Computer makers turn to mobiles for the next big thing

March 17th, 2009 - 11:36 am ICT by IANS  

Washington, March 17 (IANS) Taking a cue from Apple’s success with its iPhone, many personal computer makers and chip companies are now into the mobile-phone business, promising devices with the power of standard computers but in palm-size packages.
The new smartphones promised by PC companies will, among other things, handle the full glory of the Internet, power two-way video conferences, and stream high-definition movies to your TV.

It is a development that spells serious competition for established cellphone makers and phone companies, reported the New York Times Monday.

Apple was the first to spot a sleepy industry, shaking up the handset category two years ago with the iPhone. Until recently, the handset makers were the ones reacting to the iPhone - and then with me-too products.

With smartphones and PCs taking on many of the same functions, there is certainly a fear among PC makers that if they do not get into cellphones, cellphone makers will start building PCs.

Acer, the big PC manufacturer, has gone from offering no cellphones to selling eight new models, with more to come this year.

Dell has also worked on prototype phones but has not committed to making a new product. And Asustek, the company that was first to market ultraportable laptops known as netbooks, has new smartphones coming.

“The smartphone market is the natural direction of our long-term mobile strategy,” Gianfranco Lanci, chief executive of Acer, a Taiwan-based company, said as he announced the products at last month’s World Mobile Conference in Barcelona.

“We’re just taking on another dimension.”

The suppliers to the PC industry have also started shifting to the new market. Intel announced a deal to supply the cellphone maker LG with chips for new mobile devices.

Nvidia, the PC graphics-chip titan, signed a deal to provide three smartphone makers - which supply handsets to brand-name manufacturers and carriers - with its new Tegra processor.

“This is a once in a lifetime deal where a huge market changes the things that are important to it,” said Michael Rayfield, the general manager of Nvidia’s mobile business unit.

The convergence of the two devices has long been predicted, but it took a confluence of industry changes for it to begin in earnest.

For decades chip manufacturers rushed to leapfrog one another with faster processors, and computer makers scrambled to squeeze more functions into smaller boxes. But ever-faster chips eventually become impractical. Their blazing speed requires vast amounts of power and cooling.

Both Acer and Nvidia have promised very low-cost smartphones, threatening the most lucrative part of the cellphone makers’ business.

At the same time, the phone market has been bombarded with operating systems from Microsoft, Google and Intel.

This gives companies like Motorola and Nokia an entirely new set of problems besides falling sales and shrinking margins.

“It’s cataclysmic for the phone guys, who were used to playing golf on Wednesday afternoons,” said Roger Kay, president of Endpoint Technologies Associates, a research firm. “Those times start to look pretty good now.”

Not that such a move will be easy for the PC makers. The PC industry has a spotty record for expanding into consumer electronics. Dell stumbled with its MP3 player, and Hewlett Packard’s line of televisions failed to catch on with consumers. Both products have been discontinued.

Perhaps most critically, traditional phone and mobile chip companies have expertise in making phones that work.

“It has to be a good cellphone first,” said Ed Snyder, an analyst with Charter Equity Research. “This is about as far away from PCs as raising elephants.”

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