In The Survival of Wintel we blogged on the question of how the Windows-Intel alliance is currently being threatened by ARM based processors and free (or very cheap) Linux based OSes like Google's Android. Yesterday a Chinese manufacturer Skytone (and not a Taiwanese manufacturer) said they would be the first ones to launch an Android based netbook. Of course, the system would be powered by an ARM processor and would come in at a far lower price point than the current Netbooks, especially those with Microsoft.
Then today the Taipei Times had an interesting article on the next round of netbooks. According to the article:
A new class of cheaper, smaller netbook computers might upset the IT establishment this year and potentially usher in new players in a hotly competitive market.
The biggest change in the new pint-sized laptops is what they won’t have: Intel Corp chips or a Microsoft Corp Windows PC operating system, which dominate netbooks today.
The new netbooks, which use less energy, will run on the low-power ARM processor platform now used in nine out of 10 cellphones rather than Intel’s x86-based Atom chip. The UK-based ARM Holdings Plc licenses the chip technology.
As many as 10 ARM-based netbook models could hit the market this year, ARM says, while declining to identify specific manufacturers. Major PC players and Asian contract manufacturers alike are interested, analysts say.
When reading this I thought well, although this may be the first round of Android based PC's, they are not the first Linux based netbook. Remember the Eee PC 4G that came with a customized version of the Linux operating system?
However let's not kid ourselves! The netbook is a "disruptive technology" and it is challenging the traditional notebook space. There are going to be strategic challenges for both Intel, Microsoft and the traditional PC manufacturing giants here in Taiwan! The netbook technology is not that sophisticated and the biggest challenge will be assembly, distribution and brand recognition. The advantage the bigger branded PC makers have is that they entered the market early and so therefore adapted their cost structures to ensure competitiveness in this new market space, and for them it won't matter what processor and OS they use, they just need to assemble the componenets and make sure the systems run, but they need to be wary of potential competition from lower cost manufacturers in China. Of course, the Chinese manufacturers probably do not have sufficient scale (to manufacture) and sufficient brand presence to bash down the bigger boys now. But five years down the line? We will wait and see.
The challenge posed by ARM processors is a classic example of disruptive technologies and how they can alter the entire market. Over the past few years the brutal prices wars between Intel and AMD have been very visible while ARM has been slowly but surely establishing themselves in the mobile phone space and establishing presence, dominance and brand recognition. Their cost structures are also incredibly low as compared to Intel as they do not own fabs and license out the technology rather than manufacture the product themselves.
The Innovators Dilemma describes how new companies move into spaces the giants initially reject as not being sufficiently profitable compared to their current market space and how the current major players will continue to sustain technologies rather than look back. The Innovators Dilemma also describes how the new players in a largely neglected part of the market are able to take over the market, develop lower cost structures and then push into the higher margin sectors of the industry making it very difficult for existing players to move into the newly established sector because their cost structures have not been designed around the lower margin business. The good thing for Intel though is they did establish the Atom brand and after the launch of the Atom brand netbooks really did take off, but they are still going to have a more difficult battle with ARM than they did with AMD I think.
Netbooks are changing multiple industries and sectors! Do you think this is good for the consumer? I do! Look forward to your comments!
7 comments:
I also wonder whether they are really entering a new segment.
The netbook really did hit the mark in terms of size, power and price. It also really was an untapped market. But I have my doubts that this will be as big a splash.
Between netbooks and smartphones there are these offerings from HTC. The Shift and the Advantage. Which are expensive at around USD1500 and USD1100 respectively.
Those appear to be in the realm of the Blackberry and business aimed devices.
Would something that costs less than a netbook be able to offer anything better than these? Or for that matter, any better experience or convenience than a smartphone?
For consumers, is there really a space between the iPhone and the netbooks?
It's a cool thing, and I love technology for technologies sake usually. We'll see how it goes.
Your company is pretty involved with Linux/Android in mobile devices right? Have you guys branched out to netbooks or are looking at it?
Some brief thoughts:
Like you, I see a lot of potential in netbooks and ARM. I think the key is going to be power use and not the cost of ARM. If you could use a netbook an entire day and charged it just once a day like say, a cell phone, you don't need to carry a power adapter around and the netbook becomes ultra mobile.
My personal opinion is that Linux, Ubuntu in particular, is going to do really well in the netbook segment. Microsoft doesn't do ARM, and it's not clear that it'd be easy for them to support. Compatibility is a real win with Linux and there are even some technologies in there that Asus/Acer could use to create a full ecosystem the way that Apple has. And an ecosystem would fend off Chinese copycats pretty well.
I see a lot of potential there, though maybe not with as many exclamation points as you ;-).
Hi Anon,
Thanks for your comments as always. I do appreciate them. Currently I work in a mobile phone software company and we are developing some Android Apps for mobile phones but I am on the finance side now not the product side so very little visibility.
I do agree with you on the new performance measure when it comes to processors. Whereas in the past speed and power were the critical performance characteristics I believe the the next frontier for processors won't so much be performance but that the power/performance/cost ratio will become increasingly important.
As for Microsoft, yes, I was thinking Ubuntu will become more prevalent but I don't know much about the Linux OSes out there so chose not to comment. I will say this though, I do think although Microsoft Windows cannot run on ARM, I am sure they will be able to develop something quicker than people think however all industry sectors from software, chipset and assembly may become more fragmented in the near future.
Thanks for the comments.
Take care.
Paul
Another related article saw today:
Is Atom's growth hurting Intel?Thought you might be interested. Another angle, though as the comments point out, it may be a larger shift that Intel doesn't have a choice with, but to follow.
This is a good topic. An article on Netbooks and HD video processing coming out from AMD/ATI and nVidia: Netbook and HD Video
Hey there, missing your blog. What's going on these days?
Elpida got bailed out, but Taiwan Memory appears still listless. Palm Pre's come out. Acer and their very good Italian CEO had a big article in the New York Times. MSI has started to get its name out there with netbook/thin products.
Taiwan stock market was way up, but then gave up a good chunk of its gains.
The rush order effect has come, is it now on its way out? Are the increases in demand from the China market sustainable?
The very exciting Palm Pre is out, as is the iPhone micro-upgrade, and will be in available in Taiwan July or so? But more important, what is HTC's strategy admist all this?
With all these location-aware smart phones out there, is there any room for independent GPS devices anymore? What is Garmin going to do (Taiwanese American cofounder, big R&D in Taiwan)?
Meanwhile the US VC industry needs to shrink by maybe half; can they find growth in Asia instead?
A recession, but interesting times.
ARM-based netbook https://www.alwaysinnovating.com/touchbook/
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