Mini-laptop makers out to muscle in on market

Several hardware suppliers are already betting on the mini-notebook sector taking the market by storm as the day of the US$100 mobile PC draws closer. But what does it all mean for the Middle East channel?

Miniature notebooks are rapidly capturing the imagination of the mobile PC channel and in the process threatening to shake up a sector of the market that was becoming somewhat predictable.

Manufacturers such as Asus - with its much-lauded Eee PC 700 series - and other Asian producers are now beginning to flood the market with new models, and stake an early claim for category leadership.

Carapelli Computers, which is based on Dubai's Khalid Bin Al Waleed Road, recently stole a march on local competitors by announcing the availability of its Impulse NPX-9000 PC. It claims the model, which is priced at US$129 for bulk orders of 100 units or more, is the smallest and cheapest of its contemporaries.

While the kind of fanfare that mini-laptops are creating will tempt plenty of Middle East channel players into entering the market, the price points accompanying these devices clearly indicate that margins aren't going to be huge. Already it seems inevitable that the big winners of this sector will be those that sneak in early and can ride the wave before it peaks.

Data on the size of the mini-notebook sector in the Middle East is scarce, but research into the pace of global growth gives a good indication of what regional organisations should expect to see.

Gartner Dataquest - which defines mini-notebooks as devices that must have a screen size of between five and 10 inches and run a full version of a client operating system - insists worldwide shipments are on course to reach 5.2 million units in 2008 and eight million by the end of next year.

While that's small fry compared to a laptop market worth around 150 million units, Gartner's tip that 50 million mini-notebooks could be sold by 2012 reflects the level of expectation surrounding the sector.

Experts say demand for mini-notebooks will be spurred by several factors, not least their size, weight, price and basic PC functionality.

"Potential users are likely to include both first-time buyers seeking a low-cost introductory PC as well as experienced users seeking a low-cost second or third PC for themselves or a relative," explained Annette Jump, research analyst at Gartner.

Although these devices started out as low-cost education PCs, 70% of the category is eventually predicted to be dominated by the consumer audience, which means the channel has a starring role to play in sales and support.

Vendors are already realising that market positioning, price and wireless connectivity will determine success in this market, making channel management vital, especially in the retail sector.

The big question for many Middle East PC players is whether mini-PCs will expand the size of the mobile market or eat into it. Analysts claim that there will be few signs of cannibalisation in the next two years as the gap between functionality and performance is still too wide, but by 2010 it could seriously make a dent in low-end notebook PC sales.

Much also depends on price. Gartner reckons that the US$100 laptop is still three years away, but there are already companies trying to blow that prophecy out of the water.

Hong Kong-based JoinTech recently confirmed plans to bring its JL7100 notebook to the UAE this month, with prices as low as US$99 a piece for high volume purchases. JoinTech refuses to disclose all of the secrets that keep its costs down, but admits that it carefully selects components vendors against bulk orders.

Jump at Gartner points out that focusing too much on sub-US$100 price points could create a distraction from addressing other issues and warns that there are still "many open questions" surrounding specifications, power availability, and cost of internet connection.

Middle East resellers thinking of making a quick buck from shipping mini-laptops would be wise to factor these into account.