Godzilla vs Reptilicus? Clash of titans: Netbooks vs Smartphones, the preview

Pick your gigarivals of choice. Godzilla vs Reptilicus? Alien vs Predator? Spiderman vs Batman? Kirk vs Picard? Venus vs Serena? Coke vs Pepsi? We will be witnessing a classic clash of true titans over the next few years, between the shrinking personal computer and the ever-smarter mobile phone. Lets handicap that contest.

IN THIS CORNER HEAVYWEIGHT CHAMP

The undefeated heavy-weight champion, the Personal ''PC" Computer. At 33 years of age, the PC comes in after decades of a steady diet and weight-loss regimen and features superfast processors, enough of a hard drive to fit the text from all the books in the Library of Congress, and so much memory to run even Windows Vista. With a full QWERTY keyboard and a mouse, and big 10 inch TFT display the PC is fast at its inputs and outputs. Taking lessons from the mobile phone, the netbook has wireless and mobile connectivity from WiFi and WiMax to 3G and 3.5G for broadband speeds. The heavyweight champion has been dieting and enters the fight weighing only 2.6 pounds (1.4 kg)

The PC has an undefeated record and in its illustrious career the heavy-weight champion has crushed the stand-alone typewriter, the desktop calculator, the filing cabinet, the encyclopedia, the desktop calendar, the yellow pages, the atlas; and in a tag-team doubles match, with the scanner and printer, has also crushed the stand-alone photocopier and fax machine. In its latest bouts it met up with the television and newspaper, and at the time of this edition going to print, the two were out for the count, no doubt the PC will emerge victorious against also the TV and newspaper.

IN THIS CORNER FEATHERWEIGHT CHAMP

The undefeated featherweight champion, the Cellular "Mobile Phone" Phone. At 30 years of age the mobile phone steps into the ring slightly younger but also weathered veteran of bruising battles in the digital space. The mobile phone has been bulking up with abilities and capabilities to exceed the wildest dreams of superspies and joins the clash in full smartphone form, with not just one inbuilt camera but two, for that special someone, one person in a million, who actually makes 3G video calls. The mobile phone has studied the laptop and bulked up from a puny keypad to full QWERTY keyboard and then adding a touch-screen. To compensate for no mouse, the smartphone has learned to take inputs via 2D barcodes. The smartphone has picked up abilities recently to gather contextual data from the networks, in location-based data. While never having a huge display for its featherweight size, the mobile has grown its screen and new measures a full 3 inches. To add versatility, the phone offers real time screen orientation and augmented reality overlays as well as live camera feeds for megapixel microscopy (what in layman's terms could be called a magnifying glass). Also dieting a lot over the past three decades, the mobile phone now enters the the match at 4.5 ounces (130 grams).

The mobile phone brings an undefeated record against the stand-alone PDA, the digital camera, the wristwatch, the pocket calculator, the landline phone, the alarm clock, the pocket calendar, the MP3 player, the address book and the white pages and portable maps. Its latest bout was with the compass, which according to all early reports was also decided by knock-out.

PREVIOUS MATCHUP

The amazing thing is that in their full professional fighting careers, the two world champions have never met up face-to-face before in a championship bout. In some junior series they have met, briefly, when a Blackberry took on emailing use of tethered laptops early in this decade, and more recently when an iPhone took on web surfing on WiFi enabled notebooks but neither contest was decisive. This no-holds barred death-match between undefeated world champions PC and mobile phone has been anticipated with great excitement for many years already.

MATCH

The battle between the netbook and the smartphone is about to commence and will last the full 12 rounds in other words up to the end of 2020, unless ended by knock-out by either contender prior to that.

ODDSMAKERS

Vegas oddsmakers in America feel the PC is the front-runner and give the netbook the odds to win. Meanwhile Monaco betting in Europe is firmly on the side of the smartphone, and European betting is heavily in favor of the mobile phone. Macau betting in Asia is almost even. The match will be an epic battle and could go either way.

TOMI AHONEN HANDICAPPING

We have received exclusive handicapping of the upcoming bout by famed author in digital convergence, Tomi T Ahonen, who has previously followed closely the careers of both champions and written extensively about them. Mr Ahonen gives us his inside scoop on the upcoming bout.

The PC has to come out swinging. It will take the fight directly to the smartphone, and attempt to approach the compactness of the smartphone, and achieve the same level of mobility in a small portable and dare I say it, sexy casing of the most desirable smartphones, while adding the richness of the PC applications and web surfing experiences. With a 3G dongle in addition to WiFi, the netbook will become a formidable opponent in its broadband connectivity. By adding Skype, the netbook has neutralized much of the mobile phone's inherent advantage of voice communications. And with a comfortable large keyboard and mouse, the netbook can deliver volleys of Twitter updates in an attempt to overwhelm the smartphone.

The mobile phone will rely on its mobility and pocketability to go where the netbook cannot go, from the bathroom to the disco, cinema and even climb right into the bed, to deliver that last SMS text message of the night. The mobile will use innovation and creativity and compact features to match the sheer power of the netbook, such as the camera also used as 2D barcode reader, to bypass some keyboard entry in web surfing, and adding real-time context based information in augmented reality. Its recent addition of money-payment skills will come in handy to conjure up new virtual money plans to use revenue streams to pick up points from the judging.

These are top top-notch, disciplined, highly trained and prepared contestants, with an illustrious legacy of defeating long-standing champions. The office typewriter and desktop calculator (PC) and the landline phone and the wristwatch (mobile phone) have been iconic champions ruling their domains for more than a hundred years each, yet defeated easily by these two champions. Do not under-estimate either one of them. They are formidable.

HOW IS YOUR REACH?

But I do think it does come down to one decisive item in the smartphone's arsenal that the netbook simply cannot match, and it is something we've coined the term "Reachability" (from the Finnish "tavoitettavuus"). The most powerful need for humans is not to be entertained, nor to be informed. It is not either to compute, The most powerful need for us humans is to communicate. That is why we carry the phone with us every day, 24 hours a day, literally taking it to the bathroom with us, and we do sleep with the phone in bed with us, but not with the laptop. To communicate.

With netbooks there are ever more powerful means to initiate communications. We can skype, we can email, we can Twitter, and depending on the 3G contract on the netbook, we can also send SMS text messages straight from the netbook. In the netbook format, the PC is catching up to the abilities of the mobile phone and may well be as good or perhaps in some cases even better at initiating communciations. Initiating communications.

But the PC falls completely in the ability to receive communcations by others in real time. Even in a netbook format, the PC will need to be on, connected, and physically open, to receive Skype calls or Facebook updates or to view a picture sent by a friend. It cannot deliver our calls and messages while we walk on the sidewalk, stand in line at the Starbucks, rush on the platform from one train to the other to make our connection. The phone can always deliver in real time, because it features reachability.

That is why the original Blackberry email was so addictive in America they called the device the "Crackberry". And then for exactly the same reasons, reachability, the rest of the world did not fall for email on the Blackberry, because by then the rest of the world had discovered SMS text messaging, something even more rapid and addictive, the "hard drug" if you will, as SMS is even more dependent on the element of reachability. Once Blackberry adjusted to become the texting-phone of choice, it found even bigger success among SMS users. Reachability is why mobile phones replace the fixed landline. We don't answer the family landline phone, because we know the call is not for me. My friends know to call me on my mobile phone. Reachability.

SERIOUSLY

Ok, enough with the supermatch. I'll take Godzilla. The netbook market is a vitally important market for the existing PC industry. It is the big frontier where the next generation of PC winners and losers will be made. There will be a long-lasting major market for the personal computer and it will have many uses where it totally trumps the best of smartphones. The PC is not going away. I have created a metaphor of 30 minutes/30 secondsto explain the different market needs, the PC serves a "30 minute" need while the mobile phone serves a "30 second" need. These two have very little overlap.

Understand what I wrote about in Reachability. While a netbook can do much the same as a smartphone, the netbook cannot replicate reachability. That means, that the netbook is a 'nice to have' device while a mobile phone is clearly today a 'must have' device. The more the smartphone can cram abilities into it, the more it will also own those activities.

All economically viable people on the planet have a mobile phone (4.2 billion subscriptions today). Many of them, but not all, will want some kind of "computing ability", which more today than ever, means some form of "internet access" which can be very basic WAP access. Some may use a netbook, laptop or other PC to do their web surfing, but increasingly as smartphones get better, many will be happy with their smartphones to do the web surfing ("computing") they want.

POCKET TEST

Remember McGuire's Law, the utility of any activity increases with its mobility. A laptop PC is more portable (more "mobile") than a desktop. A notebook fits a smaller briefcase and weighs less, is more portable than a laptop. Now ultra-tiny netbooks are even more portable. But a phone is more portable still. All modern mobile phones, even the "near-brick sized" E90 Communciator from Nokia, fit the pocket. The netbooks do not.

So if you have the ultimate greatest perfect does-absolutely-everything you ever wanted, in a netbook, but it does not fit the pocket, it won't replace the mobile phone. When you go clubbing or to the restaurant or to the sporting event or wherever, the phone must fit the pocket. If it is too big to fit into your pocket, it won't replace the phone. It is an additional gadget, inherently, not a replacement gadget.

Now bring back reachability. If we are limited to only one device that we'll take along, it will be the phone, and any additional functionality that happens to be built-into the phone. Because of reachability, if its only one thing we pocket, it will be the phone.

RINGING IN POCKET TEST

So what if it truly merges into the exact same device? A laptop-notebook-netbook-ultra-ultra-compact tiny keys pocketbook? ie the next generation "pocket PC" or any such "palmtop" form factor full-functioning PC first explored successfully by Hewlett-Packard about 20 years ago with their classic LX-100 series? This is of course quite possible.

Then I'd say the ultimate test of "is it really a phone or is it only a tiny PC" is "does it ring in the pocket". So when it is in its closed state (perhaps in sleep mode), will it still be able to receive calls (and incoming SMS messages) and ring the alarm. If  the tiny PC in your pocket really rings when someone calls you, and you then are able to take it from your pocket and take that call (or not); then yes, its a phone. Else it is a pocket-sized PC, and we've had those for more than 20 years now to tiny market success. They are now called stand-alone PDAs and their annual sales linger in the 4 million units per year when.

What is then the impact? I say the smartphone "wins". In the longer run, during the next decade, the pocketable super-smart convergence device will succeed in mass markets if it is based on a phone metaphor (ringing in pocket test) and not succeed in anywhere near that scale if it is merely a tiny PC (non-phone) netbook. It has to pass the ringing in the pocket test. If it does that, it is a phone. It not, it is a tiny PC. Lets examine these two.

REGARDLESS, NETBOOKS WILL DO WELL

The Tiny PC type of netbook is an attractive option for many reasons. It is more portable (remember McGuire's Law) so we can take it with us more often than larger PCs. The netbook is lighter, fits better, because its screen is smaller, it needs far less battery power (biggest power hog of the laptop is the screen) and with scale, it can be mass-produced to large numbers, helping push down the price. Many of the installed base of 1.2 Billion PCs in the world need to be replaced.

Don't think it will be total shift to netbooks. The laptop PC was introduced by Toshiba in 1985. It took the laptop and all portable PC types (netbooks and notebooks too) a turtle-crawling speed of 23 years, to reach just slightly greater sales annually than desktop PCs. Yes, 2008 was the first year when more laptop format PCs were sold than desktop PCs, and it took all portable PCs to achieve that for laptops, counting laptops, notebooks and netbooks to just edge out the desktop PC format. 23 years of chasing the desktop PC.

Some existing desktop PCs will never go mobile. Imagine a corporate user, with a calling center with 500 agents at a cubicle farm, with desktop PCs with flat screen monitors, reading their customer-service scripts on their PCs, and speaking on Skype-enabled headsets serving customers. That calling center operator will want absolute max optimized costs, and has zero added value from mobility of the computer. The calling center operator would not want to let workers roam around the town supposedly working, from smartphones with tiny screens. The desktop metaphor is perfectly suited for the calling center operator, and no matter how wonderful the next E-Series or Samsung or LG or Blackberry of iPhone 4G might be, they will not replace their desktops, not even with laptops or ultra-super-cheap netbooks.

In rough numbers the world sells about 150 million desktop PCs annually and the installed base is in very rough terms about 750 million desktop PCs in use today. Maybe half of them might migrate to portable computers? and perhaps a majority of those portable computers will go to netbooks eventually?

Not all. Many laptops need to be big. The netbook evolved partly from the ideas of an ultra-cheap laptop for the developing world. But many who have laptops for work needs, for example travelling salesmen who make customer presentations daily to small audiences in conference rooms using the 14" screen of their laptop, will not want a 10" or smaller screen of a subnotebook sized netbook. Others want the laptop as a multi-purpose multimedia device, to edit photographs and videos, to watch DVDs and play videogames. For them too, a larger screen is desirable. So not all will go to netbooks.

Very roughly speaking, about 150 million laptop PCs will be sold and this year about 20 million of them will be netbooks. The installed base of laptop PCs globally is about 450 million (netbooks under 25 million end of last year).

SHIFTS TO AND FROM SMARTPHONE

There is a growing shift of existing PC users shifting to smarphones. We first saw it with the Blackberry and early Nokia Communciator models at the start of the decade with a trickle of email users abandoning laptops; and its now been a more pronounced stream of converts with the iPhone recently. Obviously nowhere near even a majority of their users, there nonetheless is an undeniable trend of some existing laptop users shifting to high-end smartphones for all their "computing needs" (usually that means internet access needs) This trend will accelerate as the distinctions between a "real PC" ie netbook and "very smart" smartphone (think next year's iPhone or Blackberry, or Nokia's follower to N97 and E90). As the devices become ever more similar, the shift-over becomes ever more appealing.

Mostly those who would consider this choice - you reading this blog for example - are the wealthy part of the industrialized world, where we are lucky enough to be one of the 1.2 billion people who have a PC. For PC users in the industrialized world this is a question of choice, and also needs to consider the old PC, is it "good enough" for web surfing for another year. Would I need to re-install (perhaps re-purchase) the various software apps we've installed onto the existing PC, from Windows to the office suite to the anti-virus software etc. The phone is replaced about every year and gets ever more powerful. Maybe I'll make do with the existing PC if the new smartphone is "just good enough" to do my Twitter updates and check on CNN news and watch YouTube..

We are in the minority of the digital divide. There are 3 billion more people out there who do have a mobile phone subscription, but who do not own a PC of any kind. Most in the developing world do not even have this choice.

But please understand, it is not the only shift. There is an opposing shift too from phones to PCs. These users will not stop using their phones (for browsing etc) but may want to expand their web or computing use to a "real" PC. There are current mobile phone owners, of feature-phones or smartphones, who don't own any kind of PC, who wish to have a real PC (notebook or netbook). They currently are doing their surfing on their phone, and they perhaps also use a PC at an internet cafe or at school or with friends, and they aspire to own a netbook sometime soon. And among the middle-class in the developing world, this is a significant new market niche. So there is a reverse trend as well. Very roughly speaking, these two will cancel each other out, but my gut says the PC-to-smartphone trend will become bigger. However, considering the math involved, in the big picture, it really won't matter which off-setting trend is marginally bigger than the other. These two roughly cancel each other out.

NETBOOK MARKET SIZE

The total market for PCs may grow somewhat from the 1.2 billion in use today, to maybe 1.5 billion by the middle of the next decade. It won't reach 2 billion. And the replacement cycles for PCs have been relatively stable at 3.5 years on average so we can expect a top end annual market size of at best 400-450 million PCs sold annually, at the end of the decade.

Still, of those personal computers under perfect conditions by 2020. perhaps 300 million netbooks can be sold annually, towards the end of the new decade. That is the rosy scenario, remembering they sell about 20 million netbooks this year says Gartner. Netbooks may well never sell more than 100 million units per year. The 300 million is very very optimistic, but it is plausible. (for those more econometrically inclined, note that this means sustained annual growth rates of 28% per annum, for 11 years in a row. Reality is most likely only half this rate, sustained over more than a decade, for an industry as mature as the PC industry)

But again, I want to be clear, I do believe in a strong robust market growth opportunity for netbooks to reach into quite possibly hundreds of millions of netbooks sold per year, towards the end of the upcoming decade.

SMARTPHONE MARKET

Meanwhile, the smartphone market last year was also very roughly speaking about 150 million units sold. This year smartphone sales are growing strongly inspite of the economic downturn, will be near 200 million (but very unlikely to pass 200 M this year.). The mobile phone industry has a long history of migration patterns as the phones have picked up new abilities. These  show a perfect S-Curve, just like the shift from 1G (analog early cellphones) to 2G (GSM/CDMA etc) digital mobile phones did in the 1980s (a shift that has reached  100%).

Then we saw the S-curve pattern for SMS capable phones (up to 100% already), then in this decade several early innovations: WAP capable phones (already past 90%), then color screen capable phones (past 80%), then MMS capable phones (past 70%) then cameraphones (past 70%). All follow the same adoption pattern. Smartphones are on a similar pattern and will eventually form the majority of all phones sold in the world, the pattern is obvious and undeniable. We cannot say for certainty, if all phones will become smartphones; but certainly more than half will be, that much is clear from the numbers so far. So, roughly speaking, we'll pass 250 million smartphones sold annually in 2010, 300 million in 2011 and pass 400 million sold annually no later than 2013.

Last year, 2008, was the first year that more smartphones were sold than laptop PCs. In less than four years from now, more smartphones will be sold than all PCs sold, including all desktops, laptops, notebooks and netbooks.

Understand the scale. Netbooks are far smaller in size, their total addressable market is smaller, their adoption ceiling is far lower and they will never ever ever catch up with smartphones. Smartphones are bigger already, growing faster and with a far far far greater accessable market size.

WHO NEEDS WHOM

Lets think a bit. The PC industry has to go where their customers want them to go, to ever more mobile devices. The netbook is a natural evolution for the computer, ever smaller, ever lighter, ever more portable, ever more compact, ever more stuffed with abilities, and ever cheaper.

The phone makers have many options. Go the smartphone route is one option, which is currently very popular, or the featurephone route (SonyEricsson has been taking a beating at that option recently, with Walkman musicphones and Cybershot cameraphones) or the low-cost phones option (you need scale, so this is only for the big 5) or up the value chain to services and apps (think Apps Store). The phone makers don't need to bother with netbooks, their smartphones are close enough and have that key competitive advantage, Reachability, guaranteeing them the victory in the long run vs (non-phone) netbooks.

ONE DOLLAR PC

Ok, a couple of other thoughts. Some will say, but Tomi, the PC makers now offer deals with mobile operators/carriers to sell one dollar netbooks (with 2 year annual contracts). No difference. It is the same price for the netbook, hidden in the price of a 2 year contract. The subsidised netbook is not a one dollar PC, any more than the iPhone 3GS in America is not a 200 dollar smartphone (its real unsubsidised cost is about 700 dollars which every AT&T customer ends up paying, over the life of the contract. There is no free lunch. In other countries like Italy they pay the full unsubsidied price for the iPhone).

There is absolutely no difference in the concept, to buying a gadget from an electronics store with a monthly payments plan, or to putting the full price on a credit card and paying that off in two years.

But please do not think that pattern can hold globally. It can't. The global trend is away from subsidised phones, they are illegal in many countries (like Italy and Belgium), over half of the industrialized world don't offer any subsidies and they are even more rare in the developing world. Many countries have recently studied the phenomenon of subsidied phones, found it to be very bad practise, and moved away from them, such as South Korea and Israel recently. The countries where the subsidised netbooks will mostly be offered will tend to be the wealthiest countries like the US and UK, and even then to only the wealthier segments of the customer base, those with monthly contract "post-paid" accounts, rather than prepaid (voucher) customers who often are the poorest. The one dollar subsidised netbook will not suddenly eliminate normal rules of economics, and this is not a magical way to get poor people to afford PCs. Sorry.

SOFTWARE COSTS

A point that is often missed in the netbooks discussion is that the netbook buyer will need software to the PC, which typically is pre-installed on (most) smartphones. The netbooks tend to come out of the box relatively "dumb" that can be then customized by the new owner, by installing lots of software. The smartphone, on the other hand, tends to come out of the box fully operational, and by far the vast majority of smartphone owners never install an actual application onto their new phone.

It takes a far greater level of sophistication to install apps to PCs ("computer literacy"); even more so, to do it with free software downloaded from the net, often needing to be unzipped, which can require several steps to installation. Most mobile phone apps, can be done with over-the-air download and one or two accepting verifications on the phone screen to complete the installation.

LITERACY, COMPUTER LITERACY

I want to mention literacy. An illiterate user can easily learn basic use of a mobile phone, even to the point of sending and receiving money as millions do in Kenya for example;  but illiterate people will be bewildered by a netbook (the world has 800 million illiterate people and vast more who are marginally literate, all can happily use a mobile phone). The PC is far more demanding on its users. Remember what the World Bank just said a few days ago, that it is the mobile phone which is the most powerful platform to deliver services in the developing world. Don't kid yourself, its not the PC or broadband. Mobile is.

PHONE PLUS X EQUALS PHONE

Lets end on some fun with math. I stole this idea from Glyph Lefkovitz of Divmod, when he was discussing the computer. Glyph said anything the PC wants, it gets, and gave a cool formula:

Computer + X = Computer

Thsi is very good. Think of the PC's past. Computer + modem = computer. Computer + mouse = computer. Computer + stereo speakers = computer. I liked that theory, but saw immediately that in my mind the formula is even more compeling for the mobile, that it is

Mobile Phone + X = Mobile Phone

Now think of the history of phones. Mobile phone + camera = mobile phone. Mobile phone + MP3 player = mobile phone. Mobile phone + alarm clock = mobile phone. Mobile phone + web browser = mobile phone. Now with the the crash of the netbook and smartphone, we will see what happens when:

Mobile Phone + Computer = ?

I say it is mobile phone. Mobile phone plus computer.. will equal mobile phone. Even if both devices are identical in form factor (pocketable), it comes down to Reachability. If you can receive calls while the device is in your pocket, then its a phone and will "take over" from the PC. Both will have their own markets, the smartphone "own" market far bigger than the netbook market, but when they clash, I do think the phone "wins". So thank you Glyph, but I think I will be using that revised formula in upcoming discussions.

This is obvously my view today. I have been thinking about it a lot and many hold other views, which are equally valid. Regardless, I think this question, "which form factor, netbook or smartphone, will be predominant in the next decade" has tremendous implications for not only handset makers and PC makers, but for operating systems (Chrome vs Android for example), how that OS is structured (around a PC use metaphor, lets install apps; or a smartphone metaphor, it has to work out of the box); and of course, for applications developers. I say smartphones several times larger total market in the next decade than netbooks, similar in scale to mobile phones vs PCs today (4 times bigger).

That is what I think of now, as we brace for the clash of the titans, when the netbook enters from one corner and the smartphone from the other corner. We will see this battle rage for long into the decade, but it will not take to 2020 to see the winner. I believe we'll have a winner by round 6 or 7 in this battle, near the middle of the decade. I think I can hear the rumble and roar of Godzilla approaching..

Let me know what you think...

Comments

[ARJWright]

Great post (long, as usual too).

I'd take smartphones in this fight personally. Even in those use cases where a PC-like interface is better, the smartphone allows one to grow functionality, not diminish it so that its more portable.

What I'd like to see most is that battery tech pick up. Smartphones (and netbooks) will stay niche until manufacturers start thinking like the OLPC folks and aim for better functionality with less power expended (which goes beyond just making something smaller).

[Emily W.]

I think you're missing how uncomfortable the visuals become on such a small screen. Most of my information intake online is through reading, I'd rather have a netbook with an adaptable PixelQi screen that makes reading online (or books or documents) pleasant, and can also be used for video, but only using as much power as is needed for each (i.e. I'd like to be able to turn off the backlight and connectivity and read for up to 12 hours at a go, but also check email or watch a movie if I feel like it). I'd rather have a fully capable netbook plus a basic cell phone for reachability and SMS (and music player), at an affordable rate. Then again I'm American so maybe perspective determines preferences...and where you lay your money on this matchup.

[Tomi Ahonen]

Hi ARJ and Emily

Thank you for the comments. Will reply to both individually

ARJ - thanks. Good observation that one "side" grows while the other "dimishes" its range of abilities. Hadn't thought of it that way ha-ha.. Very good.

About battery, yes, but its a problem we'll probably have into perpetuity. I saw a pair of graphs a while back, by someone working with phone batteries, showing processing power (exponential curve) and battery power (linear curve) so it won't be getting better, ha-ha, it will be getting worse. Recently we've had a temporary improvement due to the unanticipated reversal of the "my phone is smaller" race, with the wide big screen of the iPhone and now we have larger phones than 2 years ago. Expect the thinner-smaller race to resume again putting added strain to the battery..

Emily - very good points and yes, I agree with you. A larger screen is certainly preferred (as is the larger keyboard). I for example right now use my laptop to post this, not my phone. But that comes back to the 30 minute / 30 second metaphor. We both, you and me, have some 30 minute tasks like you reading this long essay and me writing it. And we both have 30 second tasks that arrive to our phones. So there is a valid use-case for both types of devices, and we'd both prefer to have both devices.

That guarantees a significant market size for both devices, right? But now, consider the two major areas of people who won't have both.

One is people in the developed world who have never gotten a PC (some of our parents and uncles and aunts and perhaps grandparents). Some of them have a PC, others don't. But even in America, almost all older folks have a phone today.

So when their bank starts to push e-banking and m-banking services (to save money for the bank, to be able to close down more of their branches) - the "easy" upgrade is for the elderly person who already has a phone, already votes in American Idol and already send MMS picture messages to the grandkids, to expand mobile phone data behavior to include m-banking - when the alternate is to go buy a PC, have it installed, then get broadband, have that installed, then figure out how the banking service works on the PC, etc...

The other is obviously the developing world (70% of all phone accounts) where mobile phones outnumber PCs by ratios of 10 to 1 and better. So there the common use will be smartphone or feature-phone, and a PC is a very distant wish, if one wins the lottery or something. Remember most people can't afford to buy a newspaper and don't have a TV (but do have a mobile phone)

So your view is very valid, it helps illustrate part of the market that is "safe" for netbooks and can't really be "stolen" by smartphones..

Thank you both for writing

Tomi Ahonen :-)

[Varun Narula]

Here's another view point - netbooks and smartphones may not necessarily be competing, but as technology improves in all respects, a device would evolve call it the 'smartbook' 'netphone' or whatever you may choose that will have the most useful features of today's smartphone (always on) and netbooks ( more
computing power etc.). Rising from the ashes, as one may call it, because a few years from now, today's smartphones would be considered dumb and netbooks antique paperweights.

That's another thought - none of these devices have so far destroyed the paper. Would the smartbook / netphone achieve that ?

[Sachendra Yadav]

I second mobile + computer = mobile. Whatever the netbook can do, mobile will be able to do very soon... and it can make calls... guaranteed win for mobile. The PC will survive to support industry applications like Photoshop, 3D Studio, in-line editing etc but will fade away from personal use.

[cooli]

Excellent post, Thanks Tomi.

IMHO, netbook/PC don't stand a chance in the long term (10 years, maybe even less). Basically the smartphone has that key reachability and is "pocketable". What it is missing from the netbook is the screen size, the keyboard size and other UI control input (e.g. mouse), the computing power and finally some of the softwares that people got used to in the Microsoft/Mac OS X world.

The two first ones have a solution already today e.g. think if Apple or Nokia would propose a smart connector into their smartphones so that via this connector, they and 3rd parties could sell cheap HW to extend the capabilities of the smartphones:
- thin laptop with no processor/ram/mother board only LCD screen, keyboard, extra battery to recharge the phone and power the screen, maybe an additional hard disk to backup the phone.
- a stand with easy connection at home/work to LCD screen, power, wireless mouse/keyboard

In few years the computing power of smartphones should start to approach what you need to power a netbook/PC with similar multitasking, screen resolution, ...

The software side is the key here, to have a smartphone OS with enough power and flexibility to allow such scenarios, while still catching up on what is today possible on a PC (e.g. Flash, full browser support, photo/video editing, ...).

Apple is maybe the best prepared for that, however I guess they won't push cheap HW and cannibilize their macbook line.
Nokia could do it with both or either Symbian OS and Maemo, but they still have to get the developpers on their side.
Google still has to improve Android and reach scale. At least they're quite ahead in term of SW applications (Google apps, Gears, ...).
You have to tell me if/how RIM can pull that up.
I don't see Microsoft getting this right for a come back ;-)

Cheers!

[Francis]

I was in the position just a few weeks ago of deciding whether to go smartphone or netbook. Although netbooks has much of the things that I want and familiar with on my PC, your 30 second vs 30 minute usage analogy made me realize what device is right for me. From reading this article, I ended up with a smartphone and I know I made the right decision. I've also read other articles comparing smartphones to netbooks/laptops as an either/or option. One author even tried to go one week with just using his smartphone but quickly gave up after only 3 days. As you mentioned, most people don't have the option and can only have a cellphone, but for people who can afford both, I can not see the point of trying to pick one over the other because they have very different uses. Some even tried to do away with one device when they already have access to both.

Yes, I picked the smartphone over the netbook, but that's because I already have a desktop and a laptop (albeit an older laptop). Having a full keyboard and big screen of a netbook is nice while on the go, but when I really analyzed my data usage on the go, I fall heavily on the "30 second use" side. As a matter of fact, I don't recall ever having the desire to go somewhere just to sit under a tree in a park, or sit at Starbucks for hours on end just to mobile compute. I do all that on my desktop PC or laptop. All my other mobile data needs are served very well by the smartphone. I just can't see myself using a netbook while chatting on instant messenger while walking in public. Something I routinely do with my smartphone.

[peter]

Yet more news from Nokia World 09. Now we have confirmation and information about the brand-new Nokia N97 "Mini", slimmed down version of the current Nokia flagship smartphone. On the whole, it looks like a very solid compromise between power, cost, and size. Visit http://www.i4u.com/article26726.html for more details.

[Romain]

Hi Tomi, very interesting read.
However, I think that your argument about the lack of "reachability" of laptops will only hold for so long: I'm sure in the mid-term PC manufacturers and OS vendors will manage to make PC laptops "reachable" in the sense that they'll be able to receive communications while in a very low-power state.
Actually I could even see Apple do that first since they control both the HW and SW (easier for them than Microsoft who has to coordinate their effort with many PC makers and HW manufacturers).
Nevertheless, even when PC are as "reachable" as smartphones, they will never be as "pocketable".
I believe this distinction will always remain and distinguish the PC from the smartphone, because if the PC becomes truly "pocketable" it loses its comfort and productivity edge over the smartphone

[Tomi T Ahonen]

Hi Varun, Sachendra, cooli, Francis, peter and Romain

Thank you all for the comments. I will respond to each individually

Varun - good point about the convergence. The 'size' convergence is now obvious, as the 'shrinking' phone trend was reversed by the iPhone, and the netbooks give an ever smaller direction for the laptop. First, that 'pocket' computer metaphor is nothing new. I loved my HP LX 100, 'palmtop' PC which ran DOS and used real Lotus 1-2-3 back two decades ago. Was in every way a real computer in a very tiny box, fit into my pocket, and was a staple to every business meeting I ever went to - until I replaced it with my first Nokia Communicator. And today's E90 Communicator is definitely a 'tiny' netbook-equivalent by Nokia. But the point is, that the laptop metaphor (won't ring in the pocket) is the smaller market opportunity, vs the ringing-in-the-pocket smartphone - so if it rings, its a smartphone. If it doesn't it won't be nearly as big. If the 'total convergence' happens as you describe, then smartphones have won..

Sachendra - thanks, we agree :-)

cooli - good points and we agree. Did you notice, that the 'performance gap' is now shrinking from both sides, while smartphone CPUs, memory, screen size etc are improving, the netbooks are often severe compromises vs 'full size' notebooks, and have slower CPU's, lesser memory etc, and are very comfortable running Windows XP.. so the laptop metaphor (via netbook) is actually moving 'backwards' in performance haha...

Francis - very good points and good examples. Yes, I am very much in the same way. While I prefer longer typing - like these comments now at the blog - via my laptop, I often find myself with some spare time but not my laptop with me. I am quite happy to use my smartphones (Blackberry and #E90 Communicator, both with QWERTY keyboards) to do my Twitter updates, the occasional shorter blog update and miscellaneous comments such as at Forum Oxford. But yes, you and I are in the privileged group, who can afford to own both types of devices. Great comments and examples, thanks.

peter - thanks for the update

Romain - Actually I do disagree with you. The 'easy' part of the PC industry is to do the connectivity via WiFi or WiMax today or the near future. But that brings hideous problems of the economics. The laptop maker will not want to pay for your WiFi/WiMax - service subscription. And with the very small exception of a few places on the planet (Singapore as one rare exception) you will not have free wireless connectivity anywhere.

Then the issue becomes parallel wireless networking technologies - 2G, 3G, WiFi, WiMax and soon also 4G (which is not WiMax by the way). Each has certain benefits and drawbacks in terms of laptop use, and to make matters worse, 2G, 3G and probably real 4G will have standards wars - in 3G we have 3 separate 3G technologies now being deployed in China for example.

So while it may be 'technically' quite possible to do the ringing test, I say it is commercially very complex to do even nationally (by a laptop vendor) and internationally a total quagmire. But cellular mobile phones - and smartphones - do this routinely..

Thank you all for your comments

Tomi Ahonen :-)

[Clenbuterol]

Smartphones will win for sure!!

[Ricardo]

Tomi,

I think that you're talking a lot about developing countries without having a real glimpse of what is going on, im writing from mexico which for whatever reason is a complex market due to the extreme wealth distribution. Obviously people with access to the best smart-phones will not have a netbook (most of them at least), they'll do fine with a laptop/smartphone combo (using your 30 mins / 30 secs metaphor as a rule) but the thing is people with less money. Thing is, that in my country, phone data rates are crazy expensive, and most of them require you to buy a 40 USD plan or prepaid card, while people here just go and buy 2-3 USD credit purchases to send less than 20 sms during a week or so.

So if that people find out they have the need to serve some computing task, be sure it will be something for their children school or something, and therefore they will go out and buy a 200 USD netbook. they wont EVER buy a nice 1000 USD iphone 4, hell i would say most of the people wont go and get a 300 USD nokia 5530.

It is sad, but people have really more significant things to worry about in a developing country than sending sms, twitting all day long, and watching some dorky stuff in youtube.

Other thing that is important to say is "shareablity" that is, a phone is a rather personal stuff, so in a household, you coud get 4 dumbphones and 1 netbook for the whole family! trust me sharing is the rule of thumb for poor people (you should see something like 4 or 5 families sharing what in the USA would be a really small house)

Maybe in a relatively distant future thing could change, but still even as a status symbol i would say poor people will feel more accomplished if they buy something that resembles an executive laptop rather than a regular phone.

Anyway lets see how things turn out, nice article, and keep writing.

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