The Coming Age of Franken-products

Stephen DeAngelis

June 19, 2009

If you’ve been following IT trends, you already know that netbooks are the some of today’s hottest selling computer products. Netbooks are small computers that fill a niche somewhere between a smartphone and a laptop. Apparently, phone companies believe that mobile communications and computing have a bright future and are elbowing in on the netbook market. At a recent IT show in Taiwan, “phone companies aggressively promoted tiny computers that bridge the gap between smartphones and laptops” [“‘Franken-Products’ Abound at Taiwan Computer Show,” by Ashlee Vance, New York Times, 7 June 2009]. Vance reports:

“Roger L. Kay, one of the most prominent analysts of the PC industry, described the new generation of machines as ‘Franken-products,’ a reference to the monster cobbled together from various parts. For years, the popular industry term used to describe the collision of computers and cellphones has been ‘convergence.’ But based on what’s coming soon to a store near you, it seems that ‘divergence’ may be the more apt moniker. There is now a quasi-laptop for just about every need and want. This month, consumers will start to see a fresh crop of cheap, thin, ultra-light notebooks arrive at chains like Wal-Mart Stores and Best Buy. Top-of-the-line computers in this category used to cost around $2,000, but the newer products will sell for less than $600. Too expensive? The computer industry offers other options. Companies like Hewlett-Packard, Dell, Acer and Asustek Computer are introducing lines of netbooks, the sub-$400 laptops aimed at simple tasks. And if all you want to do is browse the Web, … built around cellphone chips, can display high-definition video and still last for up to 18 hours on a single charge. They should start appearing in stores this fall for less than $150 and weigh less than two pounds.”

Such products are obviously suited for frequent travelers and others living a very mobile lifestyle. However, I believe that cheap netbooks may also find an important niche in the developing world. It wasn’t too many years ago when people claimed that people in developing countries weren’t interested in technology. Few people there had telephones and no one seemed eager to invest in installing land lines. Then along came cellphones and most analysts were stunned by how rapidly that technology penetrated the developing world. Today, large numbers of computer users are hard to find in the developing world; but the introduction of cheap netbooks or similar Franken-products could change all that. When I discuss Enterra Solutions’ Development-in-a-Box™ approach with business leaders in emerging markets, I make a strong pitch that their future depends on becoming integrated with regional and global business-to-business networks. No matter what you call these emerging technologies, netbooks, smartbooks, netphones, etc., I expect to see many more of them as I travel to emerging market countries in the coming years.

Vance reports that several “phone carriers plan to release Nvidia-based laptops” in the near future. These computers can reportedly “run for up to 24 days on a single charge if it is just playing music or run for 10 hours straight playing high-definition video.” In areas where recharging cellphone or computer batteries remains problematic, a breakthrough in battery life is important. Just as important is cost. Vance reports that these devices could sell from $49 to $99. He wonders if “any of these products will take off and lead to a reinvention of the PC”? If manufacturers look only to the developed world, they may not. If they market them to emerging market countries they may find a welcoming customer base. The one thing that could derail Franken-products in the developing world is the development of smartphones that are “good enough” for personal and business transactions. There are a number of companies developing applications for smartphones that hope smartphones represent the future [“Apps Boom as Companies Seek a Place on Your Phone,” by Jenna Wortham, New York Times, 7 June 2009].

Apple’s best television iPhone advertising demonstrates the number of applications that are already available to consumers. Wortham reports:

“With the number of downloads through Apple’s App Store topping one billion and more than 40 million iPhones and iPod Touches sold since 2007, an increasing number of companies are seeing the mobile industry as a source of sustained revenue. Recently, IAC/InterActiveCorp, the Internet media conglomerate founded by Barry Diller, and, have bought app developers. Smaller companies have begun to assemble properties. Since Apple showed that new apps sell phones, the market for apps is expanding quickly. Palm, Research in Motion, Nokia and Microsoft are all building app stores to work with phones running their operating systems. Apps can also be built for phones running Google’s Android software.”

The point may well have been reached where smartphones are good enough to become a person’s only phone and only computer. Wortham indicates that software companies are now asking themselves, “How can we get on the iPhone?” Smartphones may still be too pricey for many in the developing world, but the more useful they are the more cost effective they become. It will be interesting to see whether small computers or smarter cellphones become the next big thing in emerging market countries. In many ways, the answer doesn’t really matter. What matters is that people, businesses, and governments get connected.