Line blurs between phones, PCs

Mainstream notebook PCs and mobile phones are worlds apart when it comes to cost, size and design metrics. But trends revealed in recent teardowns on ultramobile PCs from Sony, Samsung and Tablet- Kiosk show the chasm is closing when UMPCs are compared with a recent ultrahigh-segment smart phone from HTC.

The four Portelligent teardowns yielded these key findings:

• UMPC hardware bills of material (BOMs) have been declining 17 percent a year. At that rate, the systems would approach the cost of current high-end smart phones between 2008 and 2009.

• The UMPC's underlying hardware architecture may impede further strides in the cost-reduction rate.

• Smart phones such as the HTC Universal are looking more like mini PCs in cost, hardware architecture and functionality.

The Sony Vaio VGN-U750P, launched in 2004 in Japan as the U50/U70 and released in the United States in 2005, was one of the first small-form-factor tablet PCs, later to be classified as a UMPC. With a 1.1-GHz Pentium-M processor, 512 Mbits of DDR RAM, a 20-Gbyte hard-disk drive and a 12.6-cm-diagonal touchscreen SVGA display, the Vaio had an estimated hardware BOM exceeding $500, helping to explain the initial wave of $1,500 to $2,000 UMPC price points.

When compared with mainstream notebook PCs analyzed in the same time period, the overall hardware BOM of the Vaio U750P rung in approximately 25 percent lower, and some metrics--such as IC package count and IC die area--were 40 to 60 percent below those of the notebook PCs. The hardware BOM is driven by high-ticket items such as the hard drive, display and a few major ICs.

Samsung's NP-Q, released just after the UMPC initiative was announced in early 2006 by Microsoft Corp. and Intel Corp., brought the UMPC platform nearly $100 closer to the sub-$200 BOMs of most smart phones. Cost reduction techniques included the switch to a Celeron-M ULV processor from Intel and a lower-resolution display. Those savings were slightly offset by a 40-Gbyte hard drive and the inclusion of a Bluetooth module (now standard in nearly every smart phone).

Even with the sub-$500 BOM, Samsung elected to keep the retail price point of the NP-Q1 above $1,000. Other than the change in processor and display, the NP-Q1 was very similar architecturally to the Vaio, with only incremental reductions realized in IC package count. Surprisingly, the Samsung NP-Q1, likely driven by the UMPC specification, grew the display and weight by nearly 45 percent and the volume by more than 75 percent over the Sony Vaio.

TabletKiosk, founded in 2003 with a focus on UMPCs and tablet PCs, released the eo V7110 in mid-2006 at a best-in-class $899 retail price point. A close look inside the TabletKiosk UMPC shows how the company was able to crack the $1,000 retail price floor. Most notably, TabletKiosk used a Via Technologies processor and chip set, as opposed to the Intel processor and chip set found in the Sony and Samsung UMPCs. The move is estimated to have saved TableKiosk nearly $50 over the NP-Q1 and more than $100 over the Vaio. That savings is driven by lower margins from Via Technologies and a die area reduction of nearly 35 percent vs. the Intel parts. Still, such cost differences have to be considered in light of power and performance, and here Intel and Via are positioned differently on the playing field, making blanket "cheaper is better" statements problematic.

Other cost savings, related to the battery pack, hard drive and nonelectronic mechanical components, let TabletKiosk achieve an estimated hardware BOM below $400. Other than the processor and chip set, the V7110 is architecturally similar to the NP-Q1 and the Vaio.

On the smart-phone front, HTC launched the Universal (also branded as i-Mate JASJAR, Qtek 9000, T-Mobile MDA Pro, Orange SPV M5000 and O2 XDA Exec) in 2005. Some carriers and resellers have positioned this Microsoft PocketPC-based smart phone as a notebook replacement. With a 520-MHz Marvell (ex-Intel) Xscale processor, 128 Mbytes of memory, Wi-Fi, a QWERTY keyboard and a 9-cm QVGA touchscreen display, the Universal came closer to looking like a laptop than any cell phone we've ever analyzed. Even the battery, with a 1,620-mA-hr rating to power all the features found in the Universal, looked more like the 1,800-mA-hr battery found in the Sony Vaio than the 700- to 1,000-mA-hr batteries typical of most cell phones.

With an estimated hardware BOM approaching $300, the Universal was also one of the most expensive cell phones Portelligent has torn down. Further examination shows that the IC package count and IC die area exceed those of the UMPCs. The lack of a hard drive and larger display were among the few factors that kept the Universal from racking up the $350 to $500 overall hardware BOM seen in the most recent UMPCs. Last year HTC launched a successor to the Universal, the TyTN, with similar functionality in a smaller form factor. Its estimated hardware BOM came in below $200.

The trend in UMPC hardware BOMs clearly shows that a sub-$200 cost--a figure now common to the smart-phone market--could be achieved sometime between 2008 and 2009. But the underlying architecture, which requires X86 processors and chip sets to support a full-blown Windows OS, hard drives and touchscreen displays, may impede the rate of further cost reductions.

Despite lower retail price points, UMPC shipments remain far short of IDC's forecast of an estimated 100 million units for 2006. Compared with smart phone, UMPCs offer limited channel distribution, a generally shorter battery life, larger form factors and lack of built-in cellular connectivity. But smart phones, with their smaller displays, light application suites and limited storage, have yet to achieve the status of notebook replacements. Consumers could face an increasingly difficult choice between hopped-up phones and slimmed-down portable PCs.

Jeff Brown is a principal analyst at Portelligent. The Austin, Texas, company produces teardown reports and related industry research on wireless, mobile and personal electronics (www.teardown.com).

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