The revolution in our pockets

Financial Times usually carries good articles.
The revolution in our pockets

When Motorola launched the first cellular telephone in 1983, the brick-like DynaTac 8000x was packed with 1,000 components and weighed more than 1lb. As well as giving a whole new meaning to "ear-bending", it was a feat of electrical engineering that few companies could have achieved.

Today, the main functions of a mobile phone have been reduced to a single sliver of silicon that can be bought off the shelf from semiconductor companies such as Texas Instruments and Intel.

....
This kind of miniaturisation has big consequences. It makes possible the fancy multi-functional devices that now crowd the shelves of electronics stores. Phones that take pictures, cameras that play music, music players that keep track of your appointments - these collisions of form and function are a direct consequence.

It is not just that small circuits and fewer components take up less room. They also tend to draw less power - which means longer battery life - and as a rule are more resistant to the rough-and-tumble of life inside a briefcase or handbag.

....
In other words, market power is shifting. Just as Compaq in the late 1980s undercut established PC makers by finding more efficient ways to assemble industry-standard components, so a new breed of low-cost producers is threatening to do the same in consumer electronics.

Take Apex Digital, the biggest seller of DVD players in the US market. The Canadian company has annual revenues of $1bn but employs only 101 people worldwide and spends little on research, development or advertising. Instead, it sources off-the-shelf components and uses Chinese contract manufacturers to put them together. Selling through mass-market retailers such as Wal-Mart, Apex is able to sell DVD players to consumers for $50 or less.

This gloriously bargain-basement business model is possible only because building a DVD player is no longer an exercise in custom engineering. As with mobile phone handsets, miniaturisation means fewer components and easier assembly.

....

Sony's PEG-UX50 personal organiser is a poster child for miniaturisation - and an illustration of its potentially unnerving consequences for the giants of consumer electronics.

This sleek, silver, hand-held device comprises a high-resolution colour screen that swivels and tilts, a keyboard, a digital camera that shoots still photographs or video clips, a voice memo recorder, a digital music player, Bluetooth wireless communications and high-speed internet browsing using 802.11b wi-fi networking.

All this in a package that is little bigger than a pack of playing cards and weighs less than 200g.

....

The $50 DVD player is already with us. Can the $5 cell phone be far behind?