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SAN JOSE, CALIFORNIA -- Processors are getting faster and cheaper, and wireless connectivity is emerging, but the notebook market remains in flux due mostly to economics. That means buyers shouldn't expect many radically interesting products this year--vendors may wait for smoother times to unveil their next big thing.

"[Vendors should] hold off on truly innovative products because they could get lost," says Martin Reynolds, vice president and research fellow at Gartner Dataquest. He offered industry insights and advice to a crowd of notebook vendors and engineers here Wednesday at the Intel Developers Forum.

Reynolds originally expected an impressive 16 percent growth in the notebook market this year, in line with steady growth for the past few years. But then he spotted a pattern of big sales growth and then a decline, every two years. Being on the decline of that trend, combined with general economic downturns, could mean mere single-percentage growth this year.

"It's best to be prudent and plan for a slowdown," he said.

Toshiba Stumbles

Further complicating issues is a shakeup in the market that has seen corporate sales leader Toshiba stumble to third behind Dell and IBM, according to sales in the third quarter of 2000. Toshiba faces distribution problems and hasn't fared well with Dell's and IBM's direct model, he says. Compaq and Hewlett-Packard round out the top five in corporate sales.

On the consumer side, Compaq has established a clear lead over the competition, Reynolds said. Sony has clawed its way into second place, with Gateway, Apple, and Toshiba rounding out the top five.

Despite solid growth in the consumer notebook segment in recent years, corporate buying continues to dominate the overall market, he said.

The Killer Mobile App

Recent processor innovations that help save battery life draw attention, but LCDs and hard drives are the real power drains, Reynolds said. To significantly cut power consumption, those components must run more efficiently. And better battery life is essential if notebooks are to ride the wave of the next big technical innovation: wireless networking.

"Users will embrace [the wireless LAN], but weight and battery life become critical," he said. We won't want to search out an AC plug when we can access the network from anywhere in the home or office, he said.

The dominant type of wireless networking is and will be 802.11b, he said. His research shows about 21 percent of companies now have some 802.11b network implemented. By 2002, more than 50 percent will use that technology, he says.

He expects the standard to naturally migrate to the home. Already it is finding its way into many convenient public places. Wireless networks are now operating in 33 U.S. airports, as well as in some convention centers, hotels, malls, and even aircraft.

Notebook vendors should look to integrate 802.11b now, and further down the road they should consider Bluetooth, he said.

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