Notebooks just took the top spot over desktops in the last quarter in which results have been reported. It's not that the PC market is growing, as much as it is that more desktop users are replacing their existing systems with notebooks. I think it's a trend that can be tied into two factors:
1. The widespread adoption of wireless internet, meaning you can now go online at everywhere from the local library to Starbucks to even Burger King (at least you can here). Partly due to the relative novelty of WiFi, but also due the increased pressure to become mobile in many jobs, this had contributed to many people deciding to buy laptops instead of a notebook. Just to give you an idea of how big a draw WiFi is, Carnival Cruises just spent about a million dollars to outfit one of its new liners with a WiFi setup that literally covers every square inch of the boat. They charge 25 cents a minute, but it is estimated that they will bring in a considerable amount of additional revenue by offering this service.
2. There has been a trend in many markets over the last several years to make products smaller and more efficient. You can see this in the growth of the LCD/Plasma/DLP television market. People are starting to move away from the
"bigger is better" mindset, and don't mind paying a premium for a LCD or plasma TV that is thinner, lighter, and more versatile than a projection unit. This same mindset is carrying over into everything from cellphones to PDA's, digital cameras, and the PC market. Even Apple has followed this trend with the release of the Mac Mini.
I'm not saying that these are the two biggest factors in the growth of the notebook sector, nor am I implying that these are the only factors. But I do believe that if you look at these two trends and compare them to the growth in the mobile market, you will see a definitive correlation.
YP5 is right in that the bulk of the growth in notebooks is in the sub-$1000 range. Many of these customers are the ones who were first to jump on the sub-$500 desktops when manufacturers started offering base systems. But there's a significant segment of the "newly mobile" market (my term) that are first-time PC owners. Unfortunately, YP5 is also correct in that the entry-level notebooks of 2005 are not as high quality as the 2002 models. That's a byproduct of this push by the manufacturers to compete in this lower range, which necessitates low margins and a consequent need to sell more units. Ironically, if you were to look at the sub-$500 desktops of today and compare them to the units sold in 2002, you'd see that the newer models are much better in terms of quality & reliability.