IBM predicts notebook prices will flatten

Although analysts predict that notebook prices will soon go below $US1000, IBM is not rushing into the fray.

"$999 is not a holy grail for us," said Adalio Sanchez, general manager of IBM's mobile computing personal systems group, in an interview last week.

"We are not going to sacrifice reliability for price," he said, adding that the quality of the products on the market for that price is not acceptable.

Over the next 12 to 18 months, notebook prices will continue to decrease to levels as low as $999, Randy Giusto, head of International Data Corp's mobile technology research group, said last week at a briefing on trends in the notebook market.

But Sanchez said IBM expects notebook prices to stabilise over the next year, as the excess supply in the market, which partly drove price cuts this year, begins to evaporate.

IBM began bringing notebooks "to the masses", Sanchez said, with the launch of its ThinkPad i series notebooks in September. The company also expanded its high-end line with the ThinkPad 600 and 390.

With the increasing emphasis on tapping into the low-end of the notebook market, IBM also wants to avoid putting out a product that is not ready for prime time, Sanchez said.

"For too long, this industry has been enamoured of technology for technology's sake," Sanchez said. "We cannot just dump technology on customers."

Windows CE

That was the case with the operating system Windows CE, which just had its second anniversary, Sanchez said. Handheld devices were offered that were essentially unreadable and impossible to type on. "We are not going to participate in that," he said.

Consumers are also declining to participate in buying technology for technology's sake, according to IDC's Giusto. Increasingly, corporate purchasing decisions are influenced by non-technological attributes such as service and support or leasing programs, he said. IDC's 1998 Portable PC Survey, which queried the purchasing decision-making of around 300 buyers, found that only two top 10 spots were assigned to technology by buyers, Giusto said.

Only with the introduction over the next six months of the more powerful class of products based on Windows CE Handheld PC Professional Edition, does Sanchez see a viable product with a readable, typeable keyboard. IBM will roll out at least one Jupiter-class machine next year.

Giusto also predicted that 14in and 15in screens would become increasingly common over the next year. However, IBM is putting more of its efforts into improving screen resolution rather than worrying about upping screen size, according to Sanchez.

A place in the market

Sanchez also questioned whether 15in screens will ever have a place in the notebook market. Improvements still have to be made to make such a product viable, he said, such as reducing the thickness of the panels and reducing power consumption. And notebooks should weigh under 3.5 kilograms, he said.

"I think we are close to the end of the growth in the size of notebooks," Sanchez said.

Asked whether he foresees a supply problem with thin-film transistor (TFT) screens, in light of reports that vendors cannot keep up with demand for the products, Sanchez said that IBM has "ample supply sources" for the screens. The company's joint venture with Toshiba continues to put major research efforts into further improving resolution quality, and also provides it with sufficient products for TFT screens.

According to IDC's Giusto, a major challenge for IBM is Dell's increasing dominance in the market. IBM is currently ranked fourth in the US notebook market, according to IDC figures based on reseller sales.

But IBM claims the high ground on the quality issue. Dell gets its components from Taiwan, whereas IBM has its own technology in screens, hard drives and power management, according to Sanchez. That gives IBM an edge in quality, he said. Dell is taking more market share from Toshiba and Compaq Computer he said, rather than from IBM.

Rebecca Sykes contributed to this article.