MSI Hikes Price on Their Wind Notebook, Cancels Orders

[Jason Dunn]

<p>I was reading <a href="http://www.jkontherun.com/2008/07/msi-wind-price.html" target="_blank">a post over on jkontherun</a> about MSI hiking the price on their Wind notebook, and on the <a href="http://www.mobiussite.com" target="_blank">Mobius</a> discussion list we had a discussion about the way prices have been going up, and up, on all these new "cheap" notebooks. I've been noticing the same thing over the past year - Asus has been inching up the price tag on their EEE PCs with each new revision (and they never even hit their originally announced price of $199 USD), and certainly most of the new players out there are coming in a a higher price point. It's a huge mistake to abandon the $299 price point because as long as the most basic of functionality is there (Web browser + wireless) that's all some people need. I'm pleased to see some slightly larger, more full-featured notebooks coming out though, because I'm personally willing to pay more than $299 to get enhanced functionality. In fact, the $599 version of the HP Mini Note bothered me not because of the price, but because it didn't have a CPU powerful enough to play DVD-resolution video and the battery life was sub-par.</p><p>The seemingly obvious point that most OEMs seem to be missing is form-factor matters for some people more than price. It's not like HP already had a laptop the size of the Mini Note in their line-up, and the $499 price point was the only interesting thing about it. No, they introduced a whole new size of notebook and while some consumers will buy only on price, others (albeit a smaller number) will buy on form factor and functionality (many of the people reading this site for instance). Because if I want a small, 9" screen device, it's not about price for me - I'm not going to buy a $499 clunker laptop because the form factor is wrong. I'd pay $999 for a device that small that had great battery life, a great keyboard, and could double as movie playback machine. In fact, I've paid $2500 for such a machine in the past: the Fujitsu P5000 and P7000 laptops I've owned.</p><p>Ultimately I think a two-pronged approach to this market is going to unfold: you'll have someone taking the $299 price point (and lower) market, and you'll have someone offering the more expensive ($399+) products that offer more laptop-like features. I think the market needs both, but the lower price point is where the greater sales volumes are going to be. I hope the manufacturers of these devices figure that out.</p>

[Stinger]

The seemingly obvious point that most OEMs seem to be missing is form-factor matters for some people more than price. It's not like HP already had a laptop the size of the Mini Note in their line-up, and the $499 price point was the only interesting thing about it. No, they introduced a whole new size of notebook and while some consumers will buy only on price, others (albeit a smaller number) will buy on form factor and functionality (many of the people reading this site for instance).

I've just bought a Asus eee 901. For the same money, I could have got a 'proper' 15.4" laptop with dual core CPU, 2GB RAM and Windows Vista Home Premium.

Why did I go for the much more limited eee 901? Primarily because of its size and potential battery life. It's the right size and weight to sling in my bag without worrying about it. It'll be great for holidays, when all I'll want to do is surf the net, e-mail home and view photos.

The 901 is the sweet spot for me. The lower models don't have enough power and the higher models are getting to the size/price where I might as well go for a full laptop.

I like how the 901 comes with 20GB of free online storage. That should overcome the eee's limited storage issue pretty well.

I also picked up an Xbox 360 HD-DVD drive for £18. It's useful as an external HDD for installing software onto the eee but it's bigger than the netbook itself!

[Felix Torres]

Well, there are several things going on in the mini-laptop business that are contributing to the price inflation:

1- First and foremost there is the currency fluctuation issue - asian export economies have generally kept their curriencies artificially low against the USD to boost exports and the recent trends of the Dollar and material costs (especially energy prices) have squeezed their margins.

2- In the car business every single model always grows larger and pricier with each generation. Asus and others have used this approach to incrementally get their margins in line with the popularity of the new form factor. They never hit $199 because of the currency issues above. But they did hit $249 for a machine suited to its original taget: school kids. Thing is, they discovered schoolkids were just the tip of the iceberg and that the real money was in targetting Mr Dunn. :eek:

3- Once they realized the Eee PC sold more for its form factor than for the price, the race was on to find the sweet spot for the form factor. And yes, it does look like something around the 901 configuration is going to be the real winner out of the mini-laptop wars. Dell's model is going to be particularly interesting because if they play the game right, buyers will be designing the product for them; they will know for sure what people want out of those babies.

4- If I had to guess, I'd say the market is going to prove bi-modal; a decent fraction (say, 20%) will go for the cheapest config they can get, with a good majority (say 50%) going for the maxed-out version, pushing the $999 barrier. The rest will be scattered all over the place. So Dell gets to advertise a $299 laptop (at which point they make little profit) but the bulk of their sales are in the juicy high-end config. Classic loss-leader advertising, straight out of the auto dealer's playbook. Just look at the recently-introduced Hybrid studio. It can easily go way past the $1200 mark. Expect the same with the dEll mini...

We're seeing the birth of a new product category so there are bound to be pains and adjustments as manufactures weight the pros and cons of the different components that are going into these minis; low-power CPUs, SSDs, screen sizes and resolutions, graphics chips... Ideally, you'd want the best of each but then its not a low-cost long-battery life box, is it? And there are different usage profiles to consider; a true Webtop for home use doesn't need 5-hr batteries but a business traveller's box does. A kid-puter like the Eee PC surf can get by with a 7" screen but a more professional box needs at least a 9" and that is going to be reflected in cost, ditto for the SSD drive sizes. A good development is the coming after-market SSD modules for the ASUS that will let you take a 2 or 4GB EeePC to 18 or even 36GB of storage. Of course, the latter doubles the price of the computer but that is hardly new as those of us that remember the Home Computer Wars can attest to.

And that is probably what we're looking at; a 21st Century reprise of the old Atari vs Commodore wars. The Eee PC Surf is clearly the VIC-20 of this generation and the 901 is clearly the Commodore 64. Now the question is, who will bring out the "Atari 800XL" of the generation? :confused:

Could be Dell.
Could be HP if they improve the Mini note.
Could be somebody else...

This could get fun...

[Hooch Tan]

In some ways, I think that the ultra cheap laptop may end up being a limited market. There's another player in the industry, which if they play their cards right, could turn the ultra-portables into a niche market. Of course, I'm thinking about phones.

Watching the progress made in Windows Mobile (Opera Mobile 9.5) and the iPhone, if they're able to continue to improve their "desktop" web browsing experience, I would tend to think that most people won't even need an ultra-portable laptop.

The convenience of having their phone with them all the time that would be able to accomplish everything that they need with regards to web services (webmail, surfing, facebook/myspace/youtube) why buy another device they'd need to carry around? If it's form factor, providing the device is powerful enough, and it's getting there, I hate to say it, but a foleo like shell would probably suffice.

[Felix Torres]

If it's form factor, providing the device is powerful enough, and it's getting there, I hate to say it, but a foleo like shell would probably suffice.

1- Well, Palm didn't believe in the Foleo enough to actually ship it.

2- Somebody else, did, however: The Celio Redfly has been out for a while:
http://www.winsupersite.com/reviews/redfly.asp

3- Look at the pricing, though. $299 for a full-blown PC, mini-laptop, vs $499 for the MSMobile "extender".

Until we get roll-out fold-out displays on cell-phones, they're not really a threat to laptops, iPhone fans notwithstanding.

[Hooch Tan]

1- Well, Palm didn't believe in the Foleo enough to actually ship it.

2- Somebody else, did, however: The Celio Redfly has been out for a while:
http://www.winsupersite.com/reviews/redfly.asp

3- Look at the pricing, though. $299 for a full-blown PC, mini-laptop, vs $499 for the MSMobile "extender".

Until we get roll-out fold-out displays on cell-phones, they're not really a threat to laptops, iPhone fans notwithstanding.

I would love a roll out display! And supposedly, they'll be coming out soonish. Well, sorta soon.

As for Palm and the Foleo, yeah. I thought little of the Foleo as well, but I do think the market has changed somewhat. At the time the Foleo was announced, web browsing was laughable at best. However, if one can get a desktop like browser experience, it might just be enough.

I've also heard that i-mate is considering one as well. What it comes down to for me, and why I think it has potential to erode ultra-lite sales, is that if someone is able to come up with a dockable solution, where their phone would provide the "cpu/storage/network" and the dock would just boost battery life and provide a more user friendly interface. Think of the road warriors who set up their portable office based on a mobile device with a bluetooth keyboard et al. This would be an extension of that.

But in order for that to work, the extension would have to be really, REALLY cheap, like sub-$100, not the $500 that the Foleo would've cost. I don't think it's going to happen soon, but I do think that there will eventually be a clash between PCs and phones when phones reach a point where its power could satisfy all a typical consumer would need.

[Felix Torres]

But in order for that to work, the extension would have to be really, REALLY cheap, like sub-$100, not the $500 that the Foleo would've cost. I don't think it's going to happen soon, but I do think that there will eventually be a clash between PCs and phones when phones reach a point where its power could satisfy all a typical consumer would need.

Well, therein lies the problem:

The screen will have to be the same on both the PC and the "extender".
Keyboard, battery, case--all the same.

You save on what?
RAM? At current prices the difference between 64MB DRAM and 512MB doesn't amount to much at the OEM level.

Storage? Yeah, there's savings there but not as much as you'd think; again, OEM prices are pretty low on small HDD and (very small) SDD.

CPU? Graphics chip? Not likely on those two; Atom CPUs and its competitors cost about as much as ARMs and PC chipsets are cheaper than the stuff in phones, pdas, and such... Even relying on x86 CPUs isn't going to help all that much because the bulk of the costs for a phone extender are in RD and the software.

Firmware? PC Bios'es are dirt cheap vs the cost of rolling out and maintaining your own. A net loss, there. Ditto for the oboard apps that let the things work at all.

Then, add-in economies of scale from selling tens of thousands of Eee PCs a month and you'll see why the Surf goes for $299 which the Redfly is listed at $500.

In theory, it should be the other way around; the lower-functionality device should be cheaper. But the market for the mini-laptop is so much larger the economies of scale and free system software (or near-free for Windows)overwhelm component costs. Economics beats electronics every day of the week.

The Redfly folks are wisely targetting their extender at the coroprate market, not the consumer market for a reason; those guys don't mind the hardware cost if it saves them on the back end on support. That doesn't apply to individual users and, much as it always rankles the IT geeks, there's a hell of a lot more of us than of them. :cool:

[Hooch Tan]

Well, therein lies the problem:

The screen will have to be the same on both the PC and the "extender".
Keyboard, battery, case--all the same.

You save on what?

Actually, what I was thinking about was a literal shell. Less companion, more extension. As in, why bother with RAM/CPU/Storage/GPU? The mobile device you have is already capable of all of that. Well, presently only somewhat, but it's improving! All the mobile device would need to do is have a VGA out and alternate input method. Then all you'd need for manufacturing costs would be a keyboard, battery and case. That's where the savings would come from. Eschewing everything else since they're already provided by the PDA.

I'll easily admit that phone browsing isn't quite up to par yet. A minute to render many webpages isn't acceptable in my book, though Skyfire looks awfuly tempting. Another issue is a unified method of connecting a shell, which is probably why companion devices are the closest option, since they handle the transation to the larger interface. If there was a universal dock for all mobile devices that could handle video/keyboard/mouse/audio/power, it'd make a "shell" more feasible.

The Redfly folks are wisely targetting their extender at the coroprate market, not the consumer market for a reason; those guys don't mind the hardware cost if it saves them on the back end on support. That doesn't apply to individual users and, much as it always rankles the IT geeks, there's a hell of a lot more of us than of them. :cool:

Agreed! :) But there is the trickle down effect!

[Felix Torres]

Actually, what I was thinking about was a literal shell. Less companion, more extension. As in, why bother with RAM/CPU/Storage/GPU? The mobile device you have is already capable of all of that. Well, presently only somewhat, but it's improving! All the mobile device would need to do is have a VGA out and alternate input method.

As in VGA out plus bluetooth?
Some PDAs already offer that, yes.
And they're all in the $500+ range so they're by themselves more expensive than a cellphone plus mini-laptop. :D

I hear where you're coming from but today its just not doable.
Same as with the oh-so-desirable thin webpad for $200...
There is a big gap between what we can conceive and lust after and what is achievable in practical terms.
But things change; with time and new technologies eventually we'll get there.
Of course, when we get there we may not want those things anymore...:o

[Jason Dunn]

In some ways, I think that the ultra cheap laptop may end up being a limited market. There's another player in the industry, which if they play their cards right, could turn the ultra-portables into a niche market. Of course, I'm thinking about phones.

I don't know about that...unless there's a radical break-through in voice input technology, or we get input jacks in the back of our heads, phones are always going to have trouble with input, and screen size.

If it's form factor, providing the device is powerful enough, and it's getting there, I hate to say it, but a foleo like shell would probably suffice.

I don't disagree...I actually liked the concept of the Palm Foleo. The Redfly is also pretty cool, but $499? Ouch.

[Hooch Tan]

As in VGA out plus bluetooth?
Some PDAs already offer that, yes.
And they're all in the $500+ range so they're by themselves more expensive than a cellphone plus mini-laptop. :D


But if someone could come up with a $100 shell for the iPhone, which would give it laptop like dimensions, it's only an incremental cost of $100. But you are right. At present, the initial barrier is higher!

There is a big gap between what we can conceive and lust after and what is achievable in practical terms.
But things change; with time and new technologies eventually we'll get there.
Of course, when we get there we may not want those things anymore...:o

That darn price barrier. I'm sure it's possible, but at a high cost for various reasons. I do kind of wonder what we'll want once we get to the point where are current lusts are reachable.

[Hooch Tan]

I don't know about that...unless there's a radical break-through in voice input technology, or we get input jacks in the back of our heads, phones are always going to have trouble with input, and screen size.

You dn't have a jack in the back of your head? :) Actually, something like that would kind of scare me. I've got bad aim. I was more thinking of a shell for a phone, that would dock, much like how with a laptop, we can dock it into something to take advantage of a larger screen, keyboard, mouse, etc.

I don't disagree...I actually liked the concept of the Palm Foleo. The Redfly is also pretty cool, but $499? Ouch.

I still kind of disagree with the Foleo in some ways. Not so much the idea, but the implementation. I was thinking more like the phone could have the potential of becoming our ultra-portable personal computer in a few years if it gets treated like IBM's metapad concept. I really liked the metapad, but IBM never did anything with it, though I recall a couple of years ago, a video coming out for something very similar.