Smartbook Business Menaces Netbooks: Lenovo Product Released

The segment of the consumer electronics market that includes all the miniature or handheld PC alternatives grows by the day. Smartphones including the RIM (NASDAQ:RIMM) Blackberry and Apple (NASDAQ:AAPL) iPhone post sharply increased sales each quarter. Netbook sales are the only rapidly growth portion of the PC market. Hewlett-Packard (NYSE:HPQ) and Dell (NASDAQ:DELL) have lately entered a market which has been dominated so far by China-based manufacturers.

PC and handset companies are prepared to gamble that there is even more room in the mobile computing business. Several companies are expected to introduce “smartbooks” which are close to the size of a cell phone but have the processor power of a small laptop. Lenovo, the world’s No.3 PC company, announced it smartbook today.The Lenovo machine will weigh under 2 pounds and have a 10 inch screen, according to PC World. It will be run by a small but powerful processor made by Qualcomm (NASDAQ:QCOM), will have a 10-hour battery life, and will operate on WiFi and 3G networks.

The handheld device sector is getting crowded, perhaps too crowded, as companies rush to take advantage of the consumer’s appetite for mini-PCs. There will come a point when there are too many products and the battle over market share will become more intense than it already is. That should bring price cuts which will also bring lower margins for the companies that have moved into the field.

The second and almost certainly insurmountable problem short-term is that 3G networks are already jammed with data. AT&T (NYSE:T) is having trouble supporting the data needs of iPhone users. The more devices that run on these high-speed wireless networks, the greater the chance that overloads will create service problems.

Markets for popular product eventually always become too crowded. The companies late to market are usually the losers. If history is any guide, the late-comers will include Dell.

Douglas A. McIntyre