Smartphone Versus Netbook: Can Nokia Jump The Gap?

For anyone looking at mobile devices right now, there’s one obvious question. Which will win, the smartphone or the netbook? The two devices have an obvious overlap, and must come into conflict. But Steve Brazier thinks there are better questions to ask.

A clash of industries

“It’s actually the phone industry versus the PC industry, not specifically smartphones versus netbooks,” said Brazier, president of analysis firm Canalys. “It’s a competition of business models, not product categories.”

Traditionally, the PC industry expects to sell devices outright, while the phone industry links them to a contract and may subsidise them, but certainly expects the device to be a small cog in business model that is based on services.

In the past these two were separate, with PCs running office software and phones used for communication. But those divisions are breaking down – and the collision is such a major event, that Canalys is holding a summit on the subject in London, in November.

eWEEK Europe spoke to Brazier to understand the roots of the smartphone-netbook collision, and get the inside story on the roots of the crisis – and the likely outcomes.

“Can vendors remain only in one industry, or do they need to be in both?” Brazier asked. “Can they be successful in both? Do they run the two as an integrated business, or two separate businesses, two separate brands?”

Can Nokia succeed in PCs?

“Nokia’s launch of a PC is just the most recent example of cross-over,” he said. The first great cross-border move, of course, was Apple’s iPhone. That, of course, has been a huge success, redefining part of the phone market. But Nokia’s success going the other way is by no means guaranteed, he said.

“Once you’ve asked all the business questions, you can go into more product-related questions,” he said. Each of the overlapping devices is a smaller part of a big, established market – and one that is hard to define: ” When is phone a smartphone? When is notebook a netbook?”

“The regular phone market is still more important than the smartphone segment,” he reminds us, “particularly in emerging territories. And some smartphones are criticised for their complexity, their battery life and cost.”

Despite this, smartphones have to keep getting smarter, he points out: “to stop them being regul;ar phones.”

Can Nokia win?

But, we ask, how successful will Nokia’s move into PCs be?

“Nokia has been in PCs before,” he points out. “And it is scarred by the experience. It pulled out in 1991, and sold the business to UK computing company ICL which was sold into Fujitsu. That sounds like ancient history, but it is only five or six years since that original Nokia PC factory got closed down.”