Netbooks Cannibalising 20 Percent Of European Notebook Sales says Intel

Netbooks could represent one in every five notebooks sold in Europe according to Intel and this proportion is even higher in Italy and Britain.

Talking to Reuters, Intel's European sales chief, Christian Morales said that globally, netbook sales reached 16 percent of total notebooks sales but in the two aforementioned countries this ratio rose to one in every four.

The semiconductor giant said that it did notice that the Atom processor overlapped heavily with the Celeron processors but profit margins for the Atom were higher than for the Celeron range. At no time during the discussion did Morales mention Atom's impact on the new CULV (Consumer Ultra Low Voltage) platform.

Although this is true, one has to bear in mind that Celeron processors like the T1500 are historically more expensive than the Atom ones like the N270; the former costs $59 while the later costs $44.

Back in April last year, we did find out that Intel could be making up to 1600 percent profit on its more expensive Atom model, the Z540 and that it cost nearly 85x more than gold at comparable weight.

The proportion of netbooks in the total notebook market is set to rise during the recession and as more manufacturers like Asus, Acer and Lenovo come up with more netbooks that actually resemble traditional laptops.

Furthermore, as Xbitlabs rightly points, out, although Atom processors are currently cheaper to produce than Celeron processors but then they tend to be sold with cheaper chipsets and other lower-cost components.

In conclusion, while netbooks might be good for the time being for Intel as they are bringing in hard-earned revenues, it is likely that Netbooks will cause ASP (average selling prices) to fall down and this will have a negative effect on profit margins.

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Microsoft and Intel have are also considering limiting the size of netbook screens to 10.2-inch for Windows 7 Starter. Many new netbooks currently carry 12-inch or larger screens and it is likely that the two computer giants want to protect their established userbase and their profit margins as well. Products with screens larger than 10.2-inch will be slapped with a higher Windows 7 licensing rate.

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