Netbooks: Line advances amid technology hurdles

Despite challenges in technology, component sourcing and manufacturing, China suppliers of netbooks are optimistic about the line, building up capability to strengthen their foothold in the booming market.

Last year, the industry experienced a letdown when a significant number of white box exports were turned back due to design flaws. The biggest batch was 30,000 units. Even so, the supplier pool continued to swell, topping nearly 200 in 4Q08 amid soaring demand. With no adequate technological background and capital, however, scores that rushed to the business exited just as quickly. The surviving companies include 80 white box and about 10 second- or third-line brand PC makers. Some are from the mobile phone, portable DVD player and GPS sectors.

To achieve buoyancy, manufacturers are looking at cost-effective alternatives to dominant Intel solutions, even as the product becomes readily available in coming months through the provider’s domestic partners and agents. Since May this year, the shortage in manufacturing inputs has limited capacity utilization of most companies to 60 percent.

White box suppliers, in particular, are eyeing ARM CPUs for pairing with the open-source Linux OS and some have even released models based on this system as recently as 4Q08. The units carry other components similar to Intel’s x86-based architecture. They have Web browsing, emailing and basic office functions but have limited multimedia and gaming capability. The trade-off, however, is enhanced power consumption. ARM-based netbooks can support up to 18 hours of use compared to about eight hours of their Intel Atom counterparts.

Backing this direction is ARM itself, which is reaching out to China makers through R&D support.

In addition, major IC supplier Fuzhou Rockchip has introduced three new products based on the ARM structure. Although intended for mobile phones, the RK2808, RK2718 and RK2728 chipsets can also be used in netbooks. These are considered high-performance for enabling multimedia playback.

Companies are also considering combining ARM solutions with Google’s Android as the platform continues to gain wider use in mobile terminals. Nokia, for instance, is planning to introduce such netbooks in 2010.

China makers are anticipating further technological advancements that will help grow their lines such as low-cost and power-efficient chipsets for the Atom N230 from SiS.

Meanwhile, Intel has released another netbook platform, the GN40 model, which is designed to support 3D games and HD video playback. The company has also scheduled the launch of the Pineview Atom N450 model for October this year. The new CPU is only one-third the size of the N270 and consumes 50 percent less power.

Local brand PC maker Hasee Computer Co. Ltd will introduce a model based on the N450 by year-end.

Since AsusTek’s groundbreaking release in 2007, netbooks have attracted major brands, including HP, Dell and Lenovo. From 400,000 units that year, 11.4 million were sold worldwide in 2008. Driven by growing Web-based and mobile networking applications, the trend will continue, with sales projected to reach 35 million units this year and 139 million in 2013, according to ABI.

In fact, the line has been eating into the global market share of notebook PCs since late 2008. It is expected to take a 14 percent share this year, from 9 the previous year, according to iSuppli. Unaffected by the economic downturn, laptops have deviated from the general trend in global PC shipments, which slipped by 8.1 percent in 1Q09 from the same period in 2008 and 14.4 percent from the previous quarter. Desktop computers were responsible for the decline.

Atom-based netbooks from China are offered in low-end, midrange and upscale models. Most run Windows XP OS, although some units employ DOS or Linux. The ARM line, on the other hand, adopts Android, Windows CE or Linux OS and is considered entry-level.

Low-end Atom models have an N270 1.6GHz CPU, Intel 945 GSE chipsets and integrated graphics card, 512MB to 1GB DDR2 memory and 120 to 160GB SATA hard drives. Panel sizes are 7 to 8.9in with WXGA 1024x600-pixel resolution. Cameras and 802.11b/g Wi-Fi connectivity are common additions. Prices range from $195 to $220.

Midrange units have the same components, resolution and add-ons. All other specifications are higher with LCD screens at 8.9 to 10.2in, DDR2 memory 1 to 2GB and SATA HDD 160 to 320GB. Connectivity includes Bluetooth. Quotes are $220 to $250.

The high end differs with 802.11b/g/n and options for an Atom N280 1.6Hz CPU and a 1280x800-pixel resolution LCD. Panels are 10.2 to 13.3in. Value enhancements include a touchscreen, GPS, and CMMB and DVB-T/H mobile TV. The price range for this segment is $250 to $300.

ARM-based netbooks go for $100 to $150. The typical LCD sizes are 7 to 10.in, with some models in 12.1in. The units run on an ARM9, 11 or Cortex-A8 processor, and have 128 to 512MB RAM, 1GB flash ROM and 160GB HDD. They come with cameras and adopt 802.11b/g Wi-Fi and Bluetooth technologies.

Future releases from China will include more 12.1in models with correspondingly larger keyboards. These remain high-priced as current panel cutting methods are still expensive but may gain the mainstream once fabs have been optimized. Other suppliers are developing a photoelectric button to replace the mouse and touch panel for improved user friendliness. Some are trying to integrate stand-alone graphics cards to enhance Atom netbooks’ multimedia and game capability.

Makers source LCD panels from HSD and Samsung for about $40, and HDDs from Seagate, West Digital and Hitachi. A 160GB HDD is roughly $35.

Hynix and Kingston are some of the providers of flash memory, which is between $8 and $9 per GB.

An Atom chipset costs $42, an LCD panel about $40 and Wi-Fi approximately $4. Housings are $20 and batteries about $22.

Component costs are on the rise and may reflect on netbook prices but only in the short term. NAND flash memory increased 11 percent in 1Q09 and 28 percent in the following quarter, according to iSuppli. LCD panel costs rose by $3 to $5 in July based on DisplaySearch estimates.

For cost flexibility, suppliers offer private or public molds. The latter includes the S30 and R39, which are popular in mainland China’s white box segment. To differentiate products and avoid IPR problems, the more aggressive makers invest in new designs. Mold costs have decreased significantly, thanks to the growing number of domestic specialist facilities. Initially, companies depended on Taiwan providers, which were charging more than $700,000 per notebook PC design back in 2004. Fees are now down to $100,000.

While only a minority in the brand-dominated domestic market, white box suppliers form the main force of China’s exports. They have mature marketing channels, especially in developing countries.

Large operations are new to the segment but are already comparable with brand PC manufacturers in capability, having invested in special production lines for netbooks. They draw expertise from other electronics and telecom devices such as DVD players and mobile phones and focus on OEM/ODM business.

Small and midsize enterprises assemble outsourced components and offer finished products at prices lower than bigger counterparts. Flexible manufacturing schedules accommodate small quantities for a short turnaround time.

Brand PC makers have long experience in R&D, production and marketing. They can turn out more than 3,000 units per month at ISO 9000:14000-compliant factories. Having gained own-brand recognition domestically partly by providing aftersales support, these suppliers are expanding their overseas distribution base overseas through OBM, OEM or ODM arrangements.

Hasee is one such enterprise. The company offers five netbook models with 8.9 to 10.2in LCD screens. It has lined up three new designs with 10.2in 16:9 panels for 2H09 in keeping with the widescreen trend in PCs. Hasee exports 20 percent of PC output to Europe, South America, the Middle East and Southeast Asia. Annual capacity is 2.5 million units. All products carry CCC, UL, CE, CSA, FCC and RoHS approval.

The majority of China’s netbook suppliers operate in Guangdong province, specifically Shenzhen. Brand makers such as Hasee and Great Wall are based there, together with more than 70 white box and 200 trading companies. Major local solutions providers, including Topstar and Chuangzhicheng, and key mold maker Shenzhen Chaoren are also located in the city.

Guangzhou, Dongguan, Huizhou and Zhongshan are the other hubs in Guangdong. Some brand manufacturers are in Beijing, Shanghai, and Fujian and Hunan provinces.

Taiwan's netbook industry continues to break records. Revenue is projected to jump 99 percent to $5.1 billion and volume more than doubling to 23 billion units YoY, according to the Market Intelligence & Consulting Institute. This means accounting for 99 percent of worldwide shipments in 2009. Last year, value and volume rose a staggering 4,412 and 9,599 percent, respectively over 2007 figures. Netbooks are expected to snare about 16 percent of global notebook PC shipments by 2015, with volume ballooning to 74 million units, according to DisplaySearch.

To keep the lion’s share, Taiwan makers will continue to enhance their selections, highlighting larger displays and expanded functionality in slimmer and more lightweight form factors.

Screens in 11.6, 12.1 and 13.4in will be featured in 2H09 releases. One such design is AsusTek Computer Inc.’s 1101HA model. The multimedia unit has an 11.6in HD display with a 16:9 aspect ratio and 1366x768-pixel resolution. It boasts SRS Premium Sound True-to-Life 5.1 surround audio and an Eee Docking intuitive shortcut.

Displays in 10.1 and 10.2in, however, are expected to be the mainstream until 2010.

Despite the larger screens, more netbooks will be thinner at 1 to 1.1in and lighter at less than 1kg. AsusTek’s Seashell Netbooks, Acer Inc.’s Aspire One series and Micro-Star Intl Co. Ltd’s Wind Notebooks represent this trend.

Touchscreens, meanwhile, are anticipated to gain wide adoption after the launch of Windows 7 this October. AsusTek and Gigabyte have convertible touchscreen models, the T91 and the TouchNote T1028, respectively.

Hybrid storage is also a trend, with SSD for the OS to ensure fast starts and a hard drive to handle data. MSI’s U115 Hybrid model has an 8GB SLC SSD and a 160GB SATA HDD. AsusTek’s T91 also employs this dual storage system.

3G communication is exemplified by Acer’s Aspire One 531h model, which supports 3G UMTS/HSPA and quadband communications. MSI’s U123H model boasts 3.5G wireless connectivity.

Taiwan companies primarily use Intel Atom CPUs, including the Z520 and Z530, and N270 and N280 series. Other options are Via Nano, Nvidia Ion, ARM, MIPS, Qualcomm and Freescale. For wireless connectivity, Wi-Fi 802.11 b/g/n and Bluetooth 2.1 are mainly adopted in new models. Microsoft Windows XP Home Edition and Linux are the OS choices. To support HD resolution, Via released the Surfboard C855 platform with the C7-M ULV processor and the VX855 all-in-one chipset. The last enables H.264, MPEG-2, MPEG-4, WMV9 and VC-1 decoding.

Many new netbooks from Hong Kong suppliers feature 10in widescreens and are based on the Intel Atom platform. A few offer Via-based models only, although others can provide both solutions.

The selection also includes 12in units while the 7in segment comes in more ARM processor-based platform options such as those from Anyka, Jade and XBurst.

As regards external appearance, models come in a range of colors and skins and have wider keyboards and seamless touchpads. Thinner, lighter models are being developed.

HSDPA 3.5G connectivity for high-speed mobile Internet access is among the latest integrated functions. Some companies have released models with this function early this year, while others are launching theirs in the last quarter. GPS, Bluetooth and digital TV receiver modules are optional.

The model NB10A HSDPA netbook from SL Technology HK Ltd has an Atom N270 processor, 120GB SATA HDD, 1GB DDR2 memory, 10in WSVGA LCD, 1.3MP webcam and 802.11b/g Wi-Fi module. It runs on Windows XP Home Edition or Ubuntu Linux OS but is ready for Windows 7 OS. It includes a seamless touchpad, and three USB 2.0, VGA, RJ-45, SDHC/MMC, audio-in and audio-out ports. Power comes from a three-cell Li-ion battery. Bluetooth, digital TV receiver and GPS are optional.

The company has also announced the release of 12in netbooks, netboxes and nettops with 15.6in and 18.5in displays.

Yu Da Fu Electronic Co. Ltd offers 7 and 10in netbooks. The 7in model with 800x480-pixel resolution is equipped with a Marvell 32-bit 400MHz CPU, 128MB SDRAM, 1GB flash memory and built-in Wi-Fi 802.11b/g. It has VGA, SD/MMC and three USB slots. Linux OS is adopted. Power comes from a 2,100mAh lithium battery.

The 10.2in unit has a Via C7 1.6GHz CPU, 1GB DDR2 RAM, 120GB HDD, 802.11b/g, and VGA, RJ-45 and two USB ports. It runs on a 2,200mAh Li-ion battery.

Metalware Technology (Hong Kong) Ltd’s PeeCee Mini M102 model has a 10.2in LED-backlit display, and runs on an Atom N270 and Windows XP Home Edition. The other specifications are 1GB DDR2 RAM, 120GB SATA HDD, 2xMini PCI-E, 1.3MP webcam, 3-in-1 card reader, 10/100M LAN and 802.11b/g WLAN.

The unit has a VGA connector, and optional external DVD-RW drive, HSDPA and Bluetooth. Its power source is a four-cell 4,400mAh battery.

Metalware also provides notebook PCs, and Via C7- and Atom-based netstations.

Hong Kong’s exports of notebook PCs reached 1.17 million units in 2008 and 150,000 units in 1Q09, with the netbook segment steadily increasing its share of total exports.

There are about 20 suppliers in the territory, many with computer and consumer electronics manufacturing background. Some have their own factories, while others turn to Taiwan-owned ODMs with mainland China production facilities. The latter setup enables them to release units that are comparable in design and functionality to A brands, and minimize buyers’ return merchandise authorization concerns.

This article "Netbooks: Line advances amid technology hurdles" is originally posted in Global Sources.

Asustek Computer Inc
Shenzhen Hasee Computer Co. Ltd
Shenzhen G-link Digital Technology Co Ltd
Shenzhen J&W Electronics Co. Ltd
SL Technology HK Limited
Shenzhen Topstar Digital Technology Co.,Ltd.
Xiamen Dollor Imp&Exp Co.,Ltd