Intel: Netbooks Continue to Cannibalize Notebook Sales

by Ostatic Staff - May. 27, 2009

As GigaOm reports today, Intel believes that the rate of cannabilization of notebooks by lower priced netbooks is sitting at around 20 percent. That's what the company's European sales chief told Reuters at a company event. This trend remains very positive for open source in general, including but definitely not limited to Linux. It's also an issue that is likely becoming a growing sticking point for Microsoft.

According to Reuters:

"Christian Morales said netbook sales were about 16 percent of all notebook sales globally, and a little higher in western Europe. In Britain and Italy they may account for as much as a quarter of all notebook sales, he said on Wednesday."

Intel makes the Atom processors that are so prevalent on netbooks, and we've reported before on the fact that Microsoft has attributed some of its recent revenue shortfalls to the success of netbooks. In a recent 10-Q filing that came just before the software giant laid off 5,000 employees, there was this quote:

"The decline in OEM revenue reflects an 11 percentage point decrease in the OEM premium mix to 64%, primarily driven by growth of licenses related to sales of netbook PCs, as well as changes in the geographic and product mixes."

Part of the problem netbooks are creating for Microsoft is that they are low-cost, low-margin substitutes for laptops. Another problem is that Linux continues to have a foothold in the netbook space. In a post called "Microsoft and the great netbook price-fixing scam of 2009," InfoWorld's Randall Kennedy even suggests that Microsoft may be colluding with netbook makers to limit customer choice and give the upcoming Windows 7 OS dominance on netbooks.

The fact that Linux is maintaining a presence on netbooks is good news, and we've delivered our prescription for how it can get increased presence. Even Windows-based netbooks are good news for open source, though. Firefox is pre-loaded on the millions of Windows netbooks that Asus is shipping, and many netbooks come pre-loaded with numerous other open source applications. That means that any more people are gaining experience with good open source applications as soon as they unbox their new computers--undoubtedly a positive trend.