Tech execs say two mobile devices is enough

NEW YORK Fri May 22, 2009 4:44pm EDT

A pilot checks messages on a blackberry phone as he makes his way to a flight at SeaTac Airport in Seattle, Washington April 16, 2009. REUTERS/Mike Blake

A pilot checks messages on a blackberry phone as he makes his way to a flight at SeaTac Airport in Seattle, Washington April 16, 2009.

Credit: Reuters/Mike Blake

NEW YORK (Reuters) - With all the smartphones, laptops, netbooks and mobile Internet devices on offer these days, how many gadgets do you really want to cram in your bag?

The answer apparently is two, according to executives at the Reuters Global Technology Summit in New York.

Executives agreed that even in a bad economy consumers are willing to prize open their wallets for both smartphones and netbooks, or slimmed-down portable computers.

And many draw the line at this point.

"Something in the middle, if it becomes a third device you have to carry, I don't know how that's a greater benefit," said Texas Instruments Inc TXN.N Chief Executive Rich Templeton, in response to a question about mobile Internet devices, which are smaller than netbooks but bigger than smartphones.

Pundits have long talked about device convergence, or gizmos with common functions, ultimately combining into one multimedia, entertainment and business gadget.

Wireless companies have succeeded in coaxing many consumers to squeeze much of their lives into pocket-sized smartphones, such as Apple Inc's (AAPL.O) iPhone and Research In Motion's RIM.TO Blackberry.

Now, device makers and wireless providers are keen to turn netbooks into the next big thing. They argue they are lighter than laptops and cheaper, but have bigger screens than phones.

AT&T (T.N) plans to sell three netbook models at all its U.S. stores this summer.

"We have been saying integrated devices forever, and people (are) still carry two devices," Ralph de la Vega, head of AT&T's mobile business, said.

TWO IS ENOUGH?

But how many people can afford both a smartphone and a netbook? Operators like AT&T are heavily subsidizing netbooks, but only if their customers commit to a $60 per month service fee for two years. The minimum monthly voice and data service fee for iPhone is already $70.

Analysts are bullish on netbooks because they are a cheaper alternative to laptops. But they worry whether consumers attracted to the netbook price tag -- often as low as $100 -- would have the stomach for the hefty monthly wireless service fees that come with each gadget.

Current Analysis analyst Avi Greengart added it was unclear if demand would spill over from early technology adopters, often willing to pay a premium to be first to have a gadget, to the mainstream market.

"There are an awful lot of service plans floating around and at a certain point consumers may just say, enough," he said in a telephone interview.

Netbooks and smartphones have a lot in common: both offer Web surfing on the go, small keyboards and the ability to download applications.

But smartphones, which also support features such as emailing and Web surfing, also offer plain-vanilla voice calling.

In the first quarter, when overall mobile phone sales shrunk, sales of smartphones jumped 13 percent to 36.4 million units, according to Gartner. At the same time, 2009 netbook sales are forecast to rise around 80 percent to 21 million units, even as the overall PC market is seen falling.

AT&T is looking to cash in on both trends. It has exclusive U.S. rights to sell the iPhone and also netbooks from Dell DELL.O Acer (2353.TW) and Lenovo (0992.HK).

Bigger rival Verizon Wireless, a venture of Verizon Communications Inc (VZ.N) and Vodafone (VOD.L), will begin to sell its first netbook from Hewlett-Packard (HPQ.N) on May 17.

"We have a lot of customers with multiple devices today...The netbook is like another arrow in the quiver," Verizon Chief Financial Officer John Killian said.

Kim Min-seok, head of SK Telecom's future technology institute, also sees consumers buying many devices.

"We think people will carry two devices at least," the executive told the summit. "I used to think all the features will eventually be incorporated in a mobile phone under the convergence trend. But it's not necessarily the case."

Other executives noted that a telecom provider's promotion of a device, partly aimed at boosting data services, often goes a long way toward ensuring the success of any gadget.

SanDisk Corp (SNDK.O) Chief Executive Eli Harari told Reuters that selling storage technology to netbook makers would not be very lucrative for his company at this stage as the device's low price doesn't offer much room for profit.

But he was bullish on the netbook's prospects.

"You have a totally new channel that's selling these netbook PCs, which are a very powerful tool," he said. Carriers "can, in fact, drive subscription services and data services a lot better on a netbook PC than on a real phone."

(Reporting by Gabriel Madway and Sinead Carew in New York and Rhee So-eui in Seoul, editing by Edwin Chan, Leslie Gevirtz)

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