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With ruthless competition and ever narrowing margins, building computers is a tough business to be in.
Until recently, the laptop market has been less difficult than the desktop business, with sales rising fast and margins holding up. But what many have regarded as an inevitable development is now starting: manufacturers from South Korea, Taiwan and China are moving in, shaving margins. IBM has seen enough and has quit, selling its highly-regarded Thinkpad notebook business to China’s Lenovo in May.
Others have stayed to fight it out, among them Toshiba, the Japanese group that has been making laptops for 20 years, and is currently the third largest vendor worldwide, according to research group IDC. But Taiwanese rival Acer is snapping at its heels, especially in Europe. So how will Toshiba survive?
Nobuhiro Yoshida, executive vice-president of Toshiba’s personal computer division, explained his vision to the FT in London.
Like the marketplace itself, the room Toshiba has hired for the meeting is piled high with an impressive range of notebook computers, for Mr Yoshida and his assistants to demonstrate their latest novelties.
The first machine is from the recently launched Qosmio range. It’s a large, sleek, black machine, designed, he says, to look more like a piece of consumer electronics. “Today, the consumer market is a hotspot for the notebook computer business,” he says.
Without the strong corporate relationships of HP and Dell, Toshiba has focused on consumers and small businesses. Many of its new developments are focused on making laptops that are also home entertainment systems.
Press one of a series of buttons along the top of the Qosmio’s keyboard, and it will start up in TV or DVD player mode. These two options are based on the Linux operating system, and can start playing in just seven seconds.
That’s quicker, Mr Yoshida says, than a plasma screen TV, and much faster than most Windows PCs, which can take over a minute.
The second model is playing a movie. A colleague lifts it up and yanks the hard disk out. Most laptops would react very badly to this treatment, but this one carries on playing without a blip.
It copies data on to two hard drives simultaneously, using a technology more commonly found in enterprise storage, called Raid. If one disc fails, the other keeps working, and no irreplaceable family pictures or $1 a song music downloads are lost.
The third laptop has a new feature which businesses will appreciate, too: an anti-snooping screen. To the person sitting in front of it, it looks normal. But if the person in the next seat on a plane tries to peek at the red-hot business plan she’s working on, he sees a black and white chessboard overlaying the screen, making it impossible to read the words.
The next machine, though admirably sleek and small, is demonstrating a much older technology. In fact, it’s painfully familiar – a Powerpoint presentation. Mr Yoshida is using it to explain some of the next wave of innovations, which haven’t made it into production yet.
He shows a slide with eight coloured rays, each of which represents a new technology area Toshiba plans to build into future products.
One shows ultra wideband wireless technology, for very fast data transfers, up to 1 gigabit (billion bits) a second over short distances, connecting laptops to docking stations and other devices, such as printers, networking gear, and display screens.
Another ray on his slide is likely to be more controversial. Toshiba is committed to Digital Transmission Content Protection over Internet Protocol for protecting digital media on home networks from unauthorised copying.
Earlier digital rights management technologies have only been partially successful at best, and consumers have resisted them. Mr Yoshida argues that establishing a standard such as DTCP-IP at least gives users greater compatibility and choice in their hardware purchases.
“There exist many kinds of content protection systems but there is no standard. Companies try to enclose their customers, but that concept is not so beneficial from the customer’s point of view,” he says.
Toshiba is also working on voice recognition and, more interestingly, advanced three-dimensional motion sensors to replace the touchpad or mouse. These would allow a user to move the cursor just by pointing with a finger, without contact.
These might require extra processing power, which could lead to a big change at the heart of Toshiba’s laptops, the processors.
At present, Toshiba is a loyal partner of chipmaker Intel. It has no plans to start building laptops with processors from its rival, AMD, but its future isn’t necessarily tied to Intel for ever.
With IBM and Sony, Toshiba has developed a new line of processors, called Cell, set to make its debut in Sony’s PlayStation 3 games console in the spring. Future Cell processors might one day appear alongside Intel chips in a twin-processor laptop.
”There will be a possibility to use the Cell-type processor incorporated into the PC,” Mr Yoshida says. “Sometimes a much more powerful processor is useful, especially for the human interface portion.”
How about the much-publicised standards battle between Toshiba’s HD-DVD and Sony-based Blu-ray for a successor to DVD? “As Toshiba’s executive officer,” he laughs, “definitely Toshiba notebook PC will support HD-DVD. We need to decide whether to support both or not.”
Ultimately the user will have the choice? “Yes.”
Such is life in the technology business. It’s always the users who pick the winners and losers in the end.