Will Microsoft's New 'Ultra-Mobile' Computer Fly or Flop? Past Experience Offers Some Clues

KNOWLEDGE @ WHARTON: Although Microsoft recently unveiled an 'ultra-mobile personal computer,' or UMPC, in a move to fill a market niche between laptops and handheld computers, it remains to be seen whether this latest innovation from the software giant will be a hit or flop. While Microsoft is following a "build-it-and-it-will-sell" strategy with the UMPC, technology history is littered with innovative products that never found a market, say experts at Wharton. As Wharton professor of operations and information management Eric K. Clemons puts it: "Build-it-and-it-will-sell strategies are a mixed bag."

UMPC Has Promise but Is Far From Mature

The Ultra-Mobile Personal Computer (UMPC) concept has merit but is unlikely to succeed without key changes, including a lower price and longer battery life.

Event

On 9 March 2006, Microsoft and Intel unveiled details of the UMPC, a reference platform for a sub-notebook-size computer weighing less than 2 pounds, with a 7-inch touch-screen. Initially, UMPCs will run Microsoft Windows XP Tablet PC Edition 2005, with Microsoft Touch Pack software (formerly code-named "Origami") providing a touch-screen-optimized interface. (UMPCs will be available with Windows Vista at a later date, and can run other operating systems, such as Linux and Mac OS X.) The first UMPCs are expected to be priced in the $799-to-$999 range, and to be available in 2Q06 from vendors such as Founder, Samsung, Asus, TabletKiosk and PaceBlade Japan.

Analysis

Today, the device is a “tweener” — neither PDA (too large to be pocketable) nor notebook (too small to be a useful PC). But the UMPC concept has longer-term promise in the consumer and "prosumer" (professional consumer) markets as a lifestyle device acting as a notebook auxiliary or replacement. This device would let users store and carry their digital “stuff” (including photos, videos and MP3 music files) and would act as a real-time e-mail client (which would require a wireless WAN card and an eight-hour battery, currently unavailable). UMPCs may also have potential in semi-vertical segments such as field sales and education.

But while the UMPC concept has promise, today’s hardware cannot deliver on it. In Gartner's view, success will require:

• Technology advances that are at least two years away (including an eight-hour battery and a sub-$400 price)
  
• Low-cost, compelling content bundles (Intel and Microsoft are working on partnerships in this area)
  
• A better Microsoft shell/interface running on top of Vista
  
• Text entry options beyond “thumb-typing”
  
• "Dock and go" synchronization, requiring minimal user interaction
  
• Sustained market momentum from Microsoft and Intel
  

Today, we believe it isn't possible to produce compelling UMPC products — just "proofs of concept." The low battery life, high price and non-Vista operating system will likely hurt the UMPC's market acceptance in this first go-round, and the negative backlash could damage its future chances. For these reasons, we question the timing of this launch: Why rush this to market before it is ready to succeed? Despite the promise of this device category, the UMPC as currently conceived will fail to achieve mainstream success — defined as unit sales in the millions rather than the thousands — by 2009 (0.8 probability).

Recommendations

Enterprises: Wait for more mature UMPCs — and low-cost content services — to emerge before considering them for field sales or other “notebook replacement” applications.

Device manufacturers: Monitor the UMPC technology road map toward viable product delivery. Understand that a key element of UMPC's value proposition is its positioning as a new lifestyle category, not just another hardware form factor.

Analytical Sources: Leslie Fiering, Brian Gammage and Van Baker, Gartner Research

Eleksen announces three UMPC–optimized keyboards

We have to admit, we're a little hurt that fabric keyboard designer Eleksen didn't give us the heads up about Origami, considering how long they must have known the secret for. Coinciding with the Samsung/ASUS/Founder launch, Eleksen introduced three UMPC-friendly reference designs, indicating that they may be backing away from marketing their own brand in favor of licensing their ElekTex tech to OEMs. Besides UMPC-optimized versions of their rollable USB and Bluetooth models, the company announced a design for a carrying case with an integrated keyboard, media controls, and/or gesture sensors. All three reference designs are available immediately for OEM device integration, although it's unclear when we'll actually see products on the shelves.

Read the press release from Eleksen here.

TabletKiosk V-700 UMPC

What, another UMPC? Don't tell us you thought the Samsung, Asus and Founder UMPCs we checked out earlier this week were the only ones out there. Like it or not, the UMPC is now a real product category (at least for now), and that means we're going to see more of these little boxes coming out over the next few months (though at least they won't be accompanied by cryptic, annoying, overblown hype campaigns). Like this one, from TabletKiosk, a company known for, yes, PCs designed for use as tablets or in kiosks. The company's entry to the UMPC market is the V-700, with specs that look consistent with the other UMPC's we've seen (though this one doesn't have an Intel processor): VIA C7M at 1GHz, max RAM of 1GB, 2.5-inch HDD up to 160GB, 7-inch 800x480 display, and the standard array of buttons (and, of course, no specifics about pricing and battery life, the two most closely held secrets in UMPC-land). In fact, if you look closely at it, you'll see that the V-700 is one of the boxes that we saw a few days ago, back when the hype machine was in full swing. Of course, it didn't have any branding (and current pics still don't). But it's nice to see that at least some of those pics were real, rather than Photoshop projects from people with way too much time on their hands.