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Clocks Clocks is offline
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Default 10-14-2009, 07:13 PM

You also have to consider the context of the general industry. The people who come to this site (you and me) have netbooks. We like them. We have a use for them. We like them enough that we come to a site like this because lets face it most people who get a netbook will never find this site.

In the industry context as a whole, they have actually had really high return rates with netbooks. Compared to the other offerings of laptops and desktops, what Dell and other OEMs are finding out is that you offer something that looks like a low cost laptop. You stress that its small and its not full power and you put a lot of thought behind how you advertise it to make it clear what it is and isnt.

Regardless of how much effort and expense you go to, there will be a segment of the population who looks at the laptop page and looks at the lowest price and says "I will get that laptop".

What they get is not what thier notion of a laptop to be. Linux based netbooks in particular have really high return rates because people go for the lowest of the low and then freak out because they dont know what this new linux thing is. "it doesnt even have office! OMG!"

You get the picture.

From an executive level, netbooks have several problems for someone like dell. The average gross and net profit margins on netbooks are lower than laptops therefore some of dell's sales performance metrics are suffering slightly.

The costs of support are going up. People are returning these things. They are badmouthing them in mainstream venues and person to person interactions because THEY didn't know what they were getting into (read: were too stupid to buy what they needed).

Not only that, but netbooks are a space where other vendors have been able to compete effectively. Dell came out very early on with stylish and solid netbooks. But we arent "very early" anymore. Every OEM has netbooks which, because of limitations from the intel licensing, are virtually identical in thier specifications. Intel doesn't want to see two market segments (netbook and laptop) compete for the same customer dollars.

AMD cant get the appropriate licensing for ion.

Therefore until intel wises up that we want the netbook form factor and are willing to spend money to power them up, the netbook space is just a myriad of business problems for someone from the business standpoint of Michael Dell. Fast growing sure, but the money to be made in the segment not only is small compared to other segments but you are trading off resources used to support those more lucrative segments as well.
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cstaats cstaats is offline
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Default 10-14-2009, 07:38 PM

Very well said. However, I don't see the issue with high return rates being necessarily due to hardware defects. Like you said, many people are too impatient to properly research a computer before they purchase it - it's more like asking the Best Buy guy which one is better and just getting it. The one part of this that I think is improving is information about the netbooks and what they are truly: glorified Internet surfing devices that can run full-size operating systems. While I see the difficulty in return rates and margins that netbooks create for manufacturers, the point is that people want them, and that means they are selling. Best Buy now has anywhere from 5-10 of these on display at a given time. ALthough Intel is being an ass with nVidia regarding their chipsets, I think that between those two and Via we'll get some better component diversity in the future. Apple is coming out with an iPhone OS tablet soon that is expected to run on an ARM-based platform. Who knows, maybe ARM will pick up momentum in the MID world and start stealing some market from the x86 realm.

What I don't think is cool is bashing the netbook market solely based on growing pains. If Michael hates them so much, well hell, stop selling them! But Dell does make money on it and he is upset that people actually like netbooks, even if he thinks it's stupid to do so.


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grungysquash grungysquash is offline
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Default 10-14-2009, 10:27 PM

He does have an interesting point but he is also missing the point............................

Yes the atom processor is no performance winner - yet it does seem to run XP and Win 7 fine. I admit I have spent money on the mini 9 I own increasing the ram to 2 gig, replacing the slow SSD with a faster SSD with more speed - and installing a new battery which can last 8 hours. I use this unit as my permanent full time work computer, I don't do heavy 3D work (obviously) but live in the would of excel, word, outlook & an ERP computer system.

For this the unit is well designed for - when I travel it's light, the battery lasts all day and I have a spare just in case another 3 odd hours is needed. I run this through my acer 1900x1080 display at work and external keyboard which it drives just fine.

There is no real lag - yes it's slower but no worse than my old Compac N10v (1.2 P4 CPU, 256 meg ram & 1024x764 display) which was my main work unit back in 2004 - and this was what everyone was expected to use and we did. we didn't complain we just got on with the joy of work!!!!

In my view the mini's (and I like the 11z by the way - nice unit) are designed for a purpose, I love the fact mine has built in 3G card - that it weighs next to nix. When travelling it allows me access to email, powerpoint, excel, word etc. The screen is great for watching movies on flights (avi files through the SD slot) and nicely supplements my work blackberry which I use when travelling but how the heck do you edit a spreadsheet or word doc??? the only solution is a low cost portable computer that weighs noting and lasts on battery power as long as possible.

Now I won't be replacing my main power laptop (dell M6400, 8 gig ram, FX3700 video card - you get the drift) but I won't be lugging that darn thing away on a flight any time soon.

The mini's fit a very nice spot - low cost (important) practical for travel, email access, ability to work on documents - oh and light!!!
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faber78 faber78 is offline
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Default 10-14-2009, 11:09 PM

sounds like a hurt pocket book to me....
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holmes4 holmes4 is offline
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Default 10-15-2009, 12:07 AM

I'll cut Michael some slack - Intel is also trying hard to "position" the Atom processor as being low-end, with "good-better-best" charts in stores, etc. Atom has been very successful for Intel - I think they called out $451m in sales this past quarter - but the margins are much better on the Core 2 (and now Core i7) mobile processors. So Dell, while it has done very well for itself with Atom, wants to try to discourage people from considering netbooks as their only portable computer.


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cstaats cstaats is offline
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Default 10-15-2009, 03:04 AM

Quote:
Originally Posted by holmes4 View Post
I'll cut Michael some slack - Intel is also trying hard to "position" the Atom processor as being low-end, with "good-better-best" charts in stores, etc. Atom has been very successful for Intel - I think they called out $451m in sales this past quarter - but the margins are much better on the Core 2 (and now Core i7) mobile processors. So Dell, while it has done very well for itself with Atom, wants to try to discourage people from considering netbooks as their only portable computer.
I agree with you holmes. The margin on higher power and performance CPUs is definitely Intel's bread and butter. But I think this speel by Dell is about the change that netbooks are bringing. Listen, if these little netbooks were as unimportant as he says, why is EVERYONE making and selling them? And why are they selling faster than Tickle-Me-Elmos at Christmas? Because its what the consumer wants that drives sales. I really hate to see someone in as prestigious and respected position as Dell say things that are against what the consumer is asking for. They want netbooks, and like it or not, they're here to stay.


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bmcclure937 bmcclure937 is offline
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Default 10-15-2009, 03:46 AM

And this is why I worry that the price of netbooks will slightly increase (maybe only $50). Instead of companies losing soo much because of lower notebook sales... they would gain a little of that back from increased netbook sales.

The demand is high... and it is cutting into other sales and sort of cannibalizing the product line. I can see Dell and other companies slightly bumping the price of the netbooks to recompensate

But that is all speculation.


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Clocks Clocks is offline
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Default 10-15-2009, 05:14 AM

Quote:
Originally Posted by cstaats View Post
However, I don't see the issue with high return rates being necessarily due to hardware defects. Like you said, many people are too impatient to properly research a computer before they purchase it - it's more like asking the Best Buy guy which one is better and just getting it.
I 100% agree. You can advertise and differentiate all you want. But if my grandfather, who grew up during the great depression, goes into the store and wants a laptop, he wont care about fancy signs and packaging. He will walk over to the laptops, he will find the cheapest thing there that he can still use in the store, and he will take it home.

And 3 days later become annoyed that it is so slow.

And its not just grandparents. Its your mother and mine. And that housewife that doesnt do very well on the computer. Its the non comp-sci college or high school guy who gets a linux netbook only to find out they cant do any of thier assignments with it.

That generates returns, correct or not, smart or not, "right" or not.

Quote:
The one part of this that I think is improving is information about the netbooks and what they are truly: glorified Internet surfing devices that can run full-size operating systems. While I see the difficulty in return rates and margins that netbooks create for manufacturers, the point is that people want them, and that means they are selling. Best Buy now has anywhere from 5-10 of these on display at a given time. ALthough Intel is being an ass with nVidia regarding their chipsets, I think that between those two and Via we'll get some better component diversity in the future. Apple is coming out with an iPhone OS tablet soon that is expected to run on an ARM-based platform. Who knows, maybe ARM will pick up momentum in the MID world and start stealing some market from the x86 realm.


[quote\What I don't think is cool is bashing the netbook market solely based on growing pains. If Michael hates them so much, well hell, stop selling them! But Dell does make money on it and he is upset that people actually like netbooks, even if he thinks it's stupid to do so.
Michael dell knows the market statistics as well as you or I do. He knows what gartner has released in the segment, he knows what his market share looks like, and he knows what competition looks like in the market.

Someone (i forget who now) was once interviewed and asked if he wanted to compete with facebook. He said facebook is very good at making very little money fast. He said "its not a business I want to be in".

Its like that with dell. Hell, its like that with car manufacturers now. People are buying small computers and small cars. The assembly lines were not costed out based on small computers with small profit margins. They were costed out on trucks that could support union wages and excess labor. They were modelled on demand based buying.

Its the same thing here. Sure, you can make a profit selling bazillions of netbooks on the market. And Dell doesnt want to lose these netbook sales to the other guys, potentially giving HP or Acer or whoever a foothold to go after other sales within a family on higher margin needs.

At the same time every netbook sale is a laptop potentially going by the wayside. And when you are Michael dell, that is challenging enough that you do away with the 12" netbook that competed with your 13" laptop offerings and the 9" netbook which was more limited to produce as a future focused platform.

(You net cost savings on building off of one chassis. Think of the 9, 10, and 12 as market entries, loss leaders to figure out what the sweet spot is. Sales of the 10 were strongest and in the time that all three models were on the market, your engineers figure out that the size of the 9 makes it hard to put standardized hardware in there. Everything is an expensive R&D hassle. But with the 10 and 12, you can use standardized parts which has a broader margin and lowers your cost. If you dump the 12 to avoid competing with your own products, that leaves the 10, which is where we are today.)

---------- Post added at 05:14 AM ---------- Previous post was at 05:11 AM ----------

Quote:
Originally Posted by grungysquash View Post
He does have an interesting point but he is also missing the point............................

Yes the atom processor is no performance winner - yet it does seem to run XP and Win 7 fine. I admit I have spent money on the mini 9 I own increasing the ram to 2 gig, replacing the slow SSD with a faster SSD with more speed - and installing a new battery which can last 8 hours. I use this unit as my permanent full time work computer, I don't do heavy 3D work (obviously) but live in the would of excel, word, outlook & an ERP computer system.

For this the unit is well designed for - when I travel it's light, the battery lasts all day and I have a spare just in case another 3 odd hours is needed. I run this through my acer 1900x1080 display at work and external keyboard which it drives just fine.

There is no real lag - yes it's slower but no worse than my old Compac N10v (1.2 P4 CPU, 256 meg ram & 1024x764 display) which was my main work unit back in 2004 - and this was what everyone was expected to use and we did. we didn't complain we just got on with the joy of work!!!!

In my view the mini's (and I like the 11z by the way - nice unit) are designed for a purpose, I love the fact mine has built in 3G card - that it weighs next to nix. When travelling it allows me access to email, powerpoint, excel, word etc. The screen is great for watching movies on flights (avi files through the SD slot) and nicely supplements my work blackberry which I use when travelling but how the heck do you edit a spreadsheet or word doc??? the only solution is a low cost portable computer that weighs noting and lasts on battery power as long as possible.

Now I won't be replacing my main power laptop (dell M6400, 8 gig ram, FX3700 video card - you get the drift) but I won't be lugging that darn thing away on a flight any time soon.

The mini's fit a very nice spot - low cost (important) practical for travel, email access, ability to work on documents - oh and light!!!
From my upcoming lengthy discussion of customizing a Dell Mini 9 netbook for my needs. To scale but not actual size. Side and top contours are not actual device contours, they are there to represent the published dimensions of each device.

Top Size Comparison


Side Size Comparison


Relative Weight Comparison, in lbs



Need I say more?
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Max_Carnage Max_Carnage is offline
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Default 10-15-2009, 07:46 AM

Thanks for a detailed and well thought out post, Clocks.

Quote:
Originally Posted by Clocks View Post
that leaves the 10, which is where we are today.
Suits me. The 10v is the sweet spot between portability and type-ability IMHO. I'd rather they stuck with that form-factor for their low-end than moved to 11.x inches.

I don't agree with the grandfather scenario though. I think the fact that so many people have discovered that they can work perfectly well on low-spec hardware is more of an issue for the hardware manufacturers (not to mention retailers) than the fewer people who decide it's inadequate.

The margins are bigger on a $1500 laptop than on a $300 netbook. But most people who buy a netbook today get a computer as capable, or more, as the computer they used 4 years ago. But what they do on their computer hasn't changed, and therefore the lower spec, low margin option does work for them.

bmcclure, you can rest easy. The only way the hardware manufacturers could simultaneously raise prices would be if there was a perfect monopoly or perfect collusion (illegally so). It's not going to happen. The market is pretty competitive, and China is really starting to shine. They're bringing out netbooks and notebooks of very decent quality, and the increase in quality continues at a rapid clip. I can't see how the hardware manufacturers could raise their low-end prices, even if they want to.


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holmes4 holmes4 is offline
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Default 10-15-2009, 02:16 PM

I found that Dell actually said something a lot closer to what I suspected:

Quote:
"We see a fair amount of customers not really being that satisfied with the smaller screen and the lower performance - unless it's like a secondary machine or it's a very first machine and the expectations are low," he said. "But as a replacement machine for an experienced user, it's not what we'd recommend. It's not a good experience, and we don't see users very happy with those."

But he did say there are certain niche situations where a netbook makes perfect sense. As an example, he pointed to the Dell Latitude 2100, a small low-cost notebook for schools. "Sales have been many times what we thought," Dell said. "Schools just love 'em. It fits their applications perfectly. But as a general purpose notebook, it's not really a great solution with screen size and performance."
Michael Dell: Netbooks go sour after 36 hours ? Channel Register


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