Analysis: Panasonic Ready To Fight For Competitors' Turf

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In the past year, Panasonic Computer Solutions managed to surpass Hewlett-Packard in notebook revenue sold through the channel, leaving it in second place only behind Lenovo, according to market research firm The NPD Group.

And the vendor's not stopping there.

"Our goal is to be at $1 billion in revenue by 2010," says Sheila O'Neil, director of channel sales for Panasonic Computer Solutions.

Panasonic currently generates about 60 percent of its sales from its traditional rugged line, 30 percent from its semirugged line (designed to serve as a desktop replacement product) and 10 percent from its business-rugged models (which are thin-and-light laptops), but the vendor wants to even out that ratio. However, while its newer, less rugged models are still pricier than standard consumer and commercial notebooks, they're not costly enough to propel the vendor to reach its goal of growing to $1 billion by 2010. To get there, Panasonic will have to drive up unit shipments as well, an area where Panasonic pales in comparison to other notebook vendors.

Panasonic's move comes as Dell recently rolled out its own semirugged models, and some analysts predict the whole notion of "ruggedness" is poised to become the new marketing buzz-phrase among vendors looking to differentiate themselves in a commoditized market. In many ways, the trend toward selling more durable notebooks into mainstream markets makes sense, as anyone who has ever spilled a cup of coffee onto their laptop or dropped their notebook on a hardwood floor can attest.

"As notebooks become a larger percentage of systems being sold, both in business and in consumer markets, it's inevitable you'll see more and more usage and more and more accidents," says Bob O'Donnell, analyst with market-research firm IDC in Framingham, Mass. "People are now putting more and more stuff on PCs, and the amount of time people are moving [from] place to place is also growing, so you put those together and very logically you decide you need something a little more rugged."

"The notebook is now mission-critical--you can't afford to have it break when you're going into a presentation," agrees Paul Zoz, president of Bizco Technologies, a solution provider in Lincoln, Neb.

Having vendors with brand awareness like Dell jump into the market will likely help legitimize the need for rugged features and increase sales for the market overall, O'Donnell contends. "Everyone will benefit from the bigger players getting into this space."

Another potential buoy for the ruggedized market is the growing interest in Flash-based hard drives for notebooks. Because the drives don't have any moving parts and are, therefore, harder for users to damage, they could help bolster the promise of semirugged laptops.

"Now ruggedized machines can withstand a three-foot drop in terms of the data being protected with Flash-based drives," O'Donnell says. "With hard drives, even with all the motion sensing things they do, you can still do some damage to a drive because of the moving parts."

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