COMPUTER-CHINA

"If the price is the same between notebook and Laptops, [users] will go mobile," Kay said.

Users are increasingly adopting laptops as prices fall, and Laptops are being bumped to a niche audience including task workers and gamers. The increased laptop adoption has dropped the average selling price of low-end Laptops, which has led to low margins for vendors, especially in the U.S.

On Thursday, Dell reported that its Laptop revenue fell 5 percent year-over-year despite a 9 percent increase in shipments in the first quarter of 2009.

"It's important to point out that our notebook growth rate was high and indicative of the trend toward mobility products over the Laptop," said David Frink, a Dell spokesman.

Dell's business model was built around Laptops in the client and corporate space until a few years ago, and its failure to quickly turn to laptops put its business in trouble, said Roger Kay, president of Endpoint Technologies Associates. The shift to mobile products across the major product lines has put the company back on track, Kay said.

"The trend of switching over to notebooks will continue to rise. I don't think they're going to stop anytime soon," Kay said.

Dell's laptop shipments grew 43 percent during the quarter, with revenue growing 22 percent year-over-year to US$4.9 billion.

Dell's drop in Laptop revenue reflects a growing problem with the Laptop market in general, said Charles King, president of Pund-IT. "Laptops have traditionally been a market where profit margins are extremely thin to begin with."

The carrier also reportedly intends to open its TD-SCDMA retail sales in the pilot cities to manufacturers Yulong Computer Telecommunication Scientific (Shenzhen) Co. Ltd. , Samsung, LG, and ZTE, allowing them to sell mobile phones in its outlets. A deal with Yulong will have it stocking Yulong handsets in 20 percent of its outlets by the end of this month and 50 percent by the end of June.

The announcement comes as the Chinese government has finally unveiled its long-awaited plans to reorganize the country’s operators before issuing 3G licenses. (See Chinese To Get 3G – At Last!)

Chinese Mobile, which will merge with Chinese TieTong Telecommunications Corp. (formerly Chinese Railcom) under the restructuring, is expected to lead the deployment of Chinese’s homegrown 3G technology.

Chinese Mobile has been trialing TD-SCDMA in eight cities, including Beijing, since April 1 and will continue the pilot until July. It’s invested 14.2 billion yuan renminbi (US$2.04 billion) in the technology so far.

This second round is larger than the first phase at the beginning of the year, when the carrier bought 60,000 handsets and 15,000 data cards for the trial from six suppliers: ZTE Corp. (Shenzhen: 000063 - message board; Hong Kong: 0763), Lenovo Group Ltd. , LG Electronics Inc. (London: LGLD - message board; Korea: 6657.KS) , Samsung Corp. , Amoi Electronics, and Datang Telecom Technology Co. Ltd.

According to Xinhua Finance, the tender requires bidders to have licenses for TD-SCDMA handset production from the Ministry of Information Industry (MII), which have been awarded to around 30 manufacturers.

Chinese Mobile Communications Corp. has launched the second phase of a tender for TD-SCDMA terminals, this time for 100,000 handsets and data cards.

"Various influencing factors are transitioning to a point where embedded 3G will become superior from a cost perspective compared with previously used alternatives, such as Wi-Fi hotspots and hotel broadband for wide-area use," said Leslie Fiering, research vice president at Gartner.

Gartner said the high cost of the hardware and steep monthly charges have so far convinced businesses to shy away from investing in 3G Notebook computers. But the analyst believes this will start to change by the end of 2008.

"Our standing recommendation against embedding wireless WAN (WWAN) cards in notebook computers -- except for applications with a clear return-on-investment justification -- has been based on lack of global coverage, high costs and poor asset protection," said Ken Dulaney, vice president and distinguished analyst at Gartner.

"However, new technologies and pricing due by the end of 2008 have the potential to eliminate the problems of embedded, wireless 3G notebook computer purchases."

Gartner said 3G Notebook computers would become a viable proposition for "moderate to extensive travelers" in 2009 following the availability of chipsets that combine multiple technologies and frequencies to provide nearly "universal geographic coverage."

The analyst said such technologies promise a three-year "useful life." 3G operators are also beginning to recognize the value of going beyond two-year contracts to include daily and monthly rates, as well as programs for letting international travellers use local rates on pay-per-day plans, Gartner said.

Notebook computers with embedded 3G capability could become a must-have for businesses from next year, with new technologies and pricing plans making them more viable purchases, according to Gartner.