- Brands (OEMS)
- Designers (ODMs and IDHs)
- Hardware and Software Component providers
Every week, multiple press releases and blog posts about new UMPC products make it seem that hundreds of UMPC designs are being released. The reality, however, is that there is re-use of a lot fewer designs, which usually come from ODMs (Original Device Manufacturer) and IDHs (Independent Device Houses), mostly unknown to the consumer purchasers. These limited designs are then branded with different names, logos, packages, colors and accessories by Brand OEMs to sell to consumers. This creates the appearance of a lot of innovation. Usually, however, the innovation is all in the marketing, not in usage or functionality, which is unfortunate because a new product space needs a lot of innovation in actual usage-based design.
Let’s try to understand some of the key players in the UMPC space.
The Brands (OEMs): Brand-name OEMs are mostly marketing engines, although some like Samsung do their own designs. Usually the brands understand the consumers best but are not always good at translating customer needs into a good product.
The Designers (IDHs and ODMs): Designers perform most of their design work on request from OEMs or on a speculative basis, with the goal of landing an Brand OEM customer. They are good at engineering and some innovation but usually lack customer understanding and rely on Brands for customer needs.
The Hardware Component providers: First, CPU and chipset vendors are known to push their platform as a solution to any nearby problem, not unlike a hammer looking at every problem as nail. Second, Memory, Camera and other peripheral vendors, are in commodity-like markets where margins are low and volume is most important.
The Software providers: Software providers like to stick with standard OS offerings, but can be major source of innovation if they work closely with design companies.
Coming soon: we will examine specific companies and their role in promoting and developing the UMPC category.
Microsoft/Intel Motivations
The Microsoft Origami team goal, which might be considered admirable, was to create a user interface for small portable devices. But their business intentions are not that noble. On the business side, they merely wanted to sell more OS licenses. To do this, they needed new device categories, and UMPC fulfilled that need. Microsoft has consistently publicized and promoted UMPC not as replacement device for laptops but a companion device. In fact, Microsoft worked in parallel with VIA and Intel to get the UMPC concept to the market. If some of the rumors are to be believed, Microsoft even subsidized VIA hardware, and Intel subsidized their own hardware and sponsored designs with ODM/OEMs.
Intel’s long term goal was to establish a new platform (goPC/handtop/UMPC) as a portable companion running full Windows. However, the hardware chip design is long lead-time business, taking 2-3 years for new chipset to be designed and launched. So the current Atom processor was probably started three years back at Intel, to go along with the original Microsoft Origami project. No wonder, then, that Atom is a great platform for the original UMPC vision. During the intervening 2 years, Intel sold its XScale ARM processor line and created a hole in its mobile device roadmap. Enter some ambitious Intel brass which wrapped it all up with a planned strategy to go from UMPC to MID (and our prediction – into the Smartphone business). In fact now Intel pushes this strategy so hard that Intel Ultra Mobile group barely acknowledges the UMPC concept, never mind talking about it. But go back at the point where Atom was being designed, and you find Intel was pushing its existing solution for use in UMPCs, resulting in disappointing designs.
As one can tell from the history, the initial push for the UMPC concept, including its requirements (no keyboard, a keyboard device could replace laptops and undercut current products), were more to fulfill business ambition by Intel and Microsoft, rather than to fulfill user needs. Fortunately, the usage tends to triumph eventually. For example, now a keyboard is commonplace on UMPCs, and these “clamshells” is the most successful selling UMPC products.
1st-Generation UMPC Players
Before Intel/MS/VIA started promoting UMPCs, Sony (U50/70) and OQO both where selling UMPC-like devices, which just weren’t called a UMPC. Really the only difference between those prior devices and the current UMPC concept was the price: the prior devices sold for $2000 USD or more, while the Intel/MICROSOFT UMPC concept marketing targeted price-points around $500 USD. But next, when the Intel/MS/Via UMPCs finally hit the market, they were priced north of $1000, more than double the touted $500 price.
So, what went wrong? Well, the ODMs could not build these devices for under $500 in spite of price breaks on CPU/Chipset from Intel and OS from Microsoft. Moreover, all the Brands (Samsung Q1/Founder/ASUS R2H/TabletKiosk EO) wanted to get higher margins than their traditional laptop business. They saw this as their entry-point into consumer electronics devices, and expected them to command a consumer electronics profit margins.
For the 2nd generation, many more players entered the market. Stay tuned next week for that discussion.
