There has been a bit of turbulence among IT industry analysts trying to predict the impact of low-cost notebooks (or netbooks) since they were first proposed by OLPC and validated as a viable product by Asustek, Intel and others. Gartner initially posted lukewarm sales forecasts for the devices, and IDC actually excluded netbooks from its definition of a PC, saying they did not compete directly with traditional computers and targeted “the education segment in emerging markets that wouldn't have bought a PC anyway.” Since then, IDC has changed its definition of PCs to include netbooks and both companies raised their global PC shipment forecasts on the strength of robust netbook sales. In fact, Gartner now predicts that 30% of all laptops worldwide will sell for under $300 within 3 years.
These fluctuations show that forecasts based on historical metrics such as shipments or on manufacturing capacity can be wildly inaccurate for new markets or disruptive technologies. Low forecasts that fail to anticipate new-user demands or technology and business-model innovations can have a profound impact on decision-making at multinational technology companies. Intel, for example, considered creating an Atom-like processor as early as 2003, but forecasts did not support the volume benchmark for profitability. Atom processors are now a major growth driver for the low-cost segment, and a bridge into other markets (e.g., handhelds and smartphones).
There is an opportunity for technology companies that develop forward-looking forecasts for new markets or innovative technologies. Apple and AT&T had the confidence to ignore forecasts when they introduced the iPhone. NComputing’s multi-user form factor invalidates some of the key assumptions traditional forecasts are based on, and the company is remarkably healthy after only four years. These companies made strategic investments and based their own projections on non-traditional metrics, weighting unmet demand and user preferences more heavily than historical shipping trends. In hindsight, this looks like courage or luck, particularly in a mature-market environment, where forecasts by leading industry analysts may seem irrefutable. But in emerging markets, where millions of new users have different preferences and there is a different set of competitors, non-traditional metrics and the ability to forecast based on contingencies, innovations and new market scenarios is an essential part of doing business.