Switched On: The Year of the Switch

By Ryan Block

posted December 21st 2005 4:35PM

Every Wednesday Ross Rubin contributes Switched On, an opinion column about consumer technology, multimedia, and digital entertainment:

In the Chinese calendar, 2005 was the Year of the Rooster, and many companies were served a wakeup call as the months passed. More than any year in at least the past decade, 2005 stood out as a time when far more than just the iPod got shuffled. Sacred cows were tipped as companies embraced major technological and sometimes philosophical switches in order to court new markets or move in new directions. Among the companies that took the biggest left turns:

Apple. The bombshell move to Intel processors -- probably the biggest switch of the year -- seemed to pass with little criticism as the Mac faithful tacitly admitted that the PowerPC had lost the war for portable power. The move, though, was somewhat surprising given a lack of compelling high-end consumer applications over the past few years outside of games, where the Mac often makes do with leftovers. In explaining the move, Steve Jobs vaguely described how Apple engineers want to do things that aren’t possible with the PowerPC. The next two years should reveal whether that includes some radical new form factors or perhaps pen computing done right.

Microsoft. With the possible exception of Intel itself, it’s hard to think of a company that owes as much to the x86 architecture as Microsoft. Yet, in stark contrast to the souped-up PC that was the original Xbox, the Xbox 360 joined its main videogame rivals in adopting the PowerPC architecture from IBM. The real question is, though, will the new architecture provide the horsepower to improve the Xbox 360’s standing in the home console wars? That is, assuming people can actually start buying it.

Palm. The announcement of the Treo 700w marked the first Palm-branded device to use Windows Mobile. The move struck an emotional chord with many Palm devotees who had long embraced Palm’s tight integration with its now drifting operating system. Palm, in fact, has reiterated its support to the PalmSource operating system, doing more than its new owner Access to assure its future viability. The adoption of Windows Mobile will surely help sell Treos to the enterprise, but Palm will have to broaden its smartphone appeal to compensate for the shrinking PDA market.

IBM. While Lenovo actually signed a definitive agreement to purchase the IBM division responsible for producing 100 million PCs toward the end of 2004, the acquisition was completed in 2005 as the Chinese computing giant delivered the ThinkPad x41, the venerable brand’s first convertible tablet. IBM’s departure served as a symbolic reminder of the difficulty in competing in the cutthroat PC market, it was also simply a side effect of IBM’s steady move toward a services enterprise. Lenovo’s cost structures and competitiveness should mean a fresh start. Also symbolizing the end of Big Blue’s distant ambitions to dominate the PC industry, IBM announced that it would end support for OS/2, which it and Microsoft once touted as the heir to DOS.

In addition to these big switches, some less dramatic shifts happened over the year. Sony took a step toward embracing popular standards by supporting SD cards in its notebook computers and PlayStation 3, while it adopted native MP3 support in the PSP and portable music players. After years of criticizing portable video, Apple stealthily entered the market by providing video playback “free” with the fifth-generation iPod and creating a new TV show distribution channel overnight. Former iPod vendor HP dumped the portable music juggernaut once it realized it couldn’t differentiate its iPod offerings from Apple’s. Finally, oft a naysayer of the value of online gaming, Nintendo switched gears in a big way with its Nintendo DS, embracing multiplayer gaming through a free Wi-Fi initiative.

Change, as Michael Jordan once commercially reminded us regarding underwear, is good, and some switches have already proved themselves some smart moves. For those that aren't, the next 12 months should help validate which are natural matches for 2006, the Year of the Dog.

Ross Rubin is director of industry analysis at NPD Techworld, a division of market research and analysis provider The NPD Group. Views expressed in Switched On, however, are his own. Feedback is welcome at fliptheswitch@gmail.com.