Tablets poisonous for netbooks market

The former darling of the digital generation is in terminal decline.

Not that long ago, netbooks were all the rage among digital devices.

In 2010, in fact, Bill Gates, the co-founder of Microsoft, downplayed the success of Apple's iPad tablet and said, "You know, I'm a big believer in touch and digital reading but I still think that some mixture of voice, the pen and a real keyboard - in other words a netbook - will be the mainstream on that."

How wrong time proved Mr Gates to be.

Back then, sales of netbooks had in fact reached a peak, as the industry shipped a record 32.1 million units worldwide. That was up from 26.4 million the year before, in 2009, and just 550,000 in 2008, according to data from IHS iSuppli, a market research firm.

But once tablets came along, with their premium performance and touch-screen capability, it was the beginning of the end for netbooks.

"Once a white-hot PC product that sold in the tens of millions of units annually, netbook computers are now marking their final days, with the rise of tablets causing their shipments to wind down," reads a release from IHS iSuppli in April.

The statement's headline was even more to the point: "Once high-flying product set for extinction by 2015".

Various market research firms have seen the digital writing on the wall. During the final quarter last year, and for the first time in consumer electronics history, more households in the United States said they planned to purchase a tablet than a regular laptop, slim and sleek ultrabook or pint-sized netbook computer, according to a survey conducted by Parks Associates.

Overall shipments of netbooks have been declining, sharply, in recent years. They fell to 21.2 million in 2011 then just 14.1 million last year. By 2015, netbooks are expected to be all but gone, or as IHS iSuppli's official projection states: "0".

Mr Gates, of course, was not alone in his faulty prediction.

In an interview with The National at the end of 2011, Intel's Samir Al Schamma, who was then the computer company's general manager for the Middle East and North Africa, was asked directly whether the netbook would die in 2012. "No, I don't think so," Mr Al Schamma replied, saying sales had levelled off in the region due to the proliferation of tablets.

"When we saw the netbook a few years ago, the form factor back then was what consumers wanted because of the size of the screen," he added.

Local retailers, though, saw signs of the netbook's weakened position in the market as a new form factor was becoming more popular.

"Smartphones and tablets are significantly growing and they impacted netbook sales and [to] some extent regular laptops," a spokesman for the online retailer Souq.com said more than a year ago.

To many in the industry, the swift shift came as a surprise, especially because netbooks cost less than US$200, on average, at the height of their popularity and considerably less than tablets. At the same time, the introduction of ultrabooks, which were bigger but more powerful than netbooks, presented consumers with yet another premium product that tended to cost more than many laptop models.

Even so, ultrabooks slowly picked up in sales - and even increased in price on average - while netbooks saw a decline, says Craig Stice, a senior principal analyst for computer platforms at IHS.

But as netbooks wind down in production, there is one place where they may increase in value: online marketplaces such as eBay, where digital antiques sometimes garner a surprising amount of interest - and price points.