Published on Digital Development

A computer by any other name

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Blurring distinctions between computers and mobile telephones promise increased access

There are already telephones that work more like computers--so-called smartphones, and computers that have the mobility we earlier associated only with mobile telephones. Firms associated with the computer industry, such as Intel, Microsoft, and Apple have made a clear entry into the “mobile” space. And of late, firms associated with mobile telecommunications such as Nokia are making an entry into computing. As these firms enter each others’ markets, their products are becoming increasingly difficult to distinguish.

Much of the popularity of increasingly mobile computing is due to the popularity of wireless networking technologies and especially Wi-Fi. This whetted the appetite of computer users for mobility, even if only around their homes or offices. Now, Intel has been growing its earnings in the netbook market, making microprocessors for these cheap and ultraportable versions of laptop computers. And Microsoft has developed operating systems for smartphones and recently released a new version of Windows Mobile. The best-known success story, however, is Apple. The famous computer manufacturer developed the iPhone that has consistently been a best-selling smartphone.
On the other side of these converging devices, one might argue that the mobile telephone has long been a computer with another name. Digital cellular networks that include widely used standards such as GSM and CDMA need significant computing power in order to code and transmit telephone calls correctly. Some handset manufacturers such as South Korea’s Samsung have long made both phones and computers and is now making both smartphones and netbooks. Now handset manufacturer Nokia has announced its own netbook, re-entering the business after its earlier exit in 1991.
Underlying these changes are three fundamental shifts in the business and technology of information and communications. First, it is much cheaper and easier to make smaller computers that have the desired level of computing power. This transformation has been because the costs of computing and memory have both dropped significantly since the 1980s. Second, demand for more computing power on the move has increased as people have become more used to mobile lifestyles. And as they move, people also look for the ability to carry their offices with them, virtually of course. Third, the Internet has led us to shift much of what we do and need online. This so-called ‘cloud computing’ reduces the need for computers that can do everything all the time--opening the door to smartphones--while increasing the demand for constant and high-quality connectivity to the cloud--creating the space for netbooks.

They get around

Both smartphones and netbooks are becoming increasingly popular. Juniper Research, a telecoms market research firm, forecasts that in 2009, smartphone sales will account for around 13 percent of the worldwide market. And market analysis firm IDC predicts that 22 million netbooks will be sold in 2009,
Indeed both types of devices are seen as boosts for their manufacturers, carriers, and users. In October 2009, Intel reported that the Atom and associated chips already represent over $1 billion dollars in revenues for the company. Sales of netbooks are also helping computer manufacturers grow through the ongoing economic downturn; for instance, netbook sales helped Acer increase sales by 48.3 percent in the quarter ending September 2009. Apple’s iPhone has been a strong performer--sales in the third quarter of 2009 were at record highs reaching 7.4 million and supporting strong profits even through the global economic slowdown.
Telecommunications carriers also benefit. The iPhone has helped its sole U.S. carrier AT&T add subscribers that spend an average of $61 for monthly service. Consultancy Pyramid Research suggests that netbooks will be critical to the success of mobile broadband, especially among low-income customers. Estimating that about 25 percent of new mobile broadband subscribers will sign up when their services will be both under US$20 and with bundled ultralow priced netbooks.

More, please

The group most likely to benefit, however, are the users of these devices. The falling price of computers means that more people can afford them. In the U.S. at least, data from the Bureau of Labor Statistics suggests tht the prices of personal and portable computers have dropped over 99 percent since 1992. While prices might not have falen as much everywhere, and traditional personal and especially laptop computers remain somewhat expensive today, there will likely be a significant impact on industry economices from the spread of the netbook and smartphone.
Users also benefit because mobility means more efficient power management, something that is critical in much of the developing world where electricity supplies are either unreliable or non-existent. As battery technologies improve, these devices will have the ability to work in more places, clearing one of the key hurdles to the spread of computing.
In addition, the bundling--in both the technological and marketing senses--of netbooks and smartphones with wireless broadband connectivity can spur the growth of broadband and connect more users. The technological bundling of Wi-Fi with laptops and notebooks in the early 2000s spurred the diffusion of those networks in a number of countries. While the marketing of bundled devices and connectivity is a topic of some debate, there is little doubt that some of those strategies could entice subscribers.
The overall benefit of the convergence between the computer and the telephone is more competition among device manufacturers and service providers. This might be likened to the competition among mobile handset manufacturers that has led the wide range of handsets available at different price points globally. Competition between service providers for newer subscribers has pushed the mobile telephone to reach about four billion people worldwide. Similar competitiveness will one day make a reality the possibility that powerful and interconnected, yet inexpensive computing devices will connect more people to the Internet.


Siddhartha Raja

Senior Digital Development Specialist

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