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Thursday, November 28, 2002

Computer-Mobile Fushion?

This is the question posed by the Economist in two thought provoking articles. Converge is the word that comes to mind when looking at the attempt of the computer industry to cram PCs into pocket-sized devices. The latest phones announced by Nokia, the world's largest handset maker, include a model with a folding keyboard aimed at business users, as well as a colourful phone that plays computer games. Digital cameras, already a popular feature of mobile phones in Japan, are starting to appear across the planet. Colour screens are spreading fast. To top it all the latest phones have as much computing power as a desktop computer did ten years ago.

“A COMPUTER on every desk and in every home.” This was Microsoft's mission statement for many years, and it once sounded visionary and daring. But today it seems lacking in ambition. What about a computer in every pocket? Sure enough, Microsoft has recently amended its statement: its goal is now to “empower people through great software, anytime, any place on any device”. Being chained to your desktop is out: mobility is in. The titan of the computer industry has set its sights on an entirely new market. It is not alone. This week Dell, the world's largest PC maker, launched its first handheld computers, which run Microsoft's Pocket PC software. HP and Palm, which also make handheld computers, have just unveiled new models, with far more emphasis on wireless networking and telephony. And in an even more portentous move, the SPV, the first device to run Microsoft's special version of Windows for mobile phones, has just been launched in Europe by Orange, a mobile operator.

If this is the next stage in the evolution of computing, one obvious question arises: which firm will dominate it, as IBM dominated the mainframe age, and Microsoft the PC era? The answer is that there is unlikely to be a single winner this time around. IBM ruled in mainframes because it owned the dominant hardware and software standards. In the PC era, hardware became an open standard (in the form of the IBM-compatible PC), and Microsoft held sway by virtue of its ownership of Windows, the dominant software standard. But the direction of both computing and communications, on the Internet and in mobile telecoms, is towards open standards: communication devices are less useful if they cannot all talk to each other. Makers of pocket communicators, smartphones and whatever else emerges will thus have to compete on design and branding, logistics, and their ability to innovate around such open standards.
Source: The Economist

So, the once-separate worlds of computing and mobile telephony are now colliding, and the giants of each industry—Microsoft and Nokia, respectively—are squaring up for a fight for pre-eminence. Both camps are betting that some kind of pocket communicator, or “smartphone”, will be the next big thing after the PC, which has dominated the technology industry ever since it overthrew the mainframe 20 years ago. Admittedly, the two camps have different ideas about how such devices should be built. The computer industry believes in squeezing a general-purpose computer into a small casing; the mobile-phone industry takes a more gentle, gradualist approach of adding new features as consumers get used to existing ones. But are they right about the future of computing in the first place?

IT MAY look like a mobile telephone, but the Orange SPV, launched last month, is much more than that. With its colour screen, garish icons and musical ringtones, it resembles other handsets on the market. But it has one far more significant feature: the software inside, indicated by a familiar-looking four-coloured logo on its screen. For the SPV is the first “Windows-powered smartphone”—in other words, it runs software from Microsoft. It is the software giant's attempt to stake its claim in the new market created by the convergence of mobile phones and computers. It is no less than a declaration of war.

The market for smartphones is still small. But it is growing fast, as new features are added to handsets, making them ever smarter. Of the 400m mobile phones that will be sold this year, around 16m will have built-in cameras. Nokia, the world's largest handset maker, expects to sell 50m-100m colour-screen handsets next year. A new report from Analysys, an industry consultancy, predicts that by 2007 nearly 300m Europeans will be carrying handsets with colour screens, cameras, music players, support for downloadable games, and other features that are now available only in the most advanced models. Such features are already common in Japan and South Korea, and they are starting to appear in Europe and America. These advanced handsets are, in effect, pocket computers—but they have emerged from the consumer-electronics industry rather than the world of computing.

In Europe, more people now send and receive short-text messages on their phones than use the Internet, according to figures from Gartner, another consultancy. This year, users of mobile phones around the world passed the 1 billion mark. The number of mobile phones is now greater than the number of fixed-line ones. PC sales, meanwhile, have stagnated, and innovation has slowed: today's PCs are really just like those of a year ago, or two years ago, only faster. Sales of handheld computers, or personal digital assistants (PDAs), at around 10m a year, are dwarfed by sales of mobile phones. It looks increasingly as though the “personal computer” was a misnomer. The truly personal digital device today is the phone.

That does not mean that PCs will vanish. Just as mainframes continue to hum in companies' back offices 20 years after the emergence of the PC, so too PCs will continue to have an important role. But their appeal is far from universal; no matter how cheap they become, there are limits to the number of people who want to buy one. Microsoft's once-visionary mission statement—“a computer on every desk and in every home”—now seems dated. Instead, the company talks of “empowering people through great software, any time, any place and on any device”. This is an acknowledgment, concedes Ed Suwanjindar of Microsoft's mobility division, that the PC is no longer king, and that “mobile devices are totally critical to the new extended vision for the company.”

The first obstacle thrown into Microsoft's path by the handset makers was their refusal to license its software—a complete reversal of what happened in the computer industry. There, PC makers queued up to license Windows. The largest mobile-phone makers, on the other hand, established a software consortium called Symbian to produce smartphone software of their own. Their aim was to achieve the benefits of Windows (a single, common software standard) without what they regard as its chief drawback: that the predatory Microsoft owns it. “We want to fend off Microsoft—we don't want to go the way of the PC business,” says a spokesman at one handset maker. Several Symbian-powered handsets have already come to market. The latest is the Nokia 7650, with a built-in camera and colour screen. It was launched in the summer and sales are expected to exceed 2m by the end of the year. More Symbian handsets will appear over the next few months. Besides Nokia, Symbian's backers include Motorola, the world's second-largest handset maker, Siemens, the number two in Europe, SonyEricsson, Panasonic and Samsung. Between them, Symbian licensees account for almost 80% of all handsets sold.

Yet, for all their similarities, Microsoft and Nokia differ in one crucial respect. Microsoft's dominance stems from its closely guarded ownership of Windows. But the mobile-phone industry, in which Nokia is top dog, is based on open standards. The use of common standards that are not owned by any particular vendor has benefits. For example, it enables handsets based on the GSM standard to be used in most parts of the world. But it also has drawbacks: Europe's proposed standard for 3G does not work yet. Nokia has achieved its dominance not through ownership of proprietary technology, but from its ability to innovate around open standards, from its strong brand, and from its impressive logistics. In other words, in several respects it is not like Microsoft at all.Nokia's attitude to Microsoft is revealing. “We are not in competition, but approach convergence from different sides,” says Mr Alahuhta, choosing his words carefully. He is right: Microsoft is so insignificant in the mobile-phone market that it is not a competitor—at least, not yet. But as their industries collide, the firms are sure to become opponents in what promises to be a long and bitter fight.
Source: The Economist

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