At present, there are more than 1,000 notebook computer models in the U.S. channel, and each one strives to attract consumers with varying features, price points and manufacturer incentives. Despite the differing mix of features, prices and incentives, the majority of notebook consumers base their choices on price, performance and form factor. After all, who doesn't want to get the most bang for their buck?
A unique market niche within chas emerged in recent years, however-one that targets the industrial user. To tap into this narrow segment, large manufacturers such as Hewlett-Packard and Panasonic have introduced "ruggedized," heavy-duty notebooks.
To examine this emerging trend more closely, Current Analysis Labs studied the Panasonic Toughbook CF-73, a ruggedized notebook that is designed for mobile professionals and workers who need to take their notebooks into the field. The CF-73 can withstand rough handling and dirty, sometimes dangerous environments. It is useful for workers in such industries as transportation, public safety and telecommunications.
The CF-73 is engineered to provide reliability and performance for power users on "rugged" assignments. It includes a full magnesium-alloy case, a shock-mounted and isolated hard drive, reinforced USB and PC card connectors, re-engineered and upgraded port covers, protective ribs on the case bottom and a proprietary cooling system that incorporates an optimized heat pipe and remote heat exchanger. The keyboard and touchpad are spill-resistant, and the magnesium-alloy case is water-resistant. Further, the CF-73 has a sturdy handle that makes carrying the notebook easier.
The notebook computer features a 13.3-inch touchscreen display with 1,024 x 768-pixel resolution. Users can interact with Windows simply by tapping the display itself, as if it were a tablet PC. The display does not swivel around into a tablet form factor, but the user can still control applications without messing with the keyboard and touchpad. That's an enormous benefit for individuals who work outdoors.
The Panasonic CF-73 is powered by an Intel Pentium 4 Centrino 1.6-MHz processor and comes with a 60-Gbyte hard drive and 512 Mbytes of RAM. The notebook has a DVD-ROM/CD-RW drive and a 56-kbaud modem. The unit's physical dimensions are 11.7 x 10 x 1.7 inches and it weighs approximately 5.5 pounds. It has an 87-key keyboard with a dedicated Windows key, a touchpad, an Intel PRO/Wireless 2100 802.11b network and built-in stereo card speakers.
The Panasonic CF-73 interface includes two USB ports, an external video port, headphone/speaker ports, RJ45 (Ethernet), an I/O box port, microphone/line in, RJ11 (modem), port replicator and serial connectors. It also includes one PC Card/Card Bus slot.
The Windows XP Professional operating system comes preinstalled, and the notebook is shipped with a rechargeable lithium-ion battery and ac adapter in the package.
The unit shipped to Current Analysis Labs was a used one, and the following items were missing: 5 to 10 percent of the screws, mini-PCI radio, wireless wide-area-networking module and SIM holder, coax, antenna, hard handle and optical-drive release switch.
Production cost analysis
Most of us are aware of the lower manufacturing costs that result when IT and consumer electronics products are outsourced, but how much should it cost manufacturers to stay competitive in today's notebook market?
To answer this question, we examined the Panasonic CF-73 notebook at production volumes of 100,000 and 500,000 units and assumed that the lower-volume model was produced in Japan and the higher-volume one in China. To do this, we used time- and industry-tested methodologies to estimate the purchase costs of commodity components, manufacturing costs of fabricated components and location labor rates.
In Japan, the outcome was a final suggested production cost of $705.77 per unit. China posed a considerably lower cost of production at $582.39 per unit, or $123.38 less than the Japanese manufacturing costs.
At present, the manufacturer's suggested price is listed at $3,599. Assuming production in China at 500,000 units, Panasonic's estimated profit for each notebook unit sold would be $3,016.61 before accounting for tariffs and other taxes. Nonetheless, this is a considerable profit on a per-unit basis.
Industry analysis
Although the traditional notebook market is cutthroat and commoditized, the ruggedized-notebook market can be a lucrative one. Hewlett-Packard, for example, entered this space a few years ago because of its profitability.
In the ruggedized market, usage situations like sweat-inducing temperatures, rain, snow and clumsy workers demand protective measures to ensure system reliability. Further, the value of the data on the portable machines makes customers and enterprises willing to pay the hefty price premiums.
The estimated selling price of the Panasonic Toughbook CF-73 (CUTSBM) is $3,599. A traditional equivalent with slightly better specifications, like Sony's 13.3-inch VGN-S380B23, can be had for $2,199. The Sony notebook features the same processor, 512 Mbytes of RAM and an 80-Gbyte hard drive.
While the Panasonic CF-73 is produced in lower volumes than the comparable Sony model, the demands of the ruggedized work force indicate that there will be no shortage of need for sturdy, rugged notebooks.
Sam Bhavnani (Sbhavnani@currentanalysis.com), senior analyst for mobile computing at Current Analysis Inc. (Sterling, Va.)
