Wednesday, December 31, 2008

PC OEMs: act now to answer smart tablets like the rumored iPod Touch

Whether or not you believe the rumors of the coming large-form iPod Touch, the larger story is that there's an obvious amount of pent-up demand for such a device. While I'm sure Apple delivering it would create quite a stir, it's worth noting in the Android realm, there are heavy hitters who span from vending everything from handsets to notebooks. If they weren't thinking about building a "smart tablet" before, they likely are now. And thus Apple will be compelled to as well.

This form factor is perfectly sized to slip into a purse. As I've noticed anecdotally, users of netbooks in coffee shops tend to be skewed towards the female persuasion. But smart tablets will slip into any kind of bag, so they could be popular with either gender.

So the first question in the minds of OEMs, as they choke on the margin erosion from netbooks, is "do I build one of these?" I'd propose asking the question a different way, "what if I don't build one of these?" Mostly because my instinct is that others will. Loosely paraphrasing Intel's Andy Grove, either you eat your own lunch or someone else will.

But what can an OEM do to continue the netbook/notebook momentum and keep at least some sales from being displaced by smart tablets? For starters, they might want to think about adding a video-in port which can receive video from an iPhone/iPod/Android/Windows Mobile/etc device. And/or offering smartphone companion software so that the netbook can be used as a bigger screen and real keyboard for the smartphone. That would allow for a person to keep a pocket sized smartphone and have their notebook usage model.

I would think it a good idea for netbook/notebook chipset vendors to integrate such an input port, and keep the BOM costs down for OEMs. And I think Celio is set up nicely for a CES award.

Disclosure: no positions

Monday, December 29, 2008

ARM specs in the wheel-house of Intel Atom

With all the buzz in the netbook space, Qualcomm(QCOM)'s November announcement may have gotten lost, the one for its QSD8672 1.5GHz dual-CPU Snapdragon single-chip solution. Why this announcement is particularly noteworthy is that it's the first ARM(ARMH)-based solution for netbooks which has comparable specs to Intel(INTC) Atom chipsets, and for some features arguably better.

While the current Qualcomm Snapdragon generation runs at 1GHz, the newly announced chipset is a dual-CPU 1.5GHz single-chip solution, manufactured at 45nm by TSMC(TSM). Those are specs that bring the ARM architecture well into the Intel Atom wheel-house, albeit with better battery life and a highly integrated single chip solution.

The new Qualcomm chipsets will start sampling by 2H2009. In the mean time, various vendors are building netbooks with the current 1GHz Snapdragon generation, with products expected 1H2009. Following are some of the specs of the announced QSD8672:
  • Processor: 1.5GHz dual-CPU (45nm)
  • Wireless: GPS, Bluetooth, WiFi, 3G
  • HD video: 1080p recording and playback
  • mobile TV: MediaFLO, DVB-H and ISDB-T
  • graphics: Integrated 2D and 3D
  • displays: resolutions up to WSXGA (1440 x 900), sizes from 9 to 12 inches
  • Supported OS: Linux and Windows Mobile
We'll see how their offerings stack up as current generation Snapdragon netbooks roll out. But the specs game is on. As the netbook market grows, who will be the next ARM-based vendor to compete on GHz or multiple cores? Will it be the TI(TXN) OMAP, the NVIDIA(NVDA) Tegra, or maybe the Freescale(FSL) i.MX? Or Apple(AAPL) with their PA Semi acquisition?

Of note, Qualcomm previously promised a "big presence in Snapdragon-based devices at CES 2009".

Disclosure: no positions

Tuesday, December 23, 2008

Apple's iPhone sales to get bruised by Android in 2009

Apple has done phenomenally well so far with iPhone. They've built a smartphone sensation, application store and developer community based on absolute control. It's a veritable fortress of a business model. But as goes an old Korean proverb:
"Power lasts 10 years, influence, not more than a hundred."
Nothing lasts. And Google's Android has all the "ducks in a row" to change the order of things in 2009. My thesis is that Apple's bent on control is just the reason iPhone's ascent will falter. A quick examination of one of the top requested features on iPhone, and a little contrasting with the Android platform will expose Apple's addiction to control.

Viewing Adobe Flash while browsing the Web

The three top run-time environments for PCs are Flash, Java and Silverlight. None of them are available on iPhone. Flash is by far the most pervasive on the web, reaching 99% of Internet viewers. While Steve Jobs has previously said Flash video was not suitable for iPhone, Adobe happily ported Flash (and it's run-from-local counterpart, AIR) to Windows Mobile, Android, and Symbian platforms. It's pretty commonly held that Apple is intentionally blocking run-time environments on iPhone, not because of technical issues. But, because run-times cede control away from Apple's app store and the iTunes franchise. If you can download games and other programs from the web, then why do you need to go through Apple? And so iPhone users will go without the same browsing experience they do on their PC. Flash is an Inconvenient Truth for Apple.

Turn-by-turn maps

There are a number of other examples of Apple's control addiction which have resulted in deprecated user experience, and open doors for Android. For example, turn-by-turn maps. Apple reportedly disallows such apps from populating the iPhone app store, I could only guess while they work out a deal with one of the mapping companies. The Android community by contrast has recently received a free turn-by-turn app, by the ad-sponsored and nascent AndNav2.

Other form factors (netbooks)

If you'd like a big brother netbook to your iPhone, you'll have to wait. Steve Jobs has gone so far as to describe the netbook market as "nascent". That's an interesting comment considering netbooks are now more popular than the iPhone! Of course, there appear to be a number of companies working on Android netbooks for mid 2009. It's also worth noting some power hitters recently joined the Open Handset Alliance.

Scale and business model

Apple is but one company with a business model built on a premium brand and control. Android and the Open Handset Alliance represent a large number of heavy hitters, who can tap enormous economies of scale. And yet Google has caché. So chic, yet open devices can be commoditized and customized and can deliver what consumers ask for. Google does not need to exact a premium on smartphones, netbooks, etc. In fact the cheaper they are the better; more Android devices means more mobile search, LBS opportunities, etc. And that's how Google wins. Unfortunately for other players, due to peak phone, this is a zero-sum game.

Disclosure: no positions

Projecting your mobile device, built-in miniature projectors

Want to show a presentation from your mobile device, but don't want to lug your notebook? Or shares some photos or videos with your friends? While you might not expect projection to be possible from a handset device, companies such as Texas Instruments are enabling just that.

TI's DLP Pico projection demonstrated in 2007, appears directed towards an interesting market with its DLP mobile chipset. According to Pacific Media Associates:
“Texas Instruments is making headway in an untapped market and appears to be forging a leadership position. We expect projection within handset devices to start appearing in 2009, in a market where significant volumes are expected over the next five years.”
Projection would be a interesting feature on mobile devices sold to the corporate world. I would think that would be a logical initial market which could absorb the extra costs associated with any newly added premium feature. But there is great follow-through potential in the consumer markets, on handsets and mobile computers alike.

Along with projection integrated into multi-function mobile devices, the market for pocket projectors has arrived. Battery life, typically the bane of one's mobile life, will be a critical element of the success of these products. Or perhaps people will capitulate and carry a small AC adapter with them.

In any case, this is a great space to watch.


Disclosure: no positions

Sunday, December 21, 2008

Windows XP deadline to drive used PC market, low costs PCs

Don't give away your old PC just yet if it has a valid copy of XP. While Microsoft has largely put a hard time cap on XP sales, low-cost PCs and netbooks seem to be exempt until June 30, 2010. It's been no secret that Vista has not been well-received by either business or consumer. And it's successor, Windows 7, is not reported to be ready until late 2009 or 2010.

If the thesis is correct that this pent up demand will seek computers with XP, then certainly purchasers will chase exempt low-cost PCs and netbooks. But that's a trend that's largely been ongoing, along with the attendant rise in Linux as an offered operating system.

What's interesting is that the same pent up demand, will also largely boost the whole used PC sales and service ecosystem. The computer repair firm Rescuecom, for example, is a company which has resold XP-based PCs. Those genuine Windows XP certificates of authenticity (COA) could become a new form of currency. It's worth having a look at opportunities in this space. Microsoft has indirectly created an interesting "grey market" for some time to come.

Disclosure: no positions

Methane meltdown, global warming will accelerate

The most brief way to synthesize progress in World governmental climate change policy is to quote an NGO representative attending the recent United Nations Framework Convention on Climate Change (UNFCCC):
We can now expect only procedural movement out of Poznan, with almost no progress on substance.
Most governmental efforts (especially those with a number of players involved) in climate change read something like "we'll start in a few years from now, and do what we should have done years ago by 2050." Players clamor on about the financial impacts. Questions are asked about who will finance such efforts. Goals are watered down and dates are pushed back.

Yet Global Warming has hit a critical threshold which has made even some thought leaders in the space wonder if it's still reversible. Troubling new signs of a collapse are occurring, beyond the periodic reports of large disappearing swaths of ice. Now, boosted by increasing temperatures, frozen methane is thawing. Note that the further from the equator, the more extreme warming has become:

"Springtime air temperatures on the East Siberian Arctic shelf [have] increased up to 5 degrees Celsius [9 degrees Fahrenheit]," Semiletov said. "It's a hot spot."

In comparison, the world as a whole has warmed about 1.25 degrees Fahrenheit (0.7 degrees Celsius) since pre-industrial times.

Why do we care about methane? For one, it's about 21 times more potent a greenhouse gas than CO2. And there's a lot of it in a frozen state in areas which have crossed or are near a threshold temperature. As well, there are other greenhouse gases we need to worry about, including Nitrogen trifluoride (NF3), which ironically results from the manufacturing of thin-film photovoltaic cells. NF3 is 17,000 times more potent a greenhouse gas than CO2!

The short story -- Global Warming is here and there's nothing on the horizon which will remotely stop it's spiraling effects. This will have tremendous implications which will drive many new trends which should not be ignored. Examples of affected areas and trends would be:
  • insurance industry
  • travel
  • renewable energy
  • carbon credits and trading
  • carbon footprint based taxes
  • floods
  • heat-waves
  • droughts
  • food and water shortages
  • agricultural
  • volatility in nearly all markets
  • weather derivatives
  • migration of population
  • multi-national tension and conflict
For a window into the future, look at the island nations which live close to sea level. Indonesia is preparing to do mass relocation due to rising sea levels over the next three decades. Even worse, in the same time frame, "Island countries like Saint Lucia, Fiji and the Bahamas would likely disappear". Get prepared for the new trends. Volatility and crisis will be part of life going forward.

Disclosure: no positions

Saturday, December 20, 2008

"Peak Phone" nearing, transition from handset to smartphone to smartbook

According to reports from Nokia, IDC, and iSuppli, the mobile phone market will shrink in 2009. Shipments aren't predicted to surpass the levels of 2008 until 2011, according to iSuppli. This phenomena has occurred only once before in 2001, year of the tech bubble bursting. This change can't be assigned only to an economic slowdown. With a current world handset market of 1.22 billion per year and an estimated 6.7 billion world population, the mobile phone market is becoming saturated.

Going forward, attracting customers to replace mobile phones is key, and requires more capable and feature-rich phones. This will accelerate the trend towards smartphones, which have the capacity to offer users more and more of the Internet and media experiences that PCs are currently used for.

Smartphones which can utilize the display of TVs and other devices, may further supplant some of the usage (or need) for PCs. Also as consumers familiarize with the UI and environments of smartphones, the door is opened for the migration of smartphone environments to larger devices, for example netbooks. Google's Android is poised to be a strong contender in this latter trend, already having a basic x86 netbook port and picking up many new power-hitter members in it's Open Handset Alliance. Note that some of these players manufacture PCs.

Look for a transition from the shrink wrapped software model to the online app-store model, exemplified by the iPhone app store or Android market. A smartphone alone, or a smartphone plus netbook will become more the focus of our computer lifestyles. Some new consumers will enter the trend, never buying a PC in the conventional sense.

While 3G and more advanced data services help smartphones gain traction as tomorrow's computing device, WiFi has enabled smartphones to be a first class computing citizen. WiFi usage from smartphones has increased sharply and will continue to do so. Look for WiFi support on lots of electronic devices.

The transition from handset to smartphone is obvious, but how many of the related vendors are paying attention to the smartphone to smartbook transition and relationship? I believe answering that will be an indicator of who floats to the top.

Disclosure: no positions

Wednesday, December 17, 2008

Netbooks are a usage-model, not defined by size and capabilities

Thus far, netbooks have been defined largely by the artificial market segmentation restrictions put on them by hardware and software vendors, as a way to prevent cannibalization of more premium SKU chips and software. The media has been quick to pick up these restrictions and regurgitate them as a defacto definition of netbooks, without thinking about what a netbook really is.

We've all heard netbook characterizations such as, clamshell notebooks with a 7 - 10.2-inch screen that is "purpose built for Internet use". Or, is a small, low-cost, mobile computing device designed for consuming content, rather than creating new content. Those characterizations may be good for segmenting lower-end chips and software into platforms, so as to short-term stave off some cannibalization. But let's first talk about the usage model of a netbook, which is a much better place to start for a definition, and then look where things are quickly headed.

A simple way to say it, is that a netbook is a notebook geared towards a more network and media oriented usage. To come at it a different way, the applications and data it works with are less tied to locality of the platform, but rather more to the "cloud". This has not precluded localized data and apps in current netbooks. However, the gist is that a netbook is a shift from the traditional notebook model, towards the cloud. Taking this to the extreme, where a device operates exclusively in a cloud-centric way, we may call future devices "cloud books".

What does size have to do with it? Nothing. That's a segmentation restriction. And as far as only consuming media content, that's another soon-to-be-short-lived artifact of marketeering. Today for example, Nvidia announced a new graphics chipset for Atom platforms which for a $50 premium over current netbook prices, will run Vista Premium (and Win7) and has smoking (10x) faster graphics than the Intel counterpart. It's also powerful enough to offer video transcoding. This certainly brings netbooks into the realm of content creation.

Via, who's tiny processor x86 called Nano, has no reported netbook restrictions. Nor are restrictions reported for the ARM based TI OMAP, Nvidia Tegra or Qualcomm Snapdragon lines, all of which can handle HD video and 3D graphics. And certainly on the software side, Linux doesn't restrict what platform it runs on. Think, for example Android and its trajectory from smartphones to netbooks.

It's worth noting that it will take 2 years for Intel to catch up to ARM on power consumption, according to Pat Gelsinger. What this will likely mean is that in 2009, ARM netbooks will operate in an always on, all-day-computing fashion while x86 netbooks will need to be powered down or suspended. In the true sense of the netbook usage model, this means ARM may enjoy an advantage over x86 throughout all of 2009. While x86 netbooks will remain attractive to those who desire the more conventional XP/Win7 usage.

2009 is shaping up to be the year of the netbook. But with such fierce competition from both the hardware and software space, netbook features will be driven by consumer demand and usage. And most certainly not by artificial vendor restrictions. Lest one heck of a lot of business be lost. Look for this to add pressure to the bottom lines and margins of vendors who do not adapt accordingly, and to benefit those who grab the opportunity.

Disclosure: no positions

Sunday, December 14, 2008

Netbook sales projections are way low!

According to the latest IDC projections, projected netbook sales will be 21.5 million in 2009. Now that is what I call conservative! If you're basing your business on projections, I strongly advise you do your own diligence here. Quick reality checks:

According to DisplaySearch, 5.6M netbooks were sold in Q3'08 alone (outpacing iPhone). I'm certain Q4'08 will be much higher but that's a yearly run-rate of 22.4M, and netbook sales are going exponential. A quick check on Amazon showed that all top-10 entries on the best-seller list for notebooks were netbooks/mini-laptops! They're cheap, and are substitutes for notebooks, especially when the World is getting hammered by a recession.

Looking forward, ARM netbooks will debut mid next year, likely with Android. And some with Ubuntu. Those aren't even factored in. Additionally, the European model of subsidizing netbooks with a wireless service plan has entered the US market, and will likely enter others, driving even faster adoption.

And did I mention educational Linux pickup? By the end of 2009, 52 million students in Brazil. Every school in Russia. And it just keeps going on. Could be 100 million new Linux users by end of 2009. I'm thinking a lot of them are going to have a netbook...

If you're still not a netbook believer, dumpster dive the Marvell Technology Group F3Q09 Earnings Call transcript:

Over the last year or so, we have witnessed the emergence of the net book market place. We see these devices as early examples of a larger trend, which offers Marvell a high-volume market opportunity.

[...]

In our view, the potential to develop a converged mobile product, which would sell between US$100.00 to US$200.00 is only less than 12 months away. At this price point, we believe consumers within emerging markets will drive significant volumes far in excess of the current notebook PC market and likely equal a greater volume than smart phone markets.
Adding to the fire, I've seen a trend in blog reports of people dumping their big notebook computers, and using something smaller like a netbook, or just their smartphone. If anything, the combination of World recession, emerging markets, and educational Linux pick-up will accelerate netbooks sales. It would not surprise me to see IDC off by 50% on 2009 netbook sales.

Disclosure: no positions

No MIDdle ground: lack of Moore's law for pocket size

The press is abuzz with talk about smartphones vs MIDs vs netbooks. Some analysts are forecasting huge volumes going forward for MIDs. Let's step back for a moment and do a quick reality check.

The "form factor" of a pants pocket has not changed considerably, since the inception of a pocket, which probably started as an external pouch hung from the waist. If anything, it's generally gotten smaller as pants have become tighter and more stylish. Or as I like to joke, "there's no Moore's law of pocket size!" At the same time, smartphone UIs have enabled us to do more with the same physical form factor. For examples, using more of the façade for display area, flip-out (or virtual-only) keyboards, multi-touch and momentum scrolling allow a much more rich experience, and thus those devices serve more of our needs for more of the time.

On the tech side, Moore's law is alive and well. Looking in the ARM space (given iPhone and Android are currently ARM based), SoCs are getting some real oomph. Nvidia's Tegra line for example, runs in the 700 .. 800MHz range, decodes HD video, and supports OpenGL 2.0 2D/3D. TI OMAP and Qualcomm Snapdragon are promising SoCs as well. If needed, ARM's future Cortex A9 architecture supports up to 4 cores.

If newer Android phones look anything like the concept pics of the G2 (it's gorgeous, uses more of the surface area for display, higher resolution, 3D, etc), we're headed for a time when more of our mobile lives will be served by our smartphones. You can game on them, browse the web, store reams of pics, files, and even HD clips or entire videos. When we get to the point we want to utilize a bigger display/keyboard, then my contention is we'll use something big enough to matter. Like for examples, a netbook/notebook/PC/TV. Or a smartphone terminal.

MIDs are not big enough to make that transition matter. And they're too damn small to fit in a standard pocket. So what I see happening is that the concept of a MID and a smartphone will fuse together in the minds of the press. Everybody will declare victory... "see, tons of MIDs sold, they're called Android/iPhones." But the physical form-factor will be a smartphone.

Disclosure: no positions

Saturday, December 13, 2008

Smartphone companion instead of netbooks, no syncing or extra data security worries!

Netbooks have a usage model consistent with the latest smartphones, except they have bigger screens and near full-size keyboards. And looking forward, smartphones will offer compute power necessary to deliver a full Internet experience, with storage densities sufficient to hold the files you need for your mobile life.

So going forward, do we maintain redundant wireless services for both a smartphone and a netbook (or at least pay additional for tethering)? How do we maintain syncing data on both these devices and our home/work PC? What about syncing all environments with the same apps? Do critical apps exist on all environments? What about app configuration?

One solution to this syncing hell, is provided by the smartphone companion concept, which is essentially a netbook form factor which does nothing but act as a smartphone terminal. For example, Celio offers the REDFLY which currently interfaces with Windows Mobile devices, via USB or bluetooth. Celio was a CES 2008 Innovations Awards Design and Engineering award honoree, and will be at the upcoming CES 2009, so they're worth watching. According to their CEO, Kirt Bailey (previously of Intel Capital, mobility markets), REDFLY has game in the enterprise saving the cost of purchasing a notebook, and also the ROI involved with managing and administering the devices (estimated roughly at $4100/year each). Additionally, REDFLY does not store any user data, so the display may be lost or shared between users without security concerns.

I was initially curious how well behaved smartphone apps are w.r.t. resizing of the display screen resolution. But I noticed in this review that "most applications automatically up-scaled from the phone's 320x240 pixel screen to Redfly's native 800x480 pixel widescreen resolution". It makes sense that with portrait vs landscape, and differing resolutions across a variety of devices, that most apps are trained to support multiple resolutions.

Perhaps devices like these will first make their mark in the enterprise world based on a clear ROI and security story (icing on the cake -- remote Windows desktop on the iPhone), and then be popularized in the consumer market based on convenience and lightness. But in the developing nations, where consumers may skip owning a home PC altogether, this is a very interesting proposition.

Here's to hoping we'll see support for Android and iPhone platforms. CES '09?

Disclosure: no positions

Sunday, December 7, 2008

Android Market already offers 25% as many apps as iPhone store (imputed math)

There are approximately 500 apps available on the Android Market currently. In consummate Google style, the Android Market is in beta, and only offers free apps. If we were to impute the number of apps that would be available if paid apps were also included, using the same ratio of free/paid on the Apple iPhone app store (about 1/5 of apps are free), then Android Market offers the equivalent of ~2,500 iPhone apps. That's already 25% of the 10,000 apps that Apple offers!

Disclosure: no positions