Sony Joins the Netbook “Race to the Bottom”

The burgeoning “netbook” market has itself one more player: Sony. The company’s entry into the space is somewhat surprising considering its initial dismissal of the low-cost portable-computer market. Netbooks were initially made popular by Asus’ line of Eee PC products. Since the launch of the Eee PC in 2007, other notebook manufacturers have been aggressively trying to get their share of this new and rapidly-expanding space. Notable netbook makers include MSI, Acer, and Dell. Samsung and Averatec have announced that they will be entering the space later this year.

In an interview by Engadget in February 2008, Sony senior vice president Mike Abary felt that netbooks are harmful to the mobile computing market. Abary dubbed the cheap notebook craze as, “a race to the bottom”. At the time he believed that driving to get products down to the $300 to $500 range would stifle innovation. Products like the Eee PC have relatively slim profit margins compared to high-end notebooks with bleeding-edge features (not to mention the expensive R&D costs associated with top-of-the-line computers).

Abary appears to have changed his tune. Laptop Magazine reports that Sony has plans to enter the netbook space. He says, “We are letting the pioneers in the market make the mistakes. Sony has to participate because consumers are our core competency. We have to participate.” Translation: “Yeah, we’re late to the party. Heck, we didn’t even want to go to the party. Unfortunately, circumstances have made it so we have to go.”

Giants like Acer, Dell, and Samsung forced Sony’s hand, putting it in a position where it couldn’t afford not to be in the netbook market. It was lose an opportunity to bolster its brand equity, considering that netbooks are affordable to a huge audience. These manufacturers are likely banking on netbooks being a gateway product for its more expensive offerings; if a customer has a positive experience with a “brand X” netbook then there’s a higher chance it will buy another “brand X” product in the future. (And no, I’m not comparing netbooks to marijuana.)

Between the rapidly expanding market and the increasingly difficult economic conditions, it was inevitable that Sony would join the netbook fray. It needs to be in the space for branding purposes. With the economy forcing many people to cut back on spending, buying a full-featured notebook is out of the question for many consumers. Retailers will be pushing netbooks and customers will be snatching them up. The good news is that Sony’s foray into the market will make things more competitive and give the consumer more choices.

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