We’re in the throes of one of those major discontinuities that occur in technology evolution periodically. Actually there are two occurring concurrent and affecting one another. Entrenched suppliers hate such events because they are forced to develop new business models for producing revenue. One discontinuity happened with the announcement of the iPhone, which heralded the age of the mobile Internet. The second, precipitated by a genuine desire to bridge the digital divide between the first and third worlds, markedly drove down the cost of computing and heralded two new classes of computing device: the netbook and the smartbook.
The two computing devices are entirely different creatures. The netbook is the product of the traditional PC business, caught unawares when a social experiment got terribly out of hand: an experiment to create a low-cost product for the third world and somehow prevent it from being purchased by the first world. The smartbook is the result of the social networking explosion on the web spurred on by the iPhone creating a web application epidemic.
The netbook came out of the “One Laptop Per Child” initiative that Nicholas Negroponte, started while head of the MIT Media Lab. The program was a noble, well-meaning effort to provide a computer to every child in the third world: roughly a half a billion for an unachievable price of $100 each. That meant open source software and the lowest cost silicon—Linux instead of Microsoft, AMD instead of Intel. The nonprofit organization Negroponte formed, One Laptop per Child, to distribute the PC, shipped its first product the XO-1 at twice the target price: $199. Quanta Computer Inc. based in Tao Yuan Shien, Taiwan manufactured the unit with production stumbling along in fits and starts beginning in November 2007.
Quanta also announced plan to build a version of the laptop for the commercial market, something Asus International also had in mind with its Eee PC, which Asus showcased in two versions at Computex in June 2007. (Negroponte’s hardware and software reference design was well known and easily duplicated using an Intel CPU instead of the AMD unit.) The Asus offering initially contained a Celeron M mobile processor. Asus has since shifted to the Atom CPU, which is the main engine in nearly every netbook currently on the market as is Windows Vista—Microsoft couldn’t be shut out of a major class of portable computing platform. (Search “netbook” on net retailer’s tigerdirect.com and every unit displayed will feature Intel Atom and Windows Vista.)
The price tag on the Eee PC when it shipped in September 2007 ran $349—nearly twice the price of an XO-1 but still pretty inexpensive for a web browsing PC. Needless to say, Asus had plenty of orders to fill when production began. A rush of competitors hurriedly jumped on the bandwagon and the rest is history. The low-cost PC intended for the third world had jumped into the first.
Meanwhile, Intel shut out of the OLPC project in a disagreement with the organization set about building a comparable unit called the Classmate PC. In August this year, CTL Corp. of Portland, OR introduced its 2Go version of the Intel design priced at $399. The design is sold under other brands worldwide. Intel wanted the hearts and minds of the next generation of computer users. Building brand awareness and familiarity in school ensures loyal customers later in life.
As to which has come out the winner, the OLPC organization estimates around 750,000 XO laptops installed worldwide through March this year. Intel says it has shipped 700,000 Classmate PC's in 2008 alone and predicts it will sell over two million Classmate PCs in 2009. Capitalism triumphs over socialism but at a cost. Negroponte’s social experiment had the consequence of lowering computing cost for both the first and third. The average selling price for netbooks today is around $350, according to Taipei-based tech publication, Digitimes. The ASP for a notebook at the start of this year had been pushed down to around $795 according to Port Washington, NY-based market research firm NPD. And the lower priced netbooks are eating into notebook sales.
Figures from market research firm DisplaySearch shows netbooks represent 22 percent of the portable computer shipments the second quarter this year, up from 6 percent in the second quarter of last year. One reason for the popularity of netbooks could be the economy; consumers are opting for the lower priced computer while corporate buyers prefer to hold off replacing laptops until a better economic climate arrives. By then Intel and Microsoft and PC hardware OEMs can return to business as usual. Right? Not if Cambridge UK-based, ARM Ltd and Sunnyvale, CA-based Google and their allies have their way.
The advent of the low-cost netbook almost coincided with the arrival of the iPhone in June 2007 and the birth of the web browsing smart phone. The proliferation of web applications that followed the iPhone introduction cried out for a platform with a larger multi-touch, touch-screen display and keyboard. Enter the smartbook, which is an ARM-based smart phone in a PC enclosure. It runs Linux, Android, or eventually Chrome not a Microsoft OS—all but Win CE having not been ported to the ARM processor. However, the version now being showed doesn’t pose much of a threat. The platform that will challenge the Intel-Microsoft dominion is the +1 GHz-ARM-9 Cortex running the Google Chrome operating system expected out mid-2010.
Smart phone users wanting the web-friendly experience they have come to expect will now find it on a smartbook: instant on, day-long battery life, multi-touch touch-screen display, immediate access to social networking sites like YouTube, MySpace, Facebook, Linkedin, SMS, and a full up Qwerty keyboard all with a price tag much lower than a netbook. To be fair, network service providers will subsidize that lower price. And the subsidy will apply to netbooks and smartbooks, but the user experience will favor the latter over the former. The remaining questions are will the netbook close the user experience gap by the time the killer ARM-Google platform rolls out and will the ARM-Google solution deliver a compelling enough reason to switch.
Regardless of the outcome of the struggle between the Intel-Microsoft and ARM-Google camps, the bottom line is that hardware prices will be reduced. Scottsdale, AZ-based market research firm, In-Stat has suggested that pressure from some of the ARM chip vendors may push Intel to further lower prices on some of their computing devices in the future. That reduction will come from fiercely competitive market share battles in the growth regions of China, India, and South America—where price is a major concern. It will also come from competition for buyers in the U.S. and Asia Pacific. The high-tech world is changing quarter to quarter and the netbook-smartbook evolution is accelerating the process.
Showing posts with label iPhone. Show all posts
Showing posts with label iPhone. Show all posts
Saturday, September 26, 2009
Sunday, September 13, 2009
A short history of consumer driven technology development
We’re in the midst of yet another evolution in communications. This one is the social networking transformation in which mobile devices are not merely used for voice and E–mail but now Internet terminals for the many social networks we all belong to. It’s yet another example of an activity that began on our desktop and notebook PCs that have migrated over to our handsets, just as text messaging and e-mail did before. And as with every disruptive social phenomenon, those trying to serve this fast moving trend have been caught unawares and are trying desperately to catch up.
In the early part of this decade, users in the 100s of millions outside the U.S.—Asia, the Pacific Rim, and Europe—began to use instant text messaging as a lower cost alternative to voice. The carriers supplied this data service in the spectrum unused for voice calls, which cost them next to nothing and for which they reaped large profits. Instant and short text messaging became its own social phenomenon, with a use model unique from voice and e-mail. The messages were likened to whispering in someone ear—especially during meetings or when you didn’t want anyone but the recipient to know what was being said. In The Philippines text-messaging, citizens-organized daily protests resulted in the ouster of Philippine President Joseph Ejercito Estrada in 2001.
While instant text messaging continued building a following in the U.S., Internet-base social networking on a PC started taking off in early 2004 with the debut of MySpace. Membership went from zero to a million users from January to February of that year and the numbers kept rising from there. Social networkers were now hanging out on MySpace with their PC, talking on their cell phone and/or texting on their cell phone. Cellular service providers in the U.S. were oblivious of the trend. They continued making it more expensive to text than talk, while in the rest of the world service providers did the opposite. Is there any wonder European cellphone users were texting more than twice as much as U.S. users (according to Forrester Research reporting in 2005)?
By mid century, U.S. service providers finally realized that data service was a viable business model. In 2005, CTIA-The Wireless Association, cited an installed base of 190 million cell phones and 90 percent could send text messages and 60 percent of those texting were aged 18 to 27. (A great many of the texters were voting for their favorites on “American Idol.”) By this time, too, the Blackberry demonstrated to telephone service providers that there was a business providing e-mail access via a mobile handset for enterprise users. But, who would want to surf the web with a mobile handset?
In January 2007, with the advent of the iPhone, the notion of providing total Internet browsing on a handset took hold. The idea wasn’t entirely foreign to service providers as they had dabbled with the notion by supplying radios you could plug into your laptop and access the Internet over the cellular infrastructure. And the Blackberry could be pressed into surfing duties, but the experience was painful and cumbersome. However, service providers had no idea of what it was going to take to keep up with millions of iPhone users accessing and moving large media files around the 3G network, something they are now reluctantly coming to terms with.
It took a year but the rest of the smart phone vendors with the service providers excluded from carrying iPhones finally caught on to how to provide web browsing and similar handset functionality—a compelling user experience. This is where service providers find themselves today, facing growing numbers of smart phone users disenchanted with the slow response from the web. And it’s only going to get worse as Apple is no doubt on the verge of introducing an iPhone with full 1080p HD video capture and playback, 20-megapixel still image capture, and no doubt higher fidelity audio capture and playback.
For wireless service providers the once the wireless spectrum is completely utilized, there is nowhere to go except to offload traffic onto the wired infrastructure. The handsets and wireless infrastructure will have to contain increased intelligence to route wireless connections so as to preserve bandwidth while still providing a responsive experience to the user. It’s conceivable that, like toll lanes on congested highways, wireless service providers will begin charging a toll for a faster browsing experience. Those unwilling to pay will be subject to operating speeds that will begin to resemble dial-up 64 kbits/s or less as large numbers of users flood the system during prime usage time.
The more things change the more they stay the same.
In the early part of this decade, users in the 100s of millions outside the U.S.—Asia, the Pacific Rim, and Europe—began to use instant text messaging as a lower cost alternative to voice. The carriers supplied this data service in the spectrum unused for voice calls, which cost them next to nothing and for which they reaped large profits. Instant and short text messaging became its own social phenomenon, with a use model unique from voice and e-mail. The messages were likened to whispering in someone ear—especially during meetings or when you didn’t want anyone but the recipient to know what was being said. In The Philippines text-messaging, citizens-organized daily protests resulted in the ouster of Philippine President Joseph Ejercito Estrada in 2001.
While instant text messaging continued building a following in the U.S., Internet-base social networking on a PC started taking off in early 2004 with the debut of MySpace. Membership went from zero to a million users from January to February of that year and the numbers kept rising from there. Social networkers were now hanging out on MySpace with their PC, talking on their cell phone and/or texting on their cell phone. Cellular service providers in the U.S. were oblivious of the trend. They continued making it more expensive to text than talk, while in the rest of the world service providers did the opposite. Is there any wonder European cellphone users were texting more than twice as much as U.S. users (according to Forrester Research reporting in 2005)?
By mid century, U.S. service providers finally realized that data service was a viable business model. In 2005, CTIA-The Wireless Association, cited an installed base of 190 million cell phones and 90 percent could send text messages and 60 percent of those texting were aged 18 to 27. (A great many of the texters were voting for their favorites on “American Idol.”) By this time, too, the Blackberry demonstrated to telephone service providers that there was a business providing e-mail access via a mobile handset for enterprise users. But, who would want to surf the web with a mobile handset?
In January 2007, with the advent of the iPhone, the notion of providing total Internet browsing on a handset took hold. The idea wasn’t entirely foreign to service providers as they had dabbled with the notion by supplying radios you could plug into your laptop and access the Internet over the cellular infrastructure. And the Blackberry could be pressed into surfing duties, but the experience was painful and cumbersome. However, service providers had no idea of what it was going to take to keep up with millions of iPhone users accessing and moving large media files around the 3G network, something they are now reluctantly coming to terms with.
It took a year but the rest of the smart phone vendors with the service providers excluded from carrying iPhones finally caught on to how to provide web browsing and similar handset functionality—a compelling user experience. This is where service providers find themselves today, facing growing numbers of smart phone users disenchanted with the slow response from the web. And it’s only going to get worse as Apple is no doubt on the verge of introducing an iPhone with full 1080p HD video capture and playback, 20-megapixel still image capture, and no doubt higher fidelity audio capture and playback.
For wireless service providers the once the wireless spectrum is completely utilized, there is nowhere to go except to offload traffic onto the wired infrastructure. The handsets and wireless infrastructure will have to contain increased intelligence to route wireless connections so as to preserve bandwidth while still providing a responsive experience to the user. It’s conceivable that, like toll lanes on congested highways, wireless service providers will begin charging a toll for a faster browsing experience. Those unwilling to pay will be subject to operating speeds that will begin to resemble dial-up 64 kbits/s or less as large numbers of users flood the system during prime usage time.
The more things change the more they stay the same.
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