Cheap netbooks gobbling up remaining scraps of profitability in Windows PC industry

“PC sales are in free fall as the weak demand for Windows desktops and full-size notebooks in a poorly performing global economy is being compounded by an influx of low cost netbooks, which are gobbling up the remains of profitability in the PC industry,” Prince McLean reports for AppleInsider.

“According to an IDC report issued last week, worldwide PC processor unit shipments in the fourth quarter of 2008 declined –17.0% quarter over quarter and –11.4% year over year. Those tragic numbers were buoyed somewhat by sales of mini-laptop netbooks running low powered processors. Take out Intel’s Atom chips that power netbooks, and processor unit shipments declined by –21.7% over the previous September quarter and –21.6% over last year’s holiday quarter,” McLean reports.

“In addition to tightening consumer spending, sickly PC sales have also been blamed upon weak interest in Windows Vista, which only runs well on desktops and full powered laptops. Most netbooks run the simpler Windows XP, and about a quarter run Linux,” McLean reports.

“That has hit Microsoft particularly hard, resulting in an 11% drop in profits over its year ago quarter and plans to cut 5,000 jobs over the next year and a half. On the other hand, Apple posted its best quarterly results ever, with 9% growth in its Mac sales over the previous year,” McLean reports. “In large measure, Apple is sidestepping the fate of other PC makers because it sells machines differentiated by Mac OS X Leopard. While other PC makers are all diving to the bottom of the barrel to offer the cheapest Windows PCs at unsustainable prices, Apple is selling a product with unique value that isn’t available elsewhere.”

Full article – recommended – here.

MacDailyNews Take: Nearly every customer to whom the witless PC assemblers peddle a cheap, slim-or-no-profit netbook, is a customer they’ve taken off the table for themselves in the foreseeable future. It’s a panicked death spiral. It’s absolutely beautiful!

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