They’re the bright spot in the whole market, holding up the whole segment. Consumer portables was the only growth area in Q1.”

The Toronto-based consulting firm uses the term “mini-notebooks” for computers with a screen size below 12 inches and outfitted with a mobile-oriented processor such as the VIA or Intel Atom. These are commonly called “netbooks” as well. IDC also has an “ultra-portable” category for computers with slightly larger screen size and more processor horse power – such as an Intel Core2 duo.

Hewlett-Packard (HP) has released products that fit the bill for both of those categories this year, targeting both consumer and small business markets.

“You’ll see a fuller range coming,” says Frederik Hamberger, director Americas Notebooks for HP. “It’s about designing something that we believe fits a trend with consumers … looking at a usage model where consumers have an interest to bring technology with them on the road.”

The DV2 ultra-portable has a 12” screen with an AMB Athlon Neo processor, 4GB of DDR2 SDRAM, and a 512MB ATI Mobility Radeon graphics card. The HP Mini 110 and 1101 sports a 10” screen, 1GB of RAM and an Intel Atom processor.

Both also have an option for a mobile broadband modem that connects to the Internet via a 3G cellular line. That will be put to good use now that Rogers Wireless has partnered with HP to act as the exclusive ISP for the netbook.

Announced last Friday, Rogers advertises download speeds of 7.2 Mbps using its network and data plans start at $31.95 per month for 500 MB of data.

“Wireless hotspots are great and they’re becoming more and more common,” Hamberger says. “But if you truly want to stay connected, a wireless WAN card is the way to go.”

The Mini 110 debuted June 1 and retails for about $300.

In the last quarter of 2008, 95,000 netbooks were sold and about 20,463 of those went to the commercial space. This was “a surprisingly high figure,” Brunt says.

For first quarter of 2009, consumer portables were up 14 per cent year-over-year, the only good news out of computer sales figures. Desktop sales were down 27 per cent, and laptops down 11 per cent.

“The really interesting piece of it all is they were predominantly sold through the retail channel,” he says. “Commercial business was buying these through the retail channel, which is odd.”

The reason for this buying trend is two-fold – netbooks are readily available in retail stores, and at a low enough cost that an employee could buy one and simply expense it. It’s also just a quick way to get one.

That bright spot is leading to some tough competition in the netbook and ultra-portable space, says Phil McKenney, chief technology officer with HP’s personal systems group. New computing products are starting to fill the gap between smartphones and laptop computers.

“Everyone who’s doing any kind of decent R&D is looking at this space,” he says. “Too small netbooks were rejected and too-big smartphones don’t work either.”

That’s a blunt, but accurate assessment, Brunt says. Netbooks first came out positioned as lower-priced offerings running Linux meant for surfing the Web. Many were returned and companies responded by releasing more powerful devices.

That boost in performance was the first step to get the attention of the business world.

“We’ve seen experimentation with them, small offices with one to 10 employees have been the early adopters using them as a secondary device,” Brunt says. “The more powerful mini-notebooks will be able to run proper business software and security protocols.”

Connectivity may be the second step to accelerating business adoption.

“The ability to connect anywhere, any time is certainly desirable for a lot of people,” he says. “It’s the best of both worlds – you pull out one device and have access to everything.”

Expect the embedded 3G netbooks to be a solid growth area for the near future, the analyst adds. HP may have the advantage by being fist to market.

The next big play in the netbooks space may come with the Windows 7 release, Brunt adds.

“Come the Fall time-frame, devices going to retailers for the Christmas season will likely be supporting Windows 7,” he says.

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