China will become the Netbook market hot zone

China will become the Netbook market hot zone

Intel Atom CPU triggered the business incentive in 2008, plus VIA started the Global Mobility Bazaa in China, these enable the China NB to catch the “Mountain Gangster” (Shan Zhai, which means the place where the mountain gangsters gather and live) wave. Even the major branding PC OEMs such as Ching Hwa Tong Fang launched their off main stream Netbook-LimeBook model. It comes with an own developed Lime OS, Freescale CPU, 256 MB or 512 MB DDR2 memory, 30GB to 100 GB HDD, and with the lowest selling price RMB$ 1,599. Ching Hwa Tong Fang is different from the major Netbook vendors, which set the new model price in the range of US$ 500 to US$ 600, and pull the price down to US$ 200.

The key reason why consumers are crazy about the “mountain gangster” device is that the price is only half or even lower than the major branding OEM models, and the quality that sacrificed was never been taken into consideration. While comparing the development of “Mountain Gangster” NB to the “Mountain Gangster” cell phones, the “Mountain Gangster” NB has fewer conditions to success. Whether it’s from the usage, product life, market scale, or design, the characteristics is very different from the cell phone.

For example, NB is mainly a tool for making a living, therefore the stability and after service are far more emphasized than cell phone. Secondly, the product life of cell phone is about 6 months to 2 years, under the low price condition, consumers keep buying new phones because of fashion and trend issues. Although the price of the “Mountain Gangster” NB is very cheap, the replacing period is not as short as six months or one year. Especially the backing up data and unstableness are something that consumers last wanted. The low repurchase rate will limit the “Mountain Gangster” NB market and lower the speed for vendors to gather gross profit. The quality issue is another thing that refrain consumers from buying the “Mountain Gangster” NB.

According to previous discussion, under reasonable purchase behavior, there are many limitations to the “Mountain Gangster” NB business opportunities. But the China consumer market has its own way and that’s why the vendors would like to give it a shot. Especially under the circumstances that top 10 NB brands account for 95% of the China NB market, non top 10 vendors see this as an opportunity for them to enter the market. In order to prevent the “Mountain Gangster” NB eroding the mainstream NB market, the top 10 vendors may accelerate their pace of Netbook product line development and reiterate the concept of low price with quality and reliability to assure their market status. CPU vendor such as Intel is willing to cooperate with its top 10 customers in product development in order to prevent VIA and AMD’s penetration in the China market. Together with these two forces, the “Mountain Gangster” NB market doesn’t have too much chance but will trigger the war in China Netbook market and made China another hot zone after Europe and the U.S.