Abstract

Impact on PC Industry

PC-like Device

Even though the market, in which notebook/netbook products are positioned, is facing saturation, in terms of connectivity demand notebook/netbook mobility is still insufficient, while voice communications are still limited by product features. If Nokia enters the notebook/netbook PC market, it will therefore have an impact on notebook/netbook vendors.

First, Nokia, with its brand-name recognition and large channel resources, will be a formidable opponent for notebook/netbook PC vendors which are aiming to cooperate with telecom operators.

Second, if Nokia develops standard netbooks, Nokia could integrate its own products and services and sell these as packages in order to increase revenue sources. This could have an impact on companies with similar business models, such as Apple.

Nokia's experience in the PC field is limited and its strengths are not in R&D and design of notebook/netbook PC products. Furthermore, netbook ODM (Original Design Manufacturing) business is currently for more than 90% controlled by Taiwanese makers. If Nokia chooses to approximate mainstream netbook PC specifications, it will have to rely heavily on Taiwanese manufacturers' technology and R&D capabilities. Taiwanese makers thus stand to benefit from this development.

As for these netbook contract manufacturers, in the current economic downturn branded vendors have become conservative in terms of outsourcing production. Therefore, if Nokia enters the netbook market, it can increase the shipments of ODM manufacturers and help them maintain business operations.

Non-PC-like device

With the increased complexity of data processing and the growing demand for mobility, the capability to access the Internet at any time has become a required feature on many terminal devices. If the product concept of Nokia will be very different from notebook/netbook PCs, the impact on notebook/netbook PC brands will be relatively limited. At the same time, however, this could also provide a stimulus for the strategic thinking of notebook/netbook PC brands.

Although Nokia's new type of device would feature strong mobility, there would be differences with notebook/netbook PC products in terms of size, performance, and application models. Product substitution effect will not be significant. Therefore, the effect on notebook/netbook brands' major markets will not be large.

The PC market, in which notebook/netbook PC brands operate, is experiencing a slowdown in growth. Therefore, the new device type rolled out by Nokia could also provide new ideas for notebook/netbook PC brands, and could push them to also launch new device types or MID-related products.

Impact on Mobile Phone Industry

PC-like Device

Among the top five global mobile phone vendors, Samsung and LG's product lines cover IT, communications, home appliances, and semiconductor. These two companies rolled out netbook PC products before Nokia, and for them Nokia is a late entrant. However, as Samsung and LG's market scales are not large, no major competition will be created in the short-term future. Motorola, which has experienced a decline in its fortunes, needs to concentrate its resources on its core business and it is unlikely that the company will launch a PC-like netbook product at this point in time.

The core technologies of mobile phone contract manufacturers are entirely different from PC contract manufacturers. As a result, mobile phone manufacturers do not have competitive advantages over PC manufacturers in the PC-like product field.

Non-PC-like Device

If Nokia developes a mid- to small-sized mobile Internet entertainment platform device at this point in time, it will have a symbolic significance for the market. Analyzing the measures of other competitors, as Motorola is still concentrating its resources on core products, it is unlikely that it will focus on these strategic products. Besides the fact that Sony Ericsson has often wavered in its product focus, its parent company Sony has similarly positioned products entering the market, and it is unlikely that Sony Ericsson will decide to go head-to-head with its parent company. If Nokia decides to develop small- to medium-sized portable Internet products and receives a positive market response, Samsung and LG could quickly follow Nokia and launch non-PC-like products themselves, as they already have PC business units and notebook PC product lines. In particular, Samsung has experience in developing UMPC (Ultra Mobile PC) products.

From the perspective of mobile phone contract manufacturers, Nokia's development of a small- to medium-sized mobile Internet entertainment platform device has the goal of testing the market. Shipment volume will likely be not large. Also, referencing to Nokia's past production strategies, high-end or strategic products are mostly produced in-house, and are rarely outsourced to contract manufacturers. Therefore, the effects on contract manufacturers will be limited.

Appendix

Definitions

PC-like Products

PC- like products have specifications similar to those of mainstream notebook PCs or netbook PCs, such as Intel Atom platform, screen sizes between 7" and 10.x", Windows XP or Linux OS, and HDD or SDD storage devices.

Non-PC-like Products

Non-PC-like products are characterized by an industrial design which is different from a typical notebook or netbook PC. These products' screen sizes are between 4" and 9", and either use x86 or ARM architectures, depending on product positioning and demand for performance, power consumption and durability. These products adopt Qwerty or touchpads. Operating systems can include Windows XP, WinCe series, Linux or own-developed operating systems.

List of Companies