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-$300
Simpler hardware / software features
Longer battery life
TARGET MARKET
NETBOOKS
ADVANTAGES
DISADVANTAGES
Lower price
Extremely portable
Competent enough for a
light productivity session
Sacrifice high performance
and functionality
MARKET BEGINNING - 2007
Relatively small audience
Complementary device
Feel more like toys or overgrown
phones than full-featured computers
Still, were a success story in the PC
industry
First to market EEE PC - ASUS
MARKET EVOLUTION - 2008
Impressive
increase in
sales
Many brands
joined with
similar
products
Very
competitive
market
MARKET EVOLUTION - 2009
Netbooks grew in size
and features, and
converged with smaller
and lighter laptops
few distinctive
advantages
What is the price of Netbook?
What is the price of Notebook?
Greater Chinese Notebook PC Shipment Value and ASP, 1Q 2007 - 4Q 2009
Unit: US$ Million
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
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%
553
541
529
522
518
511
509
503
495
487
485
483
ASP(US$)
2Q09 3Q09(e)
4Q09(f)
Source: MIC, August 2009
US$ Million
US$
14,000
600
12,000
500
10,000
400
8,000
300
6,000
200
4,000
100
2,000
0
0
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
Shipment Value
3Q08
4Q08
ASP(US$)
1Q09
2Q09
3Q09(e)
4Q09(f)
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
Tablets (iPad)
Improved computer capabilities
(design, ease-of-use and portability)
Similar price
Macbook Air & Ultrabooks
Better features and performance
Higher cost
Decline in netbook sales
Price as the only strong point
Lost in both fields
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 ASUS
MAIN 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!