Asus Eee PC

A new report from ABI Research on ultra mobile devices will warm Intel’s heart. The report estimates that the sale of all ultra mobile devices including mobile Internet devices,  ultraportable PCs, netbooks and basically anything larger than a phone and smaller than laptop will move from $3.5 billion in 2008 to nearly $27 billion in 2013. The firm issued a report a few weeks ago saying 200 million of these devices will be sold in 2013 — something I doubt. But this report is encouraging for Intel, which is pushing its low-power, x86 Atom chip into that market. From the report:

In 2013 more than half of all UMDs will have x86 processors at their heart (largely Intel’s Atom), with the balance based on ARM processors. When it comes to operating systems, in 2013 Linux will outnumber Windows devices by two to one across all UMDs, despite the higher return rate for Linux products (compared to Windows products) experienced by netbook vendors today.

I’m not sure how Linux will overcome those higher return rates, but the idea that Intel chips will power more than half of these devices might give pause to companies such as Qualcomm, Texas Instruments, Nvidia and others seeking to use ARM-based processors to get a piece of this market. If Intel has more than half (even of a smaller market), the rest will have to be split between myriad other vendors. In this case, the real winners will be Intel, with ARM coming in a distant second.

A lot of talk has been devoted to mobile operating systems lately, with Windows Mobile, Symbian, LiMo and Android getting the lion’s share of the attention. But if you consider that the mobile phone will soon be a place to make calls and access the web through cloud services, then the operating system is less significant and the browser becomes the king.

Or so says Bob Morris, head of mobile marketing for ARM Holdings, which designs the cores for many of the mobile chips that act as the brains of mobile phones. He says that browsers are the new application framework, which is why ARM is paying close attention to how their cores work with specific browsers rather than only the OS. To that end, ARM has inked a partnership with Mozilla and other vendors to build a Linux-based mobile computing device designed for web surfing on the go. Mozilla is planning a yet-to-be launched mobile browser.

So while the former CEO of Vodafone, Arun Sarin, was pushing for fewer mobile operating systems at the GSM World Congress and CTIA trade shows earlier this year, Morris believes the increasing number of services accessed through a web site such as Facebook or Gmail are what chip vendors and device makers needs to pay attention to. Browsers, plus the right downloads such as Flash or Silverlight, will drive the consumer experience more than the OS.

This trend of mobile web adoption has enhanced the profile and importance of ARM, which designs the cores of most mobile processors that serve as the brains of cell phones. ARM cores are also the basis for Qualcomm’s Snapdragon chips, Texas Instrument’s OMAP3 chips and Nvidia’s Tegra chipset, all of which are designed for faster computing at lower power for mobile phones.

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I’m not sure where Qualcomm is going with its Plaza effort, a platform-agnostic widget development and delivery framework for carriers. I see why the wireless chip maker wants to appease carriers with their own set of mobile phone widgets, as they could generate higher data usage and increase ARPU, but I don’t know why a user would use them when they can download thousands of other widgets from other sites and bypass their carrier entirely.

Mobile widgets are tiny apps residing on mobile phones that directly connect users to the web without having to go through a browser. It’s fast, and for users without a smart phone (but with a data plan and Java), it’s the only way to access the web. Handset maker Nokia is affiliated with WidSets, which offers more than 5,000 of the things, including PrivateChat, which allows you to IM without paying text messaging fees. Others including Zumobi, GetMobio and Plusmo also offer widgets for mobiles.

Plaza is in the commercialization stage right now, so things may change, but so far it seems similar to WidSets, just with a carrier point of view.

There are enough signs that Apple’s iPhone, the fast-growing mobile device from the Cupertino-based consumer electronics and computing giant, will give the still-emerging business of mobile video a turbo boost. Here’s why:

Earlier it was reported that some NBC television shows could be streamed directly to iPhone via the browser. In addition, Orb, an Emeryville, Calif.-based startup announced that it had figured out how to stream live video to iPhone and iTouch, on the unlocked devices, often referred to as “jail broken.” (Watch video). But the real boost to Internet video on the iPhone will come later this year, when Move Networks, an American Fork, Utah-based company, will release an iPhone version of its player.

Move founder and CEO John Edwards (no, not that one) stopped by in our office yesterday to meet with Liz and me and give us an update on the state of his company. He coincidentally became the first CEO to have Crash, the GigaPuppy, sit in on the meeting. Even though I was obsessed with why he raised $46 million, towards the end of the conversation, I asked him about his iPhone plans. He said Move is working on the player, but it is still early days — though he did assure us that it would be made available around the time Apple opens up the iPhone sometime later this summer.

Move’s move could have a major impact on the mobile video business. Why? Move’s video technology is used by most major networks to stream shows from their web sites -– ABC, Fox, ESPN and CBS are all Move clients. So essentially what it means is, you could go to, say, the ABC web site and watch an ad-supported episode of Lost by streaming it to the iPhone.

Move’s player can adjust the quality of the video according to the bandwidth available to the client machine. With a 3G iPhone rumored to be launching in June, Move is smart to wait out the release of its client. Even its technology is not going to be able to overcome the lousy experience of watching streamed video over an EDGE network. (Yeah, I tried watching 30 Rock on my iPhone and it sucked.)

Easy access to popular TV content that can be played back over the air without paying for it will prompt a lot of people to give it a shot. And that could spark interest in mobile video, which has been a slow starter in the U.S. market, to put it mildly. Even with the availability of Verizon VCast, Mobi TV and now AT&T’s Media FLO network, a mere 4.5 percent of U.S. subscribers have watched mobile TV, according to research firm M:Metrics. In comparison, a M:Metrics survey shows that nearly 31 percent of iPhone users have watched video on their device, while 21 percent have watched on-demand video or TV programming on their device.
I suspect there is a correlation between the screen size and video watching habits. Using an example of one — in addition to my iPhone, I like watching side loaded video content like Digg Nation on LG Vu and Nokia N95 all the time, mostly because they have screens that don’t make me squint.

One of the reasons people have a lackadaisical attitude towards mobile video is because they don’t want to pay the $10-to-$15 monthly subscription fee. In other words, ad-supported video is the way forward. That is why I think Move’s iPhone-compatible player could do the trick.

Between the laptop and the mobile phone lies…something. Intel and Qualcomm may differ on what that something is, but both firms have determined to tap into growth — real or imagined — in the ultramobile PC space, following on the heels of device makers ranging from established players such as HP and BenQ to smaller ones like LimePC and ASUS Taiwan.

Along the way, the Intel Atom and Qualcomm Snapdragon chipsets will compete against processors from VIA Technologies and Freescale Semiconductor, both of whom make chips for ultramobile PCs already. So far, the winner looks like it will be anyone who wants a computer with a screen width ranging between four and nine inches, as new devices will flood the market. But beyond education, how large will that market be?

VIA Technologies is one of the older players making chips for these pocket PCs. The number of ultramobile PCs based on VIA processors is currently approaching 40, more than 30 of them are shipping today. Freescale has a smaller foothold; one device containing its processors is currently being shipped, and it has a partnership with Intel to provide power management chips for Atom-based devices. Intel has an older line of chips that power the ASUS-produced EEE, but its newly launched Atom processor represents its true effort to get into this market.

At a developer conference last week in Shanghai, Intel said it plans to ship Atom chips in June; it also has 25 mobile Internet devices planned around the processors from manufacturers including Lenovo, Clarion and LG. Also last week, I spoke with Qualcomm’s COO Dr. Sanjay Jha, who outlined Qualcomm’s interest in this space.

Jha said 15 device makers will use Qualcomm’s Snapdragon chipset for powering ultramobile PCs that range from 4 inches to 5 inches in screen width. The devices should be available at the end of this year. While he didn’t disclose the names of the manufacturers, industry chatter favors Samsung and HTC. Which makes sense since Qualcomm is targeting the smaller, 4-inch to 5-inch form factor with which these cell phone makers are experienced.

Chipmakers are placing bets on this space because smartphones and ubiquitous broadband are making it possible for consumers to rely more closely on the web for life on the go. Personally, I think improvements to smartphone user interfaces would be a better bet. In the developing world and in education, such portable PCs could find a home, but for the rest of the world, a smartphone that’s easy to use is the likely winner. That or a MacBook Air.

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