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HP, Lenovo, Toshiba Lines Focus on Low Cost, Mobility


Lightweight laptops adding to netbooks at Consumer Electronics Show

Small and inexpensive "netbooks" were some of the most popular computers in the recession, wooing consumers with their portability and prices that were often below $400. Now with the economy improving, consumers will be asked to open their wallets to new styles of computers, including some costing a bit more.

Among the new offerings being unveiled this week at the International Consumer Electronics Show in Las Vegas: lightweight, medium-sized laptops meant as a step above netbooks in price and performance. There also will be at least one "smartbook" -- a tiny computer that combines elements of netbooks and so-called smart phones.

That is not to say the netbook has reached the end of its line. PC makers including Hewlett-Packard (HPQ), Lenovo, and Toshiba are expected to show off new netbook offerings with such features as touch screens and the latest Intel (INTC) Atom processors, which offer improved performance over the earlier Atoms that fueled the initial run of netbooks.

But the netbook's popularity has come at a price for the industry: slim profit margins for chipmaker Intel Corp. and the PC manufacturers.

For many PC makers, the rise of netbooks has meant falling revenue and profit from PC divisions. Hewlett-Packard Co., the world's largest computer maker, gets a third of its revenue from its PC business but just 15 percent of the company's operating profit, numbers that are shrinking thanks to netbook sales and price cuts on other machines.

And while netbooks proved that there is an appetite for highly mobile computers, consumers will likely come to want more power, more portability -- or both.

Ever since Taiwan-based AsusTek Computer Inc. got the netbook craze going with its 7-inch Eee PC in late 2007, consumers have been gravitating to the devices. According to data from research company Gartner Inc. (IT), netbooks made up an estimated 10 percent of all PC shipments in 2009, up from 4 percent a year earlier.

These devices had small screens - generally 7 to 11 inches, compared with about 14 to 17 inches on a full-sized laptop - and often smaller-than-normal keyboards. PC makers kept prices down by avoiding extras such as DVD drives and Bluetooth wireless connectivity.

Netbooks were meant to be companion devices that could slip into a purse or backpack for on-the-go Web surfing, though for many consumers it was the only computer they bought in 2009.

But only so many people can buy netbooks as secondary computers, and people who buy them as their only computers will eventually trade up to more powerful machines, said John Jacobs, an analyst at market research company DisplaySearch.

Thus, the growth in netbook sales is likely to slow in the next few years. Although netbook shipments to retailers more than doubled in 2009 to 33.3 million, compared with the previous year, shipments should rise just 19 percent to 39.7 million this year, according to DisplaySearch.

In addition to netbooks, consumers can expect to see in stores a number of devices that fit above and below the small laptops in price, size and performance as PC companies try to widen the market. Many of these are being unveiled at CES even as Google (GOOG) Inc. announced its own widely anticipated smart phone, the Nexus One.
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