While the UMPC category is evolving and changing, it is definitely here to stay. One question we hear often is: what were MS and Intel really thinking when promoting the UMPC concept? And how did the Netbook product category get started? There is a lot more to it than the ASUS EEPC. Read on.
In 2005-2006, Intel and MS started pushing a new product category called UMPC. The Intel and MS UMPC teams who created this concept insisted on machines with 7” screens and touch panels. Basically, they were small tablets. At the time, however, most ODMs/OEMs did not want build or sell UMPCs as defined by Intel/Microsoft. They were skeptical about this definition of UMPC and its market viability. But they loved the low prices of the hardware and software offered by Intel and MS. OEMs/ODMs tell us that at the time they really wanted to build notebooks with smaller screens (7”-10”) and sell them at lower prices but still higher margins. However, both MS and Intel opposed building cheap notebooks. MS most likely was interested in expanding its OS install base, not in to replacing one install base with cheaper install base. And Intel most likely did not want to cannibalize its high margin business of laptop chips. The ODMs/OEMs told umpc.com that some of the Intel leaders on UMPC team also wanted to build cheap notebooks but where being stopped by Intel’s famous “Disagree and Commit” adage.
Side note: Why was 7” set as the screen size? Simply because it was the only cheap mass produced LCD available at that time.
What really happened? Well, the market determined its own course. UMPCs, as defined by MS/Intel, met with only limited success. After this, Intel’s new UMG (Ultra Mobile Group) executives started pushing a new term MID (mobile-internet-device), compelling rehash marketing of an old vision of a do-all-mobile-device. Meanwhile the ODMs used the learning they had from building 7” tablets to build 7” laptops and then moved on to 8” and 10”. ASUS’s EEMPC and Inventec’s Kojinsha were results of this effort. By this time the MPG (Mobile Platform Group, responsible for Intel’s laptop business) executives had seen the light and went on to officially support ODM/OEM efforts to make small inexpensive notebooks (and left UMG to focus on MID). But the issue with cannibalizing higher margin notebooks remained. Enter the Netbook hardware platform from Intel, dubbed Atom, with a few limitations over notebook hardware and officially differentiated as for light work. As a result, the Atom processor offerings from Intel were split: an Atom line for Netbooks and another Atom line for MIDs.
So did OEMs/ODMs get their wish by creating an inexpensive but high margin product for notebook (called Netbook now) market? Not really. Again the market ran its own course. Every OEM/ODM got into the fray of building the new netbooks, the prices were driven down and
netbooks have turned out to be even lower margin than notebooks for OEM/ODMS.
The winner in all of this is of course the consumer. Consumers now have greater choices at lower prices.