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How will $200 netbooks affect the PC industry?

ASUSTek is planning on making life harder for many PC makers.

The Taiwanese manufacturer of motherboards and PCs recently announced earnings (it’s shares are publicly traded in Taiwan and on the pink sheets in the US and on several other foreign stock exchanges). CEO Jerry Shen held a conference call to discuss the financials and also spent some time covering company expectations for the world-wide notebook market and what ASUSTek’s share might be.

Shen expects his annual notebook shipments growth in 2009 to be higher than the industry's growth of 10-20%. The company also expects to grab a 30% share in the netbook market in 2009 – shipments of 6-7.5 million units out of an estimated 2009 netbook market scale of 20-25 million units.

Shen detailed that the company has adjusted its mid-range and entry-level Eee PC's pricing and market position, and expects to launch an Eee PC priced at US$200 in 2009.

Consumers may love this but other PC manufacturers will find themselves under price pressure.

Without even having to face this kind of price competition yet, we already see Dell responding to recession fears by freezing hiring and embarking on a serious cost cutting initiative. There is talk they are trying to sell their manufacturing facilities.

HP will not escape either. The casual user will be sorely tempted to pass by the high-end PCs from HP when they can get a simple netbook that will serve their basic needs at a minimal price.

Even Intel will feel the effects as netbooks tend to use less powerful microprocessors that yield smaller margins. We have already seen evidence of this in their most recent earnings report as netbooks turned out to be one of the PC segments still showing significant growth even during this economic downturn.

Dell and HP may continue to own the enterprise market where reliability is a top concern and there is more of a need for powerful PCs for various kinds of number-crunching and analysis tasks. Indeed, ASUS will need to prove their products offer the kind of quality U.S. customers have come to expect. Nevertheless, at such a low price point, there should be no shortage of consumers willing to try a product from ASUS. As a matter of fact, it seems like a good choice for Walmart to sell.

One thing is clear. It's going to be harder to make a buck in the PC business. No wonder IBM sold their PC business to Lenovo.

Disclosure: none

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