Monday April 13, 2009 – Maya Jasmin
With the troubled economy, rising unemployment, and uncertain futures weighing heavily on consumer’s purchasing decisions, once deemed recession proof markets are obviously feeling the current recessionary blow. PC is one such market feeling the pain and PC companies are adjusting sales and shipment forecasts down. DTC has revised its PC forecast to reflect the economic effects on the market and expects to see at least a 10% decrease in PC shipments in 2009 as compared to shipments in 2008. While forecasts may seem dim, a mini hero is emerging. The netbook, which comes with a cheap price tag and stylish design, is soaring in popularity and its sales are doing much to keep the personal computing market afloat.
In addition to helping PC shipments remain robust, netbooks may be instrumental in changing how PCs are distributed. Until very recently, buying a computer at a store or online was the only way to acquire one. However, some internet service providers are now offering a new way to purchase hardware. Like cell phones, netbooks are offered for a very low cost (usually around $100) at say a Radio Shack or an AT&T store in select markets. But the purchaser is required to sign up for contracted internet service in exchange for the low-cost machine. The contract is generally for a two year period and service prices range anywhere from $49.99 to $69.99 a month.
While this model has worked for the mobile phone market, is it really transferable to the PC market where consumers are used to buying their hardware in a traditional manner? A netbook for $100 sounds good, but what about being locked into a $60/month internet service contract for 24 months? At that rate your $100 netbook turns into a $1,500 purchase, excluding taxes, surcharges, and fees. Of course, a monthly internet service fee is required whether or not you get the service from the netbook provider, but with the netbook provider you lose the flexibility to shop for a better deal, or just change your mind, at a later date. It all comes down to the wallet, though. With tightened budgets, we’ll have to wait and see if consumers think the new business model represents a short-term good deal, or a long-term lousy deal.
