Is It A Smartphone Or A Laptop?

Neither. It's a 'tweenerand electronics makers are betting you'll want to stuff one in your bag

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When Jeff Hawkins speaks, people in the tech business take heed. After all, Hawkins, founder of Palm Inc., has invented three breakthrough gizmos—GRiDPad, one of the first tablet computers; PalmPilot, the first hit personal digital assistant; and the Treo smartphone. So the tech world was buzzing when Hawkins strode onstage at the D: All Things Digital conference on May 30 in Carlsbad, Calif., to reveal his latest brainstorm: Foleo.

It's an ultracompact computer with a twist. Palm is positioning the sleek clamshell device, which will sell for $499 after a rebate, as an alternative to carrying a larger, conventional laptop. It offers a nearly full-size keyboard, a 10-inch display, and comes with a selection of applications including a word processor and spreadsheet. But Hawkins believes it will be most useful when people also carry smartphones, like Treos or BlackBerrys, and transfer e-mail to Foleo when they're in sit-down mode. "It's a companion to your phone and companion to you," Hawkins says.

Ready or not, here come the 'tweeners. Palm and its Foleo are just the latest evidence that the electronics industry is determined to create a new category of mobile computing devices. Samsung Group, Sony (SNE ), Nokia Corp. (NOK ), HTC, Fujitsu (FJTSY ), and Vulcan Portals have also introduced or previewed products that are smaller than laptops yet larger than smartphones. The idea: offer businesspeople something very small—pocketable, in some cases—that's an alternative to carrying a laptop around town or on a short business trip.

With our pockets and carryall bags already bulging with cell phones and BlackBerrys, do we really need a whole new species of gadget? The electronics industry is betting we do. Laptop computers are more popular than ever, far outpacing the sales growth of desktops, with more than 81 million sold in 2006. The smallest laptops, called subnotebooks, weigh as little as 2 lbs. Smartphone sales are soaring, with more than 71 million sold last year. Meantime, demand is plummeting for PDAs because they can't make phone calls or run many desktop computing applications.


But it's not clear at all which of these gadgets, if any, the 'tweeners will replace. Most of the new machines are still too large to fit into a pocket or not capable enough to replace a notebook PC. The priciest top $2,900—far more than the average subnotebook. And Hawkins' presentation for the Foleo, impressive as it was, left some of the computing cognoscenti scratching their heads: Are people really looking for a companion to their phone? Will hard-core business types choose a computer that runs the Linux open-source operating systems rather than Microsoft's (MSFT ) Windows? "The yet-another-device philosophy doesn't carry, so to speak, and it's sure as hell not the future of mobile computing," sniffed blogger Ryan Block on the popular Engadget technology Web site.

There's no mystery about what's driving the 'tweener phenomenon. The computer industry is looking for new things to sell as the traditional PC market matures, revenue growth slows, and profit margins become even thinner. At the same time, mobile-phone makers want to develop products that fetch higher margins than commodity phones. So they all need new gadgets to get customers excited enough to open up their wallets.

As is often the case with new tech product cycles, the backroom power brokers are Microsoft and Intel (INTC ). They're pushing a new format called Ultra Mobile PC (UMPC). These devices, a subset of the overall 'tweener universe, weigh less than three pounds, have displays smaller than 7 in. across diagonally, and run Windows. Microsoft added features to Windows Vista aimed at improving the small-screen experience. Intel is designing a new processor from the ground up to boost performance while consuming very little power, a must for extending battery life.

Until that chip is available next year, most observers believe UMPCs will attract only the most hard-core gadget fans. "We're still in the evolutionary stage," says Anand Chandrasekher, general manager of Intel's Ultra Mobile Group. "The second-generation ones are much better than the first generation, and the third generation will be much better than the second." Indeed, so far, UMPC sales haven't made a blip on the industry radar screen. "We are talking a fraction of a percent of the total PC market. Noise," says analyst Leslie Fiering of Gartner Inc.

The major hangup is Windows. Devices loaded with Vista are expensive, operate sluggishly, and have short battery lives. That's because the huge operating system is designed to run desktop computers, not small portables. "We have suggested that if they offer something pared down from Vista, that might be a way to go," says Bret Berg, senior product marketing manager for Samsung, which just released its Q1 Ultra UMPC, running Windows Vista. So far the software giant is mum about its plans: "We're looking at adjustments, but I can't comment on it right now," says Greg Amrofell, a product manager for Microsoft's Windows Mobile group.


All the largest PC companies—Hewlett-Packard (HPQ ), Dell (DELL ), and Lenovo (LNVGY )—have been sizing up the 'tweener opportunity, yet none has taken the plunge. "At the moment, we have decided there's no balance between weight, screen size, battery life, and price that would give us something that's meaningful to the end user," says Marc Godin, vice-president of product development for Lenovo's portable division.

That leaves mainly smaller PC players and mobile-phone producers to experiment with new shapes and sizes. Nokia is convinced its expertise in designing low-power devices with little screens will win out. For one thing, Nokia portables, such as the E90 Communicator that is expected in the late summer, won't run Windows.

Palm's Hawkins has faced skepticism about the Foleo concept ever since he began talking it up to colleagues five years ago. "People would just say, It's a stupid idea, who's going to buy this?'" he recalls. But Hawkins was so convinced he was right that he made the project's survival a precondition in the 2003 sale of his company, Handspring, to Palm. That paved the way for Hawkins' return to Palm, which he started a decade earlier.

Until a clear leader emerges to define the boundaries between these devices, as Hawkins' PalmPilot did with PDAs, confusion will reign. For now, pity anyone who has to distinguish one mobile device from another. Recently, at San Francisco International Airport, a Transportation Security Administration employee scanning carry-on bags stopped the conveyor and stared intently at an unidentifiable object on her screen. "Is that a laptop?" she asked a traveler. "No, it's a UMPC," he answered. "It's not a laptop?" she asked. "No." She stared for a few seconds more and then, with a look of bewilderment, waved him through.

By Steve Hamm and Cliff Edwards

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