Thin and Inexpensive Netbooks Affect the PC Industry

Burchers said a number of companies already making netbooks will showcase a new series of machines using cell phone chips at the Computex show in Taipei, Taiwan, in June.

Qualcomm, the San Diego-based company that built an empire on cellphone chips, recently introduced Snapdragon, a chip created for smartphones and ultralight computers. Already, the company has announced deals to sell the chip to 15 major device makers, including LG, Acer, Samsung and Asustek. Qualcomm said some Snapdragon devices appearing this year will have 10 to 12-inch screens.

Intel and Microsoft warn consumers should remain skeptical about the performance of a computer that costs less than $ 300.

“When these products are sold, they need clear warning labels about what they won’t be able to do,” said Sean M. Maloney, director of sales and marketing at Intel. “It would be nice to wait and play with one of these products before the industry gets carried away.”

Yet the rise of netbooks could hurt both companies. During its last quarter, Microsoft recorded the first sales decline in its history for the PC version of Windows. He blamed netbooks for the decline. On average, Microsoft charges computer makers $ 73 for Windows Vista, the version of Windows used in powerful desktops and laptops. That’s triple what he gets for a sale of Windows XP for a netbook.

For Intel, Atom chips are low-profit products, which could become a sore point if consumers get to grips with netbooks and begin to see them as replacements for standard computers.

In his recent report, Sacconaghi hypothesized that 50 percent of consumers could get by with an Atom-based computer for their daily tasks. PC makers like HP, Acer and Dell, which face extremely slim profit margins selling laptops, could use growing competition to put increased price pressure on both Microsoft and Intel, Mr. Sacconaghi.

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