As the battle for supremacy in the Australian notebook market hits fever pitch in 2004, resellers can expect to see the traditional brand name players — the heavyweights including Toshiba, HP, Dell, IBM and Acer along with whitebox notebook vendors (Optima and Protech, among others) and new 2003 entrants (including LG and ASUS) sharpening their marketing tools and colouring the landscape.
From basic notebook features to the swish of wireless-ready gear, along with benchmarks in price and performance, consumers are eager to jump on the mobility bandwagon, according to analysts.
The Y2K replacement push coupled with the strong Australian dollar is also expected to drive sales.
Indeed, mobility is a major force driving PC demand.
Gartner said the strong growth of mobile PCs, increasing acceptance of wireless technologies (such as 802.11b), and the decreasing set-up cost of wireless LAN, had led to a growing interest and uptake in wireless and mobile PCs from large and mid-size enterprises.
On the home front, users were attracted to the increased performance of notebooks, the competitive prices and the ability to carry a mobile PC from point-to-point as well as all the related functionality, Gartner said.
The latest technology in gaming and multimedia is also striking a chord. Sony and Toshiba, for example, are pitching DVR capabilities, which let users pause and record live TV programming onto a hard drive for playback.
IDC’s latest statistics show competition in the PC market remained fierce during the fourth quarter of 2003 as notebook adoption continued and consumers reacted to falling prices. While the Asia-Pacific market came in slightly short of expectations, overall notebook growth remained strong, supporting total PC market growth of about 14 per cent for the year.
“It’s going to be cut-throat in 2004,” IDC market analyst, personal computers, Imraan Ali, said. “The top five are jockeying to make the big moves.”
A dogfight ensued at the end of the year with HP toppling Toshiba from the top of the notebook podium for the first time in nine years thanks to aggressive pricing.
Toshiba reclaimed the lead at the final hour, Ali said.
He expects more of these battle scenes to play out in 2004. This year, notebook players will continue to aggressively push lower prices (a major bargaining tool and aid in the migration from desktop to notebook computing), longer battery life, integrated wireless networking, and the many benefits associated with mobility.
Users wanted true mobility, which combined lightweight systems, enhanced battery life, wireless connectivity and a powerful system, Intel Australia’s channel marketing manager, Andrew McLean, said.
“The challenge is how to balance all of these aspects,” he said.
Enter Intel’s Centrino technology, which was at the forefront of the processor giant’s mobile strategy and addressed all four user requirements for true mobility, he said.
Rolled out in March 2003, the mobile processor Centrino bundles a Pentium-M processor with a wireless LAN chipset.
Centrino was different, McLean said, because the platform was geared towards mobile requirements whereas earlier processors were modelled after desktop versions.
“Centrino is designed to be a processor for mobile computing,” he said. “Previously, there were tweaks to processors to make them suitable for mobile computing but, ultimately, they had their roots in desktops.”
The next generation of Centrino, dubbed Dothan, promises to offer a faster, higher-performance version of the Pentium-M chip — and is slated for launch in the second quarter of this year.
Intel recently offered a performance boost with the rollout of the Pro/wireless 2200BG network connection.
With this network conection, the Centrino-based technology enabled both 802.11b and 802.11g wireless networking capabilities — a key feature resellers could pitch to customers, McLean said.
But some analysts claim Intel will have a tough time convincing consumers the Centrino technology — which pumps out slower clock speeds — is a better sell than the Pentium 4. The company will have to fight consumer perception that the technology is a slower processor souped up with a wireless tool.
McLean said the technology — which is attracting users because of high-performance and low power consumption — was catching on.
Intel COO, Paul Otellini, said Centrino represented more than 50 per cent of mobile unit shipments in Q4. Total mobile units grew more than 30 per cent compared to last Q4 — leading the company to a new revenue record.
Paint it white
The whitebox notebook market, meanwhile, has also started to sizzle as more local assemblers begin to manufacture gear, IDC’s Ali said.
“We expect to see the emergence of the local whitebox market as more local players look to cash in on the growing demand for these products,” he said.
Last year, whitebox notebook sales accounted for nine per cent of the market in Q3, Ali said. This figure would grow significantly, he claimed, although he couldn’t be specific.
The overall whitebox desktop market represents about 47 per cent of the total Australian market, according to Gartner.
A lack of consumer confidence in purchasing non-branded notebooks — and worries about lack of parts, support and services — were stumbling blocks, Ali said.
But Intel hopes to change that perception. The company has seen enormous opportunity for the channel in the whitebook space (particularly peddling to SMBs), and was on a major push to rev up the market, McLean said.
It was a key channel focus for Intel in 2004.
Taiwanese-based ODMs (the group driving all of the designs for the mobile market) are working with Intel distributors in a bid to ensure barebones whitebook solutions based on Centrino mobile technology are easily available to Australian system builders.
This will allow local whitebook vendors to tailor the system for end-user needs.
“What we’ll find in the mobile market is that the end-user will go to the channel player and request a particular type of Centrino,” he said.
System builders and whitebox vendors have had astounding success in the desktop and server markets over the past two years, he said. Now it was time the whitebook market had its place in the sun.
Retail versus corporate: what’s hotter
While many vendors are projecting notebook sales will mushroom in 2004 (the desktop replacement trend is well underway), Ali is cautious, pointing instead to strong growth in the retail sector opposed to the corporate space (as consumer notebooks continue to penetrate the home market, repeating patterns set in 2003).
“Retail is a big point of call,” he said. “A lot of vendors are targeting consumers all the way to the SMB and SOHO space.”
Digital cameras and imaging (cameras in mobile phones), the promise of portability, tumbling price points over the past year, and the ability to share information remotely were all helping fuel market demand, he said.
Putting the brakes on the corporate hoopla, Ali said the market was holding back because of ongoing concerns with security and wireless, as well as issues surrounding total cost of ownership.
He said the corporate space had a lacklustre second half last year despite a promising start in the education, government and enterprise markets.
“On the PC side, we don’t expect 2004 to exceed 2003 [the first six months we see no significant growth],” Ali said.
“Caution in the commercial market has begun to dissipate, even as companies keep tight control on spending,” IDC said in its latest report.
General manager of Toshiba Information Systems Division (ISD), Ralph Stadus, said the corporate notebook market, in particular, was gaining momentum and offered resellers a meatier selling opportunity than the desktop market.
“For resellers, notebooks have sex appeal,” he chuckled. “Desktops are boring and passé.”
As such, the company is on a major push to educate VARs about the perks of peddling notebooks.
“Within the last year notebook technology has become more advanced than desktops ... You can add more services and accessories to a notebook,” Stadus said.
Users can deploy notebooks across a WAN (with Telstra and Optus subscriptions), and add a host of gear.
He said the company planned to offer fewer promotions this year (such as the one offering memory and external optical drive packages), and instead will revisit a back-to-basics selling model.
“Instead of tricking them into buying gimmicks, we’ll be offering them the basics,” Stadus said.
And while price wars took centre stage in 2003, he hoped pricing would begin to stabilise in 2004.
Because notebooks offer advanced computing power and a gamut of features, slashed prices weren’t always the main selling point for users, he said. This was also a key message for the channel.
Stadus pointed to an underlying social need for mobility and an overall work/lifestyle change as the main factors driving the mobile computing market.
This year, consumers should take the notebook plunge and brush up on security, he said.
While wireless security remained a stumbling block for some and was still a pocket of resistance in the corporate world, the overhyped concern represented a huge opportunity for the channel in terms of education, consulting and support, Stadus said.
“People assume everybody’s driving down the road with Wi-Fi sniffers and know where all the access points are ... But just because you know where a bank is, doesn’t mean you can get access to it,” he said.
In addition to security, the SMB market would be a hot topic in 2004 — and an area in which consumers were itching for mobility and portability, Stadus said.
IDC’s Kourosh Ghassemi said there were currently more than a million businesses in Australia, close to 98 per cent of these were SMEs (with less than 500 employees).
Toshiba sold 60 notebooks an hour, or one a minute, into this space. It was here that VARs could deploy a wireless LAN network and generate cash from consulting.
Intel’s McLean agreed. He said resellers could make money here by selling broadband packages as demand for connectivity grew, installing wireless access points, as well as hawking a host of peripherals.
Considering SMBs account for the majority of the Australian landscape, vendors are eager to capture a chunk of the market. For example, IBM made a major splash in 2003 with the launch of six ThinkPad notebooks — under the Express branding line-up — that were targeted at the SMB market.
According to IDC, these and other moves will play out this year in the SMB landscape.
Need a tablet?
While many vendors hope advancements in technology including the rollout of the Tablet PC will also fuel the mobile market in 2004, IDC’s Ali said it would remain a niche market, restricted mainly to vertical adoption including law enforcement, telecommunications and manufacturing.
“It will take a lot longer to get into the corporate and mass market,” he said.
The form factor, according to analysts, remains a concern — there aren’t enough applications that take advantage of the digital ink and the price difference remains high between tablets and notebooks.
Formerly ranked under the pen-based computing realm, Tablets got a boost in November 2002 when Microsoft launched Windows XP Tablet Edition, adding its digital ink technology. Along with Microsoft, a host of vendors including Acer, HP, Fujitsu, Toshiba and Panasonic have launched Windows-based tablet models.
But Microsoft’s senior product marketing manager for Windows desktop, Danny Beck, said the technology would move further towards horizontal adoption this year – in addition to vertical penetration including manufacturing, public sector and defence – as road warriors were becoming attracted to the benefits of digital input.
“It’s ideal for anybody who is mobile, spends time away, needs connectivity and wants to input data with a pen ... Our focus is to drive the Tablet PC through all markets,” he said.
The company vision was for all laptops to be Tablets in the next five years, Beck said.
Acknowledging the market is new (in terms of its commercial hardware and software rollout) and still undergoing change, Beck said more than 40 ISVs were working on ink-enabling applications. Autodesk, Corel and Franklin Covey for example were already pitching the benefits of the technology.
Resellers could also add value by developing applications, he said.
“It’s making great traction, but new concepts take time to develop,” Beck said.
In addition to more apps, customers wanted extended battery life as well as larger or even smaller screens, depending on the business need, he said.
“The Tablet won’t replace notebooks anytime soon, but they are taking off this year,” Toshiba’s Stadus said.
Beck said customers wanted an alternative way to input data, and the numbers were starting to reflect that trend.
He said the Australian market had sold 10,000 units since the November 2002 launch.
Globally, the numbers were pegged at between 300,000 and 500,000, Beck said.
As wireless became more of a necessity for the corporate market (and desktop replacement an attractive option), enterprise would start to see the benefits of the Tablet, he said.