Dell: Netbooks not a replacement for laptops

We're selling the 'appropriate' number of netbooks, Dell executive says, citing an 'over-exuberance' for the products in the marketplace

Netbooks may have won over many users with their relatively low cost and small size, but Dell doesn't see the lightweight machines ever replacing laptops with more powerful processors inside.

"There's been some over-exuberance on this product in the marketplace," said Steve Felice, president of Dell's consumer, small and medium-size business unit, during a conference call with reporters.

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"Some of our competitors have positioned [netbooks] as a replacement device and then you see feedback from customers that are disappointed when they gave up their notebook for a netbook and find that it's not quite as fast or doesn't have quite the same functionality," he said.

Waning enthusiasm for netbooks in favor of more powerful laptops was reflected in processor shipment figures reported by IDC in April.

IDC's numbers showed that Atom -- the processors found in most netbooks -- represented a lower percentage of processors shipped during the first quarter of 2010. Atom's share of the market fell to 20 percent from 24 percent during the previous period, even as the overall volume of processors shipped rose by 4.1 percent.

Dell views netbooks as a complement, and not a replacement, for laptops, saying users shouldn't rely on netbooks as their primary computer, Felice said, calling the company's netbook sales "healthy."

"We think we're selling the appropriate number of these products to the appropriate set of needs," he said.

Stronger demand for computers meant the first quarter was good to Dell. The company's first-quarter revenue rose 21 percent, to $14.9 billion. Profits were also up, rising 52 percent to $441 million.

The company did particularly well in emerging markets like India and Brazil, where revenue rose 90 percent and 81 percent, respectively. Sales in China rose 44 percent.

"We were very pleased with the overall performance of Dell," Felice said.

Even Dell's consumer business, which is typically a weakness for the company, did relatively well, with revenue up 16 percent over the same period last year.

"We had a good first step in our recovery of this business. We were able to grow revenue 16 percent, but at the same time increase unit share around the world and also do it with increased profitability," Felice said.

"We have more work to do here from a profitability standpoint, but it was certainly the right step," he said.

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