Profits from netbook sales are lower than expected. So much so that HP and Dell are significantly reducing their investment in the “10-inch” market. HP reportedly is even considering getting out of the 10-inch business completely. Is this really a surprise when netbooks live in a cut-throat, race-to-the-bottom, low-cost market? People like to point out when certain products cost more than bottom-of-the-barrel options, but they rarely realize that certain markets can’t support themselves at razor-thin profit margins. To quote the article:
Most of the second-tier and white-box netbook vendors have already quit the market after first-tier players started cutting their netbook prices in the second half of 2009 to compete for market share.
What is also interesting is that this news comes right on the eve of the 9.7-inch iPad launch. Could HP and Dell be conceding the 10-inch market to Apple? And if they do, will the 11 or 12-inch markets matter anymore?
