Netbooks Causing Losses

The netbook has more or less exploded in terms of demand and popularity. Even though the market is saturated with similar models made by myriad companies, the segment has still seen some growth in the past few quarters. That is more than what can be said for notebooks and desktops, which are much more expensive than laptops. Hence, netbooks are considered to be a hot sector to be dealing with right now.

But big company executives and analysts are not feeling the same way. That is because the great demand for netbooks and the sagging sales in other segments is actually hurting the profit margins of larger companies like Dell and Microsoft.

Larger notebooks and desktop models make companies much more money than netbooks, whose sales in sheer number of units has dropped drastically in the past one year. This has resulted in companies not being able to meet their financial targets for the past few quarters. Since the profits go into research and development of newer products, the companies are seeing this as hampering their growth and development in the coming quarters.

Microsoft feels similarly because netbooks are preventing the sales of the higher editions of Windows 7 like Windows 7 Home Premium and Windows 7 Ultimate. Not only that – netbooks are also promoting retention of the eight year XP operating system. Hence, it is causing losses for Microsoft as well.

As a counter measure, CEOs and top executives of the various companies are publicly speaking against the netbook segment. They are speaking as if their entire customer base is dissatisfied with the netbook line, when in reality they are actually quite content with it. They are looking to break this status quo and make the consumer buy the larger, faster and more expensive models. However, it has to be remembered that the companies jumped on to the segment as a way to push sales through the depression. So this is their own doing.