Netbook Sales are on the Rise, but will that hurt

Netbook sales are on the rise, but is it really a good thing? Do
consumers know what they are getting? And is the PC industry really
benefiting from this wave of new found netbook momentum?

According to leading market research company The NPD Group's retail
tracking service; laptop unit volume increased more than 23 percent in
December to 1.9 million units. That growth was propelled by netbooks.
Without netbooks sales laptop PC growth would have been just 9 percent
in December. For the full year laptop sales growth was 21 percent with
netbooks and 16 percent without them.

Netbook sales ramped up during the year. In the first half of the
year, netbooks accounted for less than 1 percent of laptop sales.
While that number rose in third quarter it remained less than 2
percent. Only in fourth quarter, as products became more available and
began to reach the shelves of the major U.S. retailers, did sales
become significant. By December, netbooks accounted for 12 percent of
unit volume, their highest total of the year. Nearly 50 percent of all
netbook sales for 2008 occurred in December. The impact on overall
laptop ASPs was significant. In January, laptop ASPs were $861, by
December they had fallen to $740. Without netbooks price erosion in
2008 would have been much smaller as non-netbook ASPs were $795 in
December compared to the $861 at the start of the year.

So are netbooks cannibalizing the market or just making a commotion?

"Without netbook sales, the laptop market grew 16 percent in 2008,"
said Stephen Baker, vice president of industry analysis at NPD. "That
16 percent non-netbook growth likely indicates about 50 percent of all
December netbook sales were incremental and about 50 percent were
cannibalistic.