Smartphones Seen Edging Netbooks For Mobile Surfers

When 27-year-old Kas Tsai wanted to get a mobile Internet device, he picked an Apple iPhone over a low-cost netbook PC. “It just looks better and I can take it out with me when I’m out. The netbook is small, but the keyboard is so cramped and I can’t really use it on the go,” the biotech student said. People like Tsai could well decide who wins and loses in a looming war for dominance as Web surfers take their favourite pastime to the wireless realm.

Many observers say smartphones could emerge the longer-term victor. With desk-bound PCs fast losing their dominance as the main access point for Web surfing, the race is on between laptops and smartphones to see who will take their place. Many companies aren’t taking any chances, with PC companies piling into smartphones and vice versa.

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PC brands such as Acer and Dell have recently announced or been linked to smartphone launches. Mobile phone leader Nokia is going the other way, with talk of a possible foray into netbook PCs – the small, cheap laptops good for surfing the Internet or checking e-mails, but without all the functions of a larger, more expensive computer. The emerging turf wars could lead to greater competition in two already fiercely competitive sectors, causing everyone to take a hit while the battle plays out, analysts say.

“Nokia’s success in the PC market? I don’t think that’s going to get very far,” said Bob O’Donnell, an IDC analyst. “And HP or Dell selling smartphones? I don’t think so either. They’re getting into very different businesses, and that’s something everyone has got to keep in mind.”

Odds on Smartphones

In the emerging showdown between netbooks and smartphones, many say the cards seem stacked up against bulkier PCs. Both smartphones and netbooks start at about $300 each. Many companies are also targeting the same tech-savvy consumers, who are looking to complement their primary PC, making mobility and screensize the key issue for most buyers. Netbooks have been a phenomenal success since they were first launched by Taiwan’s Asustek in 2007, and bigger rivals such as Acer, HP and Lenovo have also pushed out their own lines since then.

But consumers could find that netbooks, while small enough to fit into a large handbag, still look, behave and have all the traits and inconveniences of a PC. “Can a PC power up in seconds and get me the information I need when I’m walking down the street,” asked Warren Lau, an analyst at Macquarie Securities. “Probably not, and I think that’s why smartphones are probably going to do better than PCs on the mobility front. A netbook is still a PC, and you’ll still need to sit down somewhere to use it. That’s not mobile.”

Some analysts also say that netbooks’ success owes to reduced consumer spending as a result of the global downturn, rather than a preference for accessing the mobile Internet over computers. “With financial motivation a key factor in many netbook sales, growth of the netbook platform is likely to slow down when the economy comes back and consumers have more money in their pockets,” said iSuppli analyst Matthew Wilkins.

The research firm expects netbook growth to slow to a more moderate 13 percent in 2013 from the 68.5 percent this year. In contrast, people who access the Internet on their phones are expected to grow by over 25 percent annually to over 1 billion users by 2011, suggesting that the sector is likely to sustain its growth over a longer period of time.

The absence of a reliable power supply could also crimp netbook growth in emerging markets, where many consumers would rather have a smartphone that allows them access to the Internet all day, instead of a PC whose battery life ends in hours. And with most major mobile phone makers such as LG Electronics, Motorola and HTC now pinning big hopes on smartphones, some analysts say this figure could grow even further. Mobile carriers are also actively pushing the phones to better leverage their third-generation mobile networks.

“There’s really a big push by telecom operators to move consumers to start using data plans, with so many of them throwing in subsidised smartphones,” said Vincent Chen, an analyst at Yuanta Securities. “That’s helping smartphone companies grow, because there’s this entire push to encourage consumers to buy smartphones.” Many investors are also putting their money with smartphone makers. BlackBerry maker Research in Motion has more than doubled this year, while Apple has leaped by two-thirds, outperforming the benchmark Nasdaq share index. (Reuters)