Money Flowing to the Smartphone Market

Sorry PC makers: Mobile is where the money's at.

Venture Capitalist Jean-Louis Gassée did some rough calculations and found that Apple made $3 billion in profit from the iPhone in the first quarter of the year, dwarfing the $500 million HP made off of PC's. Unlike smartphones, he wrote, PC's have peaked and a saturated market forces firms like HP to operate at low profit margins. 

Just last week, HP entered the market with its $1.2 billion acquisition of ailing smartphone company Palm, Inc. 

Silicon Valley is now the global center of the smartphone market, according to The San Jose Mercury News, a move that began with the 2007 introduction of the iPhone.

Since then, Google's Android operating system has begun catching on with manufacturers of phones, netbooks and tablet computers. Microsoft and Nokia now employ hundreds of people working on smartphones in the valley. And scores of local startups and independent application developers have formed a satellite industry that didn't exist a few years ago.

Gassée says not to worry, PC's will be around for a long time. But as consumers warm up to smartphones, the financial center of gravity will shift: "The PC business is mature and graying; the growth is with the new very personal computers."