In the interest of full disclosure, I currently consult with Vulcan and sit on IBMs advisory council.
Crossover vehicles have started to dominate the automotive market. It started with the minivan, a combination of car and van, and then proceeded to the station wagon/truck hybrid called the SUV. Now we see the SUV combining with sports cars, resulting in the Porsche Cayenne and the Infiniti FX.
Were starting to see hybrids emerge in the computing market too. Smart phones such as the Treo 600 and Motorola MPx200, which combine handheld computers and phones, are increasingly popular. Media Centers, which combine a traditional computer with a CD/DVD player and PVR, are one of the biggest growth areas today for PCs. And portable computers are birthing their own hybrid—a new class called the UPC or ultraportable PC.
A UPC is a cross between a handheld computer such as the HP iPaq and a laptop computer like the Sony Vaio 505. They combine the features of both classes of device into a new form factor.
These devices, in some cases, also combine design elements from the Apple lines. Many of the UPC hardware designers came from Apple Computer. Apple almost got the handheld right with later versions of the Newton, yet in the end the company abandoned the market. IBM was actually the first to show off a prototype of this new class of computer, yet it will not be among the first to ship one.
Im very positive on this new class of computer, but Ill be the first to admit that, as with any new class, the vendors often dont get it right the first time. Jim Louderback, in his counterpoint to this column, suggests that Ive fallen for “the latest pretty girl to walk down the street.” I think that, while she indeed is very pretty, she has substance as well.
Similar to crossover cars, the UPC is designed to fill a niche that isnt being addressed by existing products. And as in the automotive world, I believe that as these devices mature, sales could exceed the handheld and laptop classes that birthed them. Jim thinks this is unlikely—after all, the smart phone has hardly overwhelmed either the handheld market or the cell phone market, and it too is a crossover product. However, I would counter that it hasnt yet hit its stride; the most compelling smart phones have yet to come to market, though the new Palm Treo and Motorola offerings are getting very close.
When the laptop first shipped, it quickly eclipsed the luggable class that came before it. Similarly, the handheld computer obliterated the original PDA market.
The industry doesnt always get it right the first time, though. The first real handheld computer, the Newton, failed to meet expectations. Sometimes the idea and the technology just arent close enough to initially be successful.
Ive had a chance to review many of the initial UPC crop, and I think were really close. If buyers can see the potential for these devices, I predict that they will quickly disrupt the current market.
Why a UPC?
Why do we need yet another computer form factor? Because handheld computers and PDAs, as good as they are, dont work for viewing long e-mails or documents. Theyre also poorly suited for developing or giving PowerPoint presentations, and lack the storage capacity to hold the critical documents we sometimes need while on the road. In short, they do about 80 percent of what we need a portable computer to do, and for most of us, that means we need our laptops as well—which makes the handheld redundant.
The laptop, on the other hand, has all of the capacity and capability we need, but it is big and often not with us when we need it. So it has 100 percent of the capability but only comes with us around 70 percent of the time or less. Ultralight laptops have tried to fix this, but the displays and keyboards almost always seem a little too small for general use, and the devices are still too large to put in a pocket or purse.
Changing usage patterns also point towards the UPC. Increasingly we are able to connect wirelessly, which means we can work from anywhere. And for many of us its more important to be able to read and comment on lots of e-mail than draft long documents while on the road.
This is one of the reasons the handheld market has stalled—even in a connected world the handheld is simply too limited. However, I think there is still a substantial need for a small, fully functional device.
Of course, what constitutes “fully functional” is a matter of debate. Jim says you cant use UPCs like a BlackBerry because they are too large, and you cant touch type because they are too small. But there are a lot of folks who dont touch type today, and there are even more who typically respond to an e-mail with a couple of sentences. Microsofts CEO is rather famous for responding to an e-mail in 10 words or less. For these folks a device like this could be ideal. Coupled with a larger keyboard—either a fold-up from a company like ThinkOutside or a wireless keyboard from Logitech—an external mouse, and a large monitor at work and at home, this may be the ideal solution for many.
Jim also argues that you cant watch DVDs on a UPC because it doesnt have a DVD drive. But with the recent settlement between Entrust and Microsoft, were that much closer to being able to put movies—legally—on the hard drive of a device like this. And if you can live with the limited library, you can even use a service like Movielink to do this today.
Technology Enables This New Class
Technology has been getting more compact as well. PCMCIA-sized drives now exceed 40GB. New x86 processors are efficient, draw little power and generate little heat. Single chip designs now squeeze in many functions that used to require dedicated processors. In addition, new small, very-high-resolution-screens from such companies as Toshiba allow a full Windows XP desktop to be shown on a 5-inch or 7-inch display. The colors are brilliant, and the resolution is high enough so that text can easily be read by the naked eye (at least for those of us who dont already need glasses).
And dont think that this “downsizing” effort has reached its limit. Even smaller CompactFlash-sized drives from Hitachi and Toshiba have already reached 5GB and will continue to hold more data, and even get smaller in the future. Were also getting closer to a complete PC on a chip, and that will enable slimmer and smaller devices over time, too.
Jim argues that one of the biggest problems with UPCs is their battery life; he points out that the Vulcan FlipStart device will last for just two hours, while the OQO device is expected to last for four hours. I agree that four hours may actually be around half of what the class needs. However, fuel cell technology is improving and expected in the market in 2005 from such companies as Toshiba, and in the meantime, you can buy and carry spare batteries; many airlines also have power available.
Also, the majority of these devices will drop into a lower power mode for PDA and multimedia functions, which could extend the effective battery life significantly. For instance, if you were just listening to music the battery life could exceed that of an iPod as long as you left the screen powered down. How each vendor addresses the power problem will be one of the big differentiators once UPCs hit the market.
Finally, think subsidies. These new devices are e-mail engines and ideally suited for the wireless networks being rolled out internationally. Much like cell phones today, they could be attractive to carriers who want to drive data use and could easily be subsidized. In the case of an airborne wireless service, like Boeings Connexion service, they could be handed out to folks who dont have wireless laptops so they could make use of that service in flight. On the ground, they could be rented in places like Starbucks.
Challenges to Overcome
People dont always embrace new designs when they first come to market. Sometimes thats temporary, other times more permanent. SUVs and minivans eventually caught on, while the Newton is still seen as a curiosity.
This class of computer is either too big to be a handheld, and too small to be a laptop. While Japan has experimented with small laptops for years they just havent been popular in Europe or the United States. In fact, ultralight laptops, which are much larger than this new class, havent been able to manage more than 20 percent market share and have been well below 10 percent for much of the last decade.
Its all perception, though. As users realize that they need to read more than they have to write, these devices will become more palatable. Add in attachments like keyboards, mice and monitors, and theyll become even more useful. With one device you dont have to sync, and unlike the BlackBerry, youll always be able to open all attachments.
For IT this means we are back to one image and one device per employee. That cuts down on complexity and makes mobile users easier to support. It also improves security because it reduces complexity, and complexity increases security risk.
Jim argues that people dont like all-in-one devices, and in most cases he would likely be right. Certainly in the kitchen, refrigerator/stoves and dishwasher/storage drawers (I actually have the latter) havent exactly set the market on fire. But I have portable DVD players, PDAs, cell phones, and laptops. And, frankly, Im starting to feel like Quasimodo when I lug this stuff around. Going through security at airports has become a nightmare as I have to remember to take all of this stuff off, and then not leave it behind when I leave the security station. If there was an adequate all-in-one device, Id likely buy it myself. But the key word is “adequate.” I still dont think the UPC will replace the cell phone.
However, Jim should remember that the PC itself is an all-in-one device that is quickly gaining phone capability through VOIP, and has been increasingly becoming a full consumer electronics device over the last several years.
In the end, people need to see the UPC for what it can become and not in the context of things they have used before. This is not an easy task for most folks and virtually impossible for Jim, who, like me, has likely seen too many ideas like this fail due to poor execution. Strangely enough, the IBM butterfly laptop was probably the closest thing we had to a device like this and it failed miserably—not because it wasnt a good idea, but because IBM cut the wrong corners and buyers saw the result as an expensive, crippled laptop. If the market shares Jims view, the same could happen here.
Looking Ahead to the Future
Ive been fighting to get this class of product launched for more than five years now, ever since I saw the first IBM prototype. Such a device could eventually make point products like the iPod obsolete. They could rapidly allow automobiles to be connected without following the proprietary automotive model. They could ensure we always had our critical information with us in case of a disaster, and they could bring us one critical step closer to being truly connected all of the time.
This wont be an easy birth. Handheld computers are getting more capable and handheld features are being built into laptop computers. In addition, a new class of handheld computers, based on Linux, is being introduced in the third world to address that market. While more of a handheld, it will arrive as a subsidized solid state device, which could limit the entry of more capable UPCs.
In addition, laptops are gravitating to 15.4-inch displays, and once you get used to this size screen, it is really hard to go to something smaller. Ultralight laptops like the stunning Sony Vaio 505G are also being more widely accepted and users may find it difficult to choose a UPC from a company they may not have heard of over a product with a familiar brand that is slightly larger.
Still, the UPC is here, and less expensive ones are right around the corner. Antelope Technologies makes a modular unit now, and soon OQO and Vulcan Ventures will have similar but less expensive offerings. My hope is that, unlike Jim, you will open your imaginations and see the potential these products represent. The future is almost here.