Intel sees no first-time PC buyers for netbooks

SAN FRANCISCO Wed Jul 29, 2009 3:55pm EDT

An Intel Inside sticker is shown next to a Windows XP sticker on an Acer Netbook in Encinitas, California April 13, 2009. REUTERS/Mike Blake

An Intel Inside sticker is shown next to a Windows XP sticker on an Acer Netbook in Encinitas, California April 13, 2009.

Credit: Reuters/Mike Blake

SAN FRANCISCO (Reuters) - Intel Corp said on Wednesday it no longer expects netbooks to appeal to first-time computer buyers, but sees continued sales of the ultra-portable laptops as a secondary machine or a durable option for kids.

"I don't think first-time buyers are going to buy netbooks," Sean Maloney, Intel's general manager of sales and marketing, said at a media event organized by the company. "The first time you buy something you want the real deal. It's consistent not just in China, but all around the world."

"If you're going to spend your hard-earned money for the first time, you're going to put a computer in your house," he said.

Maloney said he doesn't see that trend changing any time soon.

Netbooks, so far, have sold most frequently to people who already own one or two PCs, Maloney said, but added that 7- to 11-year-old children are still a "massive underserved demographic."

Intel, the world's largest chipmaker, has cornered the fast-growing market for inexpensive netbooks, made for simple functions such as surfing the Web, with its "Atom" processors.

Earlier this month the company said second-quarter revenue for Atom processors and chipsets spiked 65 percent from the first quarter to $362 million.

Sales of chips for laptops rose 16.7 percent in the second quarter.

Atom-based netbooks have been wildly popular among consumers and analysts have questioned whether the small, laptop PCs will cannibalize sales of more expensive, full-function laptops.

Intel has said earlier it aimed to introduce new people to computing through its low-cost netbooks, particularly in emerging markets, as well as drive sales to people looking for a second machine.

Maloney said netbooks, which the company launched in late 2007 with Taiwan's Asustek, are now "well established" in global markets.

"There is a new category established. That category is, to an extent, maturing," he said. "It is not so much in the early phases."

NON-U.S. MARKETS

In wide-ranging remarks, Maloney said that while the U.S. economy is still in recession, some of the company's overseas markets, such as India and Brazil, were improving.

"If you are dependent on the U.S. consumer, or U.S. business alone, obviously you are in one box," he said. "If you are global, you're in another."

"There are a number of countries, Brazil included, that actually seem to be coming back pretty quickly," he said.

Overseas markets account for 80 percent of Intel's overall business.

"We exist in a series of microclimates in which the U.S., inevitably, demographically, is increasingly less important," Maloney said.

Intel earlier this month blew past Street forecasts in its second-quarter earnings. Chief Financial Officer Stacy Smith told Reuters he saw strength in consumer PC sales, Asia Pacific, and China.

(Reporting by Clare Baldwin and Poornima Gupta; Editing by Richard Chang)

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