MANAGERIAL ECONOMICS CASE:“BEGINNING AND END OF NETBOOK”Maria Alvarez

Wallace Hsieh

Quentin Lestra

Alfred Liao

INTRODUCTION“Get ready for the next stage in the personal computer revolution: ultrathin and dirt cheap”

NETBOOK - CHARACTERISTICS

Smaller notebooks: 7” to 10” screens

Low weight: 1kg (2.2 pounds)

Low cost: $200-$300

Simpler hardware / software features

Longer battery life

TARGET MARKET

NETBOOKS

ADVANTAGES

Lower price

Extremely portable

Competent enough for a light productivity session

DISADVANTAGES

Sacrifice high performance and functionality

MARKET BEGINNING - 2007

Relatively small audience

Complementary device

Feel more like toys or overgrown phones than full-featured computers

Still, were a success story in the PC industry

First to market EEE PC - ASUS

MARKET EVOLUTION - 2008

Impressive increase in

sales

Many brands joined with

similar products

Very competitive

market

MARKET EVOLUTION - 2009

Netbooks grew in size and features, and

converged with smaller and lighter laptops

few distinctive advantages

What is the price of Netbook?

What is the price of Notebook?Greater Chinese Notebook PC Shipment Value and ASP, 1Q 2007 - 4Q 2009 Unit: US$ Million

1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09(e) 4Q09(f)

Shipment Value 10,238 10,414 13,150 14,385 12,993 13,578 15,424 15,314 12,370 13,301 14,611 15,642

QoQ Growth -10.5% 1.7% 26.3% 9.4% -9.7% 4.5% 20.8% -0.7% -19.2% 7.5% 9.8% 7.1%

YoY Growth 31.1% 31.4% 34.7% 25.7% 26.9% 30.4% 24.7% 6.5% -4.8% -2.0% -5.3% 2.1%

ASP(US$) 553 541 529 522 518 511 509 503 495 487 485 483

Source: MIC, August 2009

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1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09(e) 4Q09(f)

Shipment Value A SP(US$)

US$ Million US$

What is the size of Netbook?

Which one made higher sales?

MARKET EVOLUTION - 2010

APPLE launched the IPAD

Affected netbook’s

sales

APPLE • “despite netbooks’ popularity, nobody really wanted a

netbook per se”. • they wanted full-fledged laptops that were very portable,

or they wanted cheap machines that allowed them to easily surf the Web, use email and do other light computing tasks.

• Rather than building a single netbook that fit both these audiences poorly, Apple built two machines that were, each in its own way, much better than any netbook ever

MARKET EVOLUTION 2011

Decline in netbook sales

Price as the only strong point Lost in both fields

Macbook Air & Ultrabooks

Better features and performance Higher costTablets (iPad)

Improved computer capabilities (design, ease-of-use and portability) Similar price

APPLE

MacBook Air iPad

What is the market share of Netbook?

Tablet V.S Netbook II

Tablet V.S Netbook III

• Substitute effect:• Demand for Netbooks decreased

MARKET END - 2013

The last remaining manufacturers, Asus and Acer, confirmed that the netbook is officially dead

ACER V.S ASUSMAIN PLAYERS IN THE NETBOOK INDUSTRY

ACER V.S ASUS OOK

ASUS - EEEPC ACER -Aspire one

From 7 inch-10.2 inch 8.9 inch only

$199-399 USD $259 USD

Multiple models Only one model

ACER V.S ASUS Q3 of 2008 OOK

ACER V.S ASUS OOK• In 2009, the netbook market grew 110% to 34 million pcs,

aspire one from Acer got 40% of it, and EEEPC from Asus got 30%, but the multiple choices strategy attributed to a lot of raw material stock couldn’t be sold out, Asus was almost bankrupted by it’s proud – EEEPC.

Question• In Oct. of 2007, Asus launched the first netbook – EEEPC

701, the price was USD 199/pc; at that time, the price of notebook started from USD 522.

• Do you consider this introduction price for EEEPC 701 was too low? Was this a good pricing strategy?

THANK YOU!