Back when Intel (Nasdaq: INTC) reported its quarterly results, there was an indication that netbooks weren't doing quite as bad as we thought they were. However, Microsoft (Nasdaq: MSFT) said that Intel dolled up its average processor price numbers. In reality, there is a dramatic decrease in netbook sales, Microsoft says.

It appears that the bottom is completely falling off the once-praised netbook base. Microsoft told analysts yesterday during its Q1 conference call that the overall PC market declined 8% in the quarter, partly driven by a massive 40% decline in netbook sales.

One analyst called Microsoft out for contradicting claims by AMD and Intel that the PC market isn't looking so bad after all, as processor ASPs increased. However, Microsoft accused Intel of removing netbook processors from its average-selling-price charts, which resulted in an overall uplift of ASPs.

Forty percent is a pretty significant decline that isn't seen very often in an IT product segment. We wonder how much life is left in the traditional netbook and whether it will simply disappear in a market niche, like the UMPC did.

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