Notebook computer comparison

DisplaySearch, a provider of FPD market research and consulting, revealed in its latest Quarterly Notebook PC Shipment and Forecast Report that sales of notebook PCs surged in Q1'02 with record quarterly shipments of 7.3 million units, up 27% from Q1'01 and representing the only time in recent history that Q1 sales surpassed the seasonally strong Q4 selling season.

For the entire year, based on strong Q1'02 results and preliminary indications for Q2'02, DisplaySearch upgraded its forecast for 2002 shipments of notebook PCs to 31.2 million units, up by 24.8% over 2001.

Not only did unit volumes surge, but also larger panel sizes continued to grab market share. Notebook PCs using 15.0" and larger displays grew to more than 25% of the market in Q1'02, up from only 10% in Q1'01. The growth in larger panel sizes is coming at the expense of 13.3" and smaller notebooks, whose market share fell from 39.4% in Q1'01 to 15.9% in Q1'02. Meanwhile, the popular 14.1" panel size grew Y/Y from 50.6% to 59.0% of the market.

Interestingly, the DisplaySearch report discusses how the trend to larger notebook PC panel sizes has been driven by the rising popularity of LCD monitors. Since LCD monitors still cost more than CRT monitors, one effect of increased LCD monitor penetration is to narrow the price gap between desktop and notebook PCs. Particularly since notebook PCs add portability and currently provide the added advantages of higher resolutions, many consumers are buying notebook PCs rather than desktop PCs. This trend is exemplified by the recent popularity of "DeskNote" products in Asia -- PCs in a notebook form factor that ship with desktop processors and without batteries. By shifting the notebook design focus away from the power budget, DeskNote products can significantly reduce costs, and in fact will soon ship with LCDs designed for monitors rather than for notebook PCs to further reduce costs.

By resolution, notebook PCs at XGA resolution (1,024 x 768 pixels) represented 81.3% of the market or 6.0 million units. Shipments of SVGA panels (800 x 600 pixels) dropped to 1.3% of the market, representing less than 100,000 units. Conversely, SXGA+ (1,400 x 1,050) shipments grabbed 11.9% of total market share and the combination of SXGA+ and UXGA (1,600 x 1,200) shipments rose to represent more than 15.0% of the market for the first time.

On a revenue basis in Q1'02, notebook display sales were up 16% sequentially and up 5% Y/Y, to $1.61 billion, representing the first quarter since early 2000 when Y/Y revenues increased. Average Selling Prices (ASPs) rose for the first time in three years to $217. The peak ASP was in Q1'00 at $463, with the bottom price falling to $192 in Q4'01. Average pricing in Q2'02 is expected to jump to more than $260.

In forecasting future pricing, the DisplaySearch report warns about currency exchange rates. With the US dollar (US$) at relative strength against Asian currencies, US$-based pricing projections are risky, particularly since historically, LCD supply shortages coincided with a weakened US$, thereby accentuating pressures to higher prices. Indeed, as of mid-June, the US$ has weakened by more than 5% against Asian currencies since the beginning of the year.

The DisplaySearch report not only details historical and forecasted shipments of notebook PCs by panel size, resolution and pricing, but also provides details about the LCD value chain from TFT LCD maker to notebook brands. For example, longtime TFT LCD market leader Samsung has lost almost S points of market share since Q1'O0 in the notebook display market. Korean manufacturers lost their leadership position in terms of total volumes to Japanese suppliers, while Taiwanese suppliers continued to gain market share. Japanese suppliers represented 3 5.4% of the LCD shipped to the notebook PC market in Q1'02, Korea represented 34.4%, and Taiwan grew to 3 0.2%. Although Samsung remained the market leader for notebook panels, the second spot went to AU Optronics in Q1'02, followed by LG.Philips LCD. AU Optronics also passed over Hitachi, which dropped to #4. The combined volumes of the newly merged IBM and Chi Mei put Chi Mei at #5 in the notebook market, slightly ahead of Sharp.

In addition to losing market share in Q1'02, market leader Samsung also lost ground in terms of panel size and resolution rankings in comparison to the rest of the notebook display supply base. Conversely, Sharp gained significant ground in terms of market share and panel size rankings. Since notebook PC panel prices are strongest during a shortage period, Sharp's timing appears to be on target.

In the case of branded notebook PC shipments in Q1'02, 2001 market leader Dell lost market share from 14.0% to 13.0% and was overtaken by Toshiba for the top position in the market. Dell also lost ground against the competition in terms of panel size. Sony gained market share and surpassed IBM to become the #4 notebook PC brand globally, behind Toshiba, IBM, and Compaq. In Q2'02, the new HP/Compaq combination will make for a tight three-way race for the #1 ranking, along with Toshiba and Dell.

By panel size, Gateway and HP lead the industry at close to 14.5" average diagonals, while Apple lagged the industry at 13.4". Interestingly, notebook PC brands that shipped panels smaller than the industry average in Q1'02, lost 2.5 points of market share, which were gained by brands that shipped panels larger than the industry average.

The report newly tracks market share for the top 12 notebook PC brands by region. One interesting trend is that Asian brands (Acer, Fujitsu, NEC, Sharp, Sony and Toshiba), have gained ground significantly against US brands (Apple, Compaq, Dell, Gateway, HP and IBM) both in terms of volumes and panel size from Q4'00 through Q1'02.

The report is priced between $4,495 and $4,995 (print version or electronic site license version). For more information on any DisplaySearch product or service, please contact DisplaySearch at Tel: 512-459-3126, Fax: 512-459-3127, email: info@displaysearch.com or Web: www.displaysearch.com.