Microsoft's Origami UMPC: What were they thinking?

A ubiquitously connective device (connectivity not included)

So what about that wide-area connectivity thing, Bob O'Donnell? "The problem there is, of course, we're not quite there yet. There's no reason why you couldn't put 3G wireless in this - those chipsets are available, and they're putting them in notebooks. Supposedly, second generation [UMPC] will have that. But the bigger problem is the service provider issue, which is, 'Great, I have the hardware, but you know what? Verizon's going to charge me 60 bucks a month.'"

"Here's the challenge," offered Ross Rubin, "and here's why saying the device has potential is not apologizing for it: Let's think about the future of wireless connectivity and the speeds that will be available a year or two from now, and these broadband speeds that we're going to have access to - 2 Mbps, maybe more when you think about WiMax or 4G. What kinds of applications are you going to roll out on a 2 1/2" screen for a smart phone that can take advantage of that kind of thing?" In other words, maybe the next-generation handsets and connectivity devices may be the first to roll out WiMAX or other standards, but they'll also be the ones stuck with the miniature screen.

So what services would consumers need wide-area broadband access to all the time? Rubin posed this question at a WiMax conference in 2005, and the answers he got all had to do with "on-demand" functionality - audio and video conferencing, and location-based services. It's at this point where the WiMAX attendees realized, said Rubin, that a smart phone has a little portability problem, where the two-inch UI no longer seems an asset. "UMPC is a compromise between this smart phone platform and the notebook platform," he continued, "with its family heritage being a lot closer to the notebook platform. But the intention is to get it down to a price where it is perhaps competitive with some of these higher-end smart phones, or that it could realistically be subsidized down the road by a carrier. That's why I think, of all the things that this product needs, probably the most important missing link right now is this high-speed wireless."

"That would be great," agreed IDC's Bob O'Donnell, "but getting [carriers] to do that is going to be a challenge. My sense is, the service providers have different business models, and different ways of making this happen. Those guys have to wake up and [think of this as a] basic guns-and-butter economy [issue]. 'If I lower the price, I can get a lot more people, that makes up for the fact that I have to lower the price.' But that's not the UMPC guys' problem; that's the 3G network guys, and they have their own sets of issues."

In other words, UMPC is going to have to appeal, somehow, to the carriers as a possible solution to a serious problem. But for them to realize this, it will be they - Verizon, Cingular, T-Mobile, and the others - to fall in love with this device. And as we've already figured out, falling in love with the UMPC is a lot more difficult today than many thought it would be last week.

"The problem is, unfortunately, classic Microsoft," said O'Donnell. "They've got a good concept, but the first couple of iterations are not cuttin' it...Bottom line, it's a mixed bag. I don't think it's totally out to lunch. I think they're going to have a hard time with the first iterations at the price points they're talking about. Then the question becomes, by not having a great product out of the gate, did they blow their opportunity?"

One could very easily answer, "Yes," explained O'Donnell, and make a case in the affirmative that would be very difficult to refute. "The reality is, no one is banging down the door saying, 'I need this product today.' To which I then [would have asked], 'Then why not have waited until you had it totally nailed at the price points you needed to hit, and then introduce it?'"

"There's certainly a lot that needs to happen before Origami reaches its full potential, whatever that may be," added Ross Rubin. Even at the low end of the current UMPC price scale - $800 - a purchase will seem out of reach for many consumers, he argued. "Once we get down to $500, once the battery life gets a little better, once we see a few applications that really enable this platform to shine, instead of just repurposing today's notebook applications and, indeed, applications that are non-optimized for a device that lacks a keyboard, then maybe more of the device's potential will be realized."

Maybe then, a year or so later down the road at least, we'll be able to answer the less-and-less-burning question, "What am I?" And the answer to that question may be more appealing than just, "I am a product category." "If you're going to launch a category, you need a hit product," stated Bob O'Donnell. "You can't just say, 'Here's a cool category...[now go] find the hit product.'"

There are some who would argue that we should give this new product a fair chance in the market. The problem with that argument is, just how much of a product is this UMPC? How well thought-out is it, even as just a framework for a category for a platform for a market segment? Think about this simple question: Today's first-edition UMPCs, including the Samsung Q1, will run Windows XP Tablet Edition 2005; the full-blown Windows Vista that the UMPC framework promises will, of course, only be available this fall at the earliest. How will a customer upgrade? Vista will be supplied on CDs; where will they go? Does a consumer literally have to purchase one of the business premium editions, in order to create an administrator/client relationship and a remote PC uplink between her big PC and her little PC, just to be able to use the CD-ROM drive on the big PC? Will the connection be over a USB cable? How will that be secured? And will the customer need two Vista licenses; one for the big PC, the other for the UMPC? Or does he get any credit for having had to purchase Windows XP first?

The fact that nobody with whom we've spoken - not our analysts, not our experts, not the people on the scene - have been able to glean the answer to these questions, is an indicator of a deeper dilemma: The UMPC is not a complete system - in many respects, not a "real PC." And so, a few weeks after that tantalizing question, "What am I?" was first asked, the only answers we can truly give at this point have to do with what the UMPC is not.