Netbooks, Wi-Max and the Cloud

Based on the empirical data out there let's take a look at the break down of how these three (hopefully) soon to be converged segments are currently performing individually and then discuss how convergence can collectively exponentially scale sales/revenue.

1. Netbooks: The hardware/thin client piece of the puzzle. In order to leverage the connectivity (Wi-Max) and application solutions (Cloud), you need the device - Netbooks.

• Taiwan’s Market Intelligence Centre (MIC) had 2008 worldwide sales of netbooks at 8 million units, and predicted sales of 18 million units in 2009, which is 128% growth.
• Gartner’s netbook numbers are more conservative. It predicted that worldwide netbook shipments will grow from 5.2 million in 2008 to 7.8 million in 2009. That’s 50% growth, compared to just 15% growth for the entire laptop market and a 21% decline in shipments for desktop PCs.
• IDC reported that netbooks accounted for 30% of all laptop sales in Europe during the fourth quarter of 2008, with 3.6 million netbooks sold.
• In 2008, netbook sales were still roughly about 10% of the global PC market, in terms of units sold. That leaves a lot of room for growth.

Clearly the message here is, netbooks are the fastest growing segment of the PC market and continued growth in sales volume and marketshare is expected if not being undeniable.

2. Wi-Max: The connectivity solution (forget fixed wireless, 3G, wireline, phone as a modem). High speed connectivity anywhere/anytime lets you leverage your netbook to connect to the applications you run from the cloud. The pipe is coming. From Clearwire:

• Expand mobile Wimax network to cover up to 120 million Americans in 80 markets in 2010.
• Bring Wimax to Atlanta, Las Vegas, Chicago, Charlotte, Dallas/Ft. Worth, Honolulu, Philadelphia, and Seattle in 2009.
• Launch Boston, New York, Washington, D.C., Houston and San Francisco area in 2010.
• In addition to the recent dual-mode 3G/4G wireless modem to be launched with Sprint, Clearwire plans to launch a personal hotspot that combines Wimax service (Clear service in Clearwire parlance) with Wi-Fi enabled products.
• Meanwhile, Clearwire is leveraging its Intel partnership to have nearly 100 mobile Wimax devices on the market by the end of 2009.

I highlighted point 5 to reiterate the continued play of Netbooks (as the Atom chip is an Intel product). Clearly Intel has a vested interest in diversification of hardware leveraging its chips but Netbooks are a large portion of that market and will only continue to grow.

3. Cloud computing: Once you have the hardware and connection in place, you need to be able to access your data, applications and email (business and personal). As SaaS/DaaS/PaaS gains traction (bolstered by a grim economic landscape), more applications are being developed in the cloud which in turn evolves behaviors (think twitter, facebook, linkedin, google apps, and even OS providers beginning to test the cloud). As you can see below, the migration is happening now:

According to the Pew Research Center's Internet Project (9 page PDF of the report is here http://www.pewinternet.org/pdfs/PIP_Cloud.Memo.pdf):

56% of internet users use webmail services such as Hotmail, Gmail, or Yahoo! Mail.
34% store personal photos online.
29% use online applications such as Google Documents or Adobe Photoshop Express.
7% store personal videos online.
5% pay to store computer files online.
5% back up hard drive to an online site.

Overall, 69% of online users have done at least one of these six activities, with 40% of internet users having done at least two of them.

Convenience and flexibility are the watchwords for those who engage in at least one of the cloud computing activities listed above:

51% of internet users who have done a cloud computing activity say a major reason they do this is that it is easy and convenient.
41% of cloud users say a major reason they use these applications is that they like being able to access their data from whatever computer they are using.
39% cite the ease of sharing information as a major reason they use applications in cyberspace or store data there. At the same time, users report high levels of concern when presented with scenarios in which companies may put their data to uses of which they may not be aware.

90% of cloud application users say they would be very concerned if the company at which their data were stored sold it to another party.
80% say they would be very concerned if companies used their photos or other data in marketing campaigns.
68% of users of at least one of the six cloud applications say they would be very concerned if companies who provided these services analyzed their information and then displayed ads to them based on their actions.

The “cloud computing” data comes from a survey of 2,251 adults between April 8, 2008 and May 11, 2008. Some 1,553 respondents in the survey were internet users and the margin of error is plus or minus 3 percentage points for results based on internet users.

Obviously all three of these technologies are heading in the right direction. However, I believe if they collaboratively (either via direct co-marketing or at the very least developing strategic partnerships to move from products specific sales to holistic solutions) that the growth curve will be even stronger regardless of the economic challenges. Whew! What do you think???

Movie Quote:

Frank: "Recent research has shown that empirical evidence for globalization of corporate innovation is very limited and as a corollary the market for technologies is shrinking. As a world leader, it's important for America to provide systematic research grants for our scientists. I believe strongly there will always be a need for us to have a well articulated innovation policy with emphasis on human resource development. Thank you."

Frank: What happened? I blacked out

Pritchard: That was interesting. ha ha. Thank you very much. And, uh, your rebuttal? Mr. Carville.

James Carville: Oh... It... We... have no response. That was perfect.

Frank: That's the way you do it! That's the way you debate!