Leibson's Law

(Note: Psion officially trademarked the name “NetBook” a while ago and prefers that the term not be used generically but I don’t think the Web community is cooperating.)

Time was, many years ago, any PC that you would really want cost $5000. That statement held true for a good 15 years from the PC’s introduction in 1981 to the mid 1990s. Prices for machines fell, but new features continued to appear so that the price of a well-featured machine stayed around $5K. Then the prices started falling, rapidly. Today, that number’s probably between $500 and $1000 and is likely to fall again because of the subcompact notebook, the diminutive PC that’s everything most people really need in a PC. The graph below, taken from a talk at MemCon 09 given last week by SanDisk Corporation’s Senior Strategic Marketing Manager Anu Murthy, tells the tale. While the bulk of PC sales had unit prices between $500 and $1000 before the appearance of the super-low-cost subcompact notebook PCs (often called Netbooks), the effect of the subcompact introductions will be to drive the average down to around $500 in a couple of years.

Even this graph doesn’t tell the whole tale. My daughter is a professional dancer and was about to zip off to Europe this summer for a workshop. She didn’t want to take her “bulky” laptop nor risk it being stolen. She wanted a lighter, smaller, cheaper alternative. Off we went to Fry’s Electronics to look at subcompact notebook PCs. She settled on an Acer Aspire One with an 8-inch display for $259. That’s well under $500. And besides, the Acer came in pink.

What did she get for her $259? A full-blown PC with a great screen, integral WiFi, and a 160Gbyte hard drive. That’s 60% larger than the drive on my work PC. With those specs, it’s no wonder that these subcompacts are driving down the average cost of a PC.