Desktop notebooks die hard

[Steven]

Desktop notebooks die hard

By John G. Spooner

Staff Writer, CNET News.com

January 8, 2003, 4:04 PM PT

Consumers are prompting a new trend in mobile computing: the "desknote."

By taking home large numbers of notebooks based on Intel Pentium 4 desktop processors over the holidays, consumers have legitimized a trend toward larger, more powerful notebooks that offer somewhat lower prices than more traditional laptops. Many industry observers had dismissed these so-called desknotes as a flash in the pan when they first appeared early last year.

NPD Techworld, which tracks retail PC sales, says notebooks using desktop Pentium 4s were the best-selling laptop models during the 2002 holiday season.

Now, thanks to the popularity of the first generation of the desktop notebooks, which offer features like fast Pentium 4 chips, big screens and DVD drives for relatively low prices, major manufacturers are launching their second generation of the machines.

Hewlett-Packard this week introduced two new notebooks using desktop Pentium 4 processors running at speeds up to 2.8GHz, a jump of about 400MHz over previous models.

Toshiba, which helped start the trend, Dell Computer and Sony are all expected to follow soon with their own next-generation desktop notebooks. Dell and Sony, which each offer one or two Pentium 4 models, are expected to expand their use of the chip.

Emboldened by the early success of these machines--models like Toshiba's Satellite 1905 or HP's Compaq Presario 1500--manufacturers are convinced they have found a legitimate new market segment fitting neatly between notebooks and desktop PCs. Indeed, consumers increasingly have been moving from desktops to notebooks.

But for manufacturers, the appeal of using desktop Pentium 4s in a notebook has a lot to do with cost.

"The problem is that the mobile (processor) prices are so much more expensive than the desktop parts, hundreds of dollars more," said Kevin Krewell, senior editor at the Microprocessor Report.

The fastest Pentium 4 designed for notebooks, Intel's 2.2GHz Pentium 4-M, lists for $562. The desktop version of the same chip costs $193, while Intel's 2.53GHz Pentium 4 lists for $243 and its 2.8GHz for $401.

By using the desktop Pentium 4s, manufacturers can also offer a middle ground between desktops and notebooks, creating a machine that is faster than a traditional notebook, but less expensive.

Many consumers, looking to trade up from a desktop to a new notebook, have purchased models like the Satellite 1905 because of the price and mix of features, which included a faster processor than available elsewhere--in this case a 2.4GHz Pentium 4--a large 15-inch screen, and DVD and CD burners for a price around $1,800 to $2,000.

The desktop notebooks typically start around $1,400. Most sell for less than $2,000, while similar notebooks with Pentium 4-M chips start higher, around $1,500, and can range up in price past $3,000.

Here to stay?

Because of this, the machines will live on for some time, some analysts say.

"There are a lot of advantages to both consumers and the manufacturers," said Steve Baker, an analyst with NPD Techworld. "Consumers say, 'I want a notebook that's got all the components I need, like a floppy drive, integrated, and I want it to be unobtrusive in my home.' You put that together, and it says big and beefy notebooks are here to stay for consumers."

Indeed, "for people looking for flexibility, this type of notebook is really going to be useful," said Jennifer Langer, a marketing manager with Dell. "They can use it in the den or in the kitchen, without sacrificing performance" over a desktop.

The next generation of these machines--models like HP's Presario 2500, announced on Wednesday--have even more horsepower for about the same price.

The Presario 2500 starts at $1,299 with a 2GHz Pentium 4 and a 14-inch screen. With a 2.8GHz Pentium 4, a 15-inch screen, 512MB of RAM, a 40GB hard drive and a combination CD-rewritable/DVD-ROM drive, it sells for $1,824 before rebates, according to HP's Web site. A similarly configured HP Pavilion ze5200, a new desktop Pentium 4 notebook also introduced this week, sells for $1,874.

Toshiba's Satellite 1955 took the trend even further, featuring a 16-inch screen and a detachable wireless keyboard. The company is expected to update the machine, which offers a 2.5GHz Pentium 4 chip, with a faster Pentium 4 chip expected in the near future.

But analysts say that even with consumers embracing desktop notebooks, Intel's Pentium 4-M processor is still the silent majority, boasting by far the greatest number of overall units shipped per quarter.

Of the 6 million to 7 million notebooks sold per quarter, around 1 million include desktop processors such as the Pentium 4, said Dean McCarron, an analyst with Mercury Research. The rest use Pentium 4-M, Pentium III-M and Celeron chips from Intel as well as Advanced Micro Devices' Athlon XP or even Transmeta's Crusoe.

"The place is where this is really going to fly is where customers don't care about the battery life and prices are a really big issue," McCarron said. "What that tells you is it's limited to consumer retail" and so is unlikely to expand to business.

HP readily admits that its desktop-replacement models won't work for everyone. The notebooks' use of desktop Pentium 4s, which consume more power than a Pentium 4-M chips, require trade-offs in battery life.

This trade-off could hamper consumers in using wireless as the number of "hot spots," or public places that give people wireless access, increases, said Alan Promisel, an analyst with IDC.

Fredrik Hamberger, senior product marketing manager for HP notebooks, said that for people who want "more mobility, (the company's Presario) 2100 series with an AMD Athlon...will give better battery life than a (Presario) 2500."

"Depending on how wireless goes, Pentium 4 desktop (chips) may be challenged," he added. But to date, "it really hasn't been that huge of a priority to minimize the size of the box (for consumers). Instead, the drivers are processors, screen size and hard drives."

Plugging into wireless

Promisel said consumers will eventually move toward Centrino notebooks for their longer battery life and wireless capabilities. He recommends manufacturers use processors designed for mobility in their notebooks.

Intel's Pentium 4-M comes with SpeedStep, which slows down the chip when running on battery power to conserve energy, and other features designed to extend battery life. But, in terms of computing power, all of its Pentium 4 chips are identical.

However, the company has quietly reacted to the desktop notebooks, in part by lowering the prices of its Pentium 4-M chips, and also by making the desktop Pentium 4s available in mobile packages--the same ones that allow Pentium 4-Ms to fit inside notebooks, McCarron said.

For a while, Intel even quietly marketed a hybrid part, the Pentium 4C, that consumed less power than the desktop part, but costs less than the mobile part.

The pricing and packaging measures, which seem to oppose each other, encourage manufacturers to create notebooks that can still accommodate mobile processors. But Intel's overall goal is to reel manufacturers back in by making sure notebooks don't lose the ability to use mobile chips, then to convince their manufacturers to use the Pentium 4-M, cutting the price gap between it and desktop chips, McCarron said. Intel will also use its Centrino technology, which promises greater battery life, to attract more mobility-oriented buyers.

Still, whether or not manufacturers respond, and abandon future versions of the Pentium 4 desktop chip for mobile processors like Intel's Pentium-M and its Centrino technology, remains to be seen.

"There are opportunities in both areas," Hamberger said. "For the foreseeable future, we will continue to support (desktop Pentium 4) on our road map, and we continue to sell quite a lot of volume."

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