In-Depth

Windows 7 Notebooks Taking Aim at Tablets

Even as tablets storm the market and command headlines, notebooks remain important and observers see them playing a persistently central role in business environments for years to come. A new crop of Windows 7-based notebooks retains the utility of the form factor while drawing inspiration from the upstart tablet category.

Notebook makers are unveiling new capabilities, price points and lightweight models in an assortment of hues and metals, vying for business professionals' mindshare and dollars against both traditional competitors and the swelling ranks of tablet makers rushing to eat away at the market share of the Apple iPad.

Microsoft, of course, isn't ready to answer with a version of Windows that rivals the iPad or the forthcoming version of the Google Android for slate devices, code-named "Honeycomb." While Microsoft indicated its next version of Windows would be optimized for such devices, that release may not surface for a year or two (see the February 2011 Channel Report story, "Where Are the Windows Tablets?").

Indeed, iPad sales -- which have already totaled more than 17 million since its release nearly a year ago -- have cut into sales of consumer notebooks, evidenced by the most recent quarterly earnings reports from Intel Corp. and Microsoft. Both companies had strong earnings overall, and Microsoft announced it has sold 300 million copies of Windows 7 since its release in October 2009. Additionally, sales of Office 2010 have been robust. Despite posting record revenues buoyed by strong demand for datacenter processors, Intel said client sales were flat.

Microsoft has tacitly acknowledged that iPads have cut into notebook sales. In an interview with Barron's magazine Tech Trader Daily blogger Tiernan Ray, Microsoft General Manager of Investor Relations Bill Koefoed told the columnist "that fewer netbooks were sold as individuals turned to buying ... something else." Ray went on to write: "What that was, he wouldn't say, but it's obvious: They were buying Apple iPads."

But, while some have predicted that this era marks the end of the notebook, these doomsayers may be speaking prematurely, cautions Tom Mainelli, research manager for the Clients and Displays group at IDC.

"We expect, over time, that more people will own both media tablets and PCs. In fact, the only portable PC category IDC expects to shrink at all in 2011 is mini-notebooks -- aka netbooks," he says.

Netbooks are not, however, disappearing. In 2010, almost 38 million netbooks shipped worldwide, according to IDC -- up 10.3 percent from the prior year. By 2014, the research firm expects 42.4 million netbooks will be shipped globally at a compound annual growth rate of 4.3 percent. By comparison, the research firm expects 45 million tablets to ship in 2011, up from the 17 million units last year. Next year, IDC estimates vendors will ship 70.8 million tablets in 2012. According to IDC, Apple's share of the market was nearly 90 percent for the third quarter of 2010.

Forrester Research Inc., for its part, believes 76.1 million tablets will hit shelves in 2014, and Gartner Inc. estimates the worldwide market will reach 208 million units that year.

Businesses are expected to continue purchasing new hardware for new employees, as replacements for outdated models or as part of companywide upgrades to Windows 7. And when it comes to which particular hardware to buy, notebooks are becoming the dominant platform, taking over from desktops as the preferred device at many businesses. Indeed, this year more than half the computers sold worldwide will be portables, according to IDC.

By 2014, manufacturers will sell 398 million portable PCs, IDC says. Notebooks will account for 42 percent of all PCs shipments, ahead of second-place tablets at 23 percent market share, according to Forrester. Desktops will only account for 18 percent of computers, while netbooks will represent 17 percent of all computers sold in 2015, the research firm predicts.

"The answer there is that the new tablets we're seeing are good for content consumption, but if you have to create a spreadsheet or create a heavy template for a text document, do a big PowerPoint presentation, the tablets aren't designed to do that," says Leslie Fiering, a vice president covering mobile computing research at Gartner. "They don't have the horsepower, [although] there are workarounds. The notebooks aren't going to go away immediately. We find that if a worker can get even two hours a week more productivity outside the traditional office environment with a notebook, it pretty much pays for itself. These things are keeping notebooks alive in the office."

Portable Predictions
Notebook sales will continue to grow, most experts foresee, as users demand the large screen, keyboard, power, storage and full array of features they expect from a desktop computer. Business users also want true portability, a light device that's easily transported from meeting to home, to remote offices and client sites. They want a system that syncs with other devices, and one that delivers all the fun, speed and capabilities of their home computer.

"The categories are blurring," says Nick Parker, vice president of marketing for the OEM division at Microsoft. "You're starting to see this consumerization of IT. Even on a work PC, people expect the 'bedazzling' of a consumer PC. The old gray thing that's a bit clunky and a bit square is not good enough anymore."

Neither are the terms today's industry pundits bandy around, says Parker, who uses "connected companion" to describe the next generation of portable devices.

"When you start talking about features like touch and stylus or pen or ink, it's hard to subcategorize. I tend to flip to the customer at this point and say, 'What do you want to use this for?' The PC is the star. 'What do you want to do, and how does the PC help you do that?'" he says.

Consumer Friendly
Many IT professionals already are well aware of the consumerization of their world. What may have begun with executives who wanted to use their personal BlackBerry devices to manage their workloads has skyrocketed into a stew of Facebook, Twitter, Windows phones, iPhones, Android devices, tablets and more.

"The typical worker in 2011 will probably have the same work-provided desktop or notebook. What will change is that a growing number of people will buy their own media tablet and smartphones, and they'll try to utilize them in their work environment. It's already happening, and IT groups are struggling to figure out how to handle it," says IDC's Mainelli. "Should they allow access to company e-mail? What about the company network? Smart companies will begin to formulate policies around these devices that ensure the company's data remains secure, while allowing employees to use the hardware of their choice to get their jobs done well."

The trend works the other way, too, with between 70 percent and 80 percent of devices used for business purposes also being used for personal reasons, according to a June 2010 study by Unisys and IDC.

Individuals don't want to leave their high-powered laptop at home and use an underpowered, less-full-featured device at the office. When they can get away with it, they won't, many security experts warn. Recognizing this, notebook vendors are loading up their business-oriented devices with high-end graphics capabilities, enhanced audio and improved speeds at the same price points.

"With regard to traveling executives, of course they're going to want the latest and greatest gadgets, right? Many will, indeed, travel light with just a media tablet," Mainelli adds. "But we think a growing number will look to use that tablet as a thin client to access either a standard PC desktop or a virtual desktop on a server that resides back at the home office. As long as they're connected, that gives them the best of both worlds."

Wanting It All
Many users will choose not to choose, some industry experts say. Instead, they will opt for several formats -- and savvy developers will underscore their device's strengths in order to sell themselves against their traditional competitors rather than another form-factor, says IDC's Mainelli.

"I think the key is not to try to compete with media tablets, but to clearly spell out why a person will likely want both. They should accentuate how the two products complement each other, and why you still need a PC. As more PC vendors enter the media tablet market this year, I fully expect to see bundles that include a PC and a tablet together," he says. "The desktop or notebook PC will reside at the desk or table, where work tasks such as writing long e-mails, banking and photo and video editing occur. The tablet sits near the couch, where Web browsing, casual gaming and checking Facebook happen. We're entering the era of multiple devices per person, and notebook vendors need to embrace that fact instead of fight it."

The task may dictate the format, too, says Parker, of Microsoft. Some assignments, such as form-filling associated with insurance, are filled with check-marks easily accomplished with a stylus. Others are more typing-intensive, he says.

"I'm excited about the versatility of going finger to stylus to keyboard whenever I want. We'll go from [watching] Elmo to marking up text on a document, and then I'll go to banging out an IM or marking up a PowerPoint," says Parker.

With their insight into business processes and procedures, solution providers are well positioned to recommend not only the best software, but also the most appropriate hardware for client needs, he says.

"I actually think channel partners have a much better view of the categorization of need than we do as an industry," notes Parker. "Solution providers have defined what people want from their PCs. They're all PCs. Solution partners figure this out very quickly, how to verticalize a set of needs. They have defined customers with defined needs and it's easy to match them up with innovation."

Tools of the Trades
Notebook manufacturers have been busily innovating. Pushed by tablet popularity, many notebook vendors are revisiting their product lines. Dell Inc., for example, almost literally turned the laptop upside down with its Inspiron Duo, a convertible notebook that lets users switch back and forth between touch and type.

Samsung aimed to please business users who want both a notebook and a tablet -- but don't have the budget, IT resources or patience to purchase two devices. The company's PC 7 Series has a sliding keyboard or touchscreen, as well as high-definition display. Expected to ship this month, the PC 7 Series weighs 2.2 pounds and will be available with Worldwide Interoperability for Microwave Access, better known as WiMAX. Taking a lesson from successful smartphone OS developers, the new laptop will include applications that have been optimized for its touchscreen, as well as additional apps available via the company's App Manager and Windows Product Scout, according to Samsung.

Several manufacturers such as Sony Corp. and Dell have incorporated 3D graphics and monitors into new laptop lines. Traditionally a tool of consumer-oriented kid movies, this capability is a boon to several vertical markets such as advertising, construction and design. Likewise, Alienware -- a Dell subsidiary known by gamers -- delivers a customizable version of its newest offering, a powerful portable device for video production, game development or other power-hungry applications.

The consumerization of IT, coupled with the ongoing and ever-increasing number of threats against the network, may encourage notebook manufacturers to add more security, says Gartner's Fiering. Eventually, the two devices will more closely resemble each other, she adds.

"Over time they're going to get closer. Notebooks will get thinner and cheaper; tablets will get more sophisticated," Fiering says.

Business users, too, are growing more sophisticated and demanding, requiring the same high-caliber performance from their office notebooks as the ones sitting at home. With so many new models available in such a wide swath of prices, solution providers can be certain they're providing business clients with the Windows 7 notebooks that best meet their needs.

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