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Vendors to push 12in netbooks in 2010

As 10in models get cheaper to battle smartbooks

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Having steered us first from 7in netbooks to 9in models, and then from those to 10in machines, it now seems Asus, Acer and co. will next year be encouraging us to upgrade to 12in laptops.

Recent research from market watcher Canalys showed that, during 2009, the 10in screen became the de facto standard for new netbooks. Rather than settle on that, Taiwanese manufacturers will next year seek to steer to the 10in machines downmarket to fend off the emerging numbers of ARM-based netbooks with integrated always-on 3G network capability.

Such a strategy will involved slashing the price of 10in netbooks, which is good for Register Hardware readers seeking a mini-laptop bargain, but not so hot for the vendors.

Margins are already tight on these products, with vendors taking around a mere five per cent of the $410 or equivalent you hand over for your new netbook, Canalys CEO Steve Brazier estimates. Once their expenses are taken out, they're left with a profit of just 20 cents per machine.

Since you ask, the breakdown of the costs is as follows: $67 to Intel and Microsoft, $279 to the makers of other components, $21 to the vendor, $10 to the distributor and $33 to the retailer.

Compare that to a $745 notebook. The vendor gets $75, of which it gets to keep $2. That's a two per cent margin, compared to 0.6 per cent for the netbook.

No wonder, then, that industry moles tell DigiTimes that vendors will push 12in netbooks next year. The margins are higher than the cut-price 10in models they'll be offering as an alternative to the so-called "smartbooks".

The problem will be competition with 11in and 12in thin'n'light laptops, which vendors are keen on as a pricier, more powerful yet still very portable alternative to netbooks. However, with a good 10in notebook currently costing around £350 and an 11in 'CULV' machine typically £450, there's room in there for 12in netbooks with Atom CPUs but HD-capable 1366 x 768 displays.

That means using either Intel's handheld-oriented Z-series CPUs or, more likely, a regular netbook Atom and Nvidia's Ion platform. But Ion may become less attractive to manufacturers early next year when Intel introduces 'Pine Trail', its new Atom platform with CPUs that have their own graphics cores and memory controllers.

Intel is expected to rapidly eliminate the current Atom N-series chips from its product list to encourage uptake of the new models.

That bats the ball back at Nvidia, which will have to come up with something impressive for Ion 2. Discrete graphics support seems the only logical answer, coupled with greater integration of other components into the southbridge. We shall see. ®

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