All-in-one Nettops reviving desktop market

Nettops did not exist a year ago, but are now the hottest group in the desktop market after several Atom-powered PC’s debuted at CES in January.

Sharp looking units packing less power than traditional Windows desktops are now dominating the market formerly ruled by Apple’s $1,200 iMac, but at a significantly lower price. They’re part of the new generation of computers called Nettops, an offshoot of Netbooks. Nettops are usually powered by Atom processors that run either Windows XP or Linux.  Like Netbooks for the desktop category, they combine an all-in-one factor with a smaller screen than most desktops (between 15 and 19 inches).

John Jacobs, director of notebook market research for DisplaySearch, said, “A year ago I would have said Netbooks are not going to cannibalize the notebook market. Then the economy went kablooey”. Since the economy has dropped, many who were searching for a notebook in the price range of $800 have decided to try the Netbook route that is the much more affordable price range of $400.

Jacobs added, “I think we’ll see something like that for Nettops,” he said. “Either for retirees or younger folks who don’t need the portability of a notebook, and just need something to get on the Internet and do basic computing. Nettops, and all-in-ones will be very attractive devices, and we expect to see a lot of retailers who have stayed out of it will jump into it.”

DisplaySearch estimates that the all-in-one category will rise to more than 6 million units in 2009 and by 2010 to well over 7 million units. That’s close to an 80% market spike in shipments that was completely unseen at the end of 2008.

Boost to a dragging category

Nettops ascent appears to be the most exciting thing to occur to the desktop PC market in quite some time. In much the same way this poor economy has given rise to Netbooks, industry watchers expect  buyers to have the same attraction to Nettops.

Richard Shim, a PC analyst with IDC, says, “Right now, nothing is going to stem the losses in terms of shipment decline that the desktop PC category is experiencing, especially with the (current) economy. But,” he adds, “Nettops and lower-cost all-in-ones will help to maintain some of the market share for desktops. It’s a bright spot in the market.”

All-in-ones grabbed the public’s attention over a year ago when Dell, Gateway, and HP introduced sharp-looking desktop units such as the Gateway One and the Dell XPS. HP went a step further and introduced a machine with a touch-screen interface, and an accompanying higher price tag, of course.

Then riding on the success of its Eee PC Netbook, Asus introduced the Eee Top, which was then followed up by MSI’s Netbook the WindTop. Dell then countered by dropping its higher priced XPS One for the Studio One 19. It didn’t come equipped with an Atom processor, but did have a significantly lower price. Since HP’s addition all of the previously mentioned machines have come with either a touch screen or tablet-like stylus input.

DisplaySearch has calculated that all-in-one Nettops cost manufactures around $399 to build. Add in the retailer’s take and the price tag rises, but not a great deal. These machines usually sell for between $450 and $800. If all you are looking for is a computer for the office or living room to surf the Internet, play music and movies, or for the kids to use for their homework, these machines are an attractive buy. And for users who don’t want Windows Vista or require something before Windows 7, Nettops are the only computers in the desktop category that come equipped with Windows XP.

Almost custom made for the discount retailers

Market data for the all-in-one Nettops isn’t really available in the U.S.as of yet. Japan is still the only market where Nettops have been widely available for the last year.

It is believed Nettops will thrive in the non-traditional electronics retailers, once they become available, in the same way Netbooks have. Since they come stocked essentially ready to straight out of the box, Nettops seem almost custom made for discount retailers like Costco, Wal-Mart and Target. And the price is low too. Wal-Mart currently carries an Averatec Nettop and Target sells the Eee Top from Asus.

But Nettops won’t be relegated to the discount retailers alone. There will probably be some shelf space available from retailers like Best Buy that usually steers clear of low-margin, niche products.

Retailers weren’t willing to take much of a chance on Netbooks, but Jacobs says, they’ve changed their tune now that there is a nice healthy accessory market for them”. He also points out that retailers would probably prefer to sell something for $400 than not making a sale at all. We can assume the same will be true for Nettops.