Friday, March 5, 2010

The New View on Mobile Device Operating Systems

Historically, the device design was viewed as the most important element for the consumer. Colors, buttons, curves, screen size, flip, sliders, etc. They then focused much effort on identifying the objective consumer interest. First, they focused on creating small devices, then thin devices – which were much more successful (i.e. the MOTO RAZR and others). This has been the story, until less than 2 years ago.

Today, with the dominance of BlackBerry in business and iPhone in consumer markets, the industry has realized that operating systems are as important, if not more important, than device design; and using ODMs or in-house teams from device companies to develop smartphone OSs is no longer an option.

iPhone Fears

iPhone came onto the scene a year and a half ago. They are now the most sold single device in the market (40m+). I noticed 4 interesting things about the iPhone at the event that brought me to the conclusion that there is a major fear in the industry:

Operator complaints – speaking to a couple of operators and hearing some sessions, there were generally 3 reactions to iPhone:

1) Some operators felt that iPhone was literally stealing from their infrastructure and customers to make a lot of money without paying a toll.

2) Some operators felt that with direct or indirect coercion, the operator had no choice but to offer the iPhone to their subscribers.

3) Some operators already view themselves as a network pipe and view the iPhone as a way to drastically increase data services and to just focus on gaining more data traffic.

Developer complaints – I heard a number of application developers complaining about the iPhone walled garden, no flash, VoIP being blocked, etc – but they are all focusing on the iPhone even though they have a choice. Everyone has to play by Apple’s rules.

Apple didn’t show up. My conclusion here was that Apple views themselves as an industry killer. Really a different industry. And GSM is for the operator centric market. Just like they turned the music industry on its head, they are now turning the mobile data services market on its head. Operators receive about 30% cut from data services on their network; with iPhone, they get zero. Google is trying to do the same, so far no success, and most content downloaded for android is free, since there is no consumer billing relationship with Google. And Google announced they are willing to work with the operators, but not yet.

Everyone is trying to copy / create valid iPhone competition – from 3 directions: (1) devices to look like the iPhone, (2) OS to act like the iPhone, (3) app stores to provide content like the iPhone.

Android Craze

There was a lot of talk, and I believe hope, from the mobile carriers that Android will emerge as the savior. The OS can compete with the intuitiveness of the iPhone. It is also open for developers – has flash, VoIP, multiple device deals, etc. And Google has no billing relationship and is hinting that they will do the data services with operators. Statistics are showing that over the next 12+ months, the only viable competition to the iPhone in the app market is Android. It is growing fast and there is an expectation of about 20m+ more Android devices sold in 2010.

Samsung Bada

Samsung announced a new iPhone OS competition – Bada – that will be on their first Bada device – Wave. Based on the amount of billboards, videos and talking – they have high hopes for this operating system. Samsung also already has their own app market and they will merge the two.

MSFT Windows Mobile 7

With much skepticism, all listened in anticipation about Windows Mobile 7. Surprisingly, it generated much interest from device manufacturers and there are at least 8 companies (Samsung, LG, Sony Ericsson, HTC, HP, Dell, Toshiba and Garmin Asus) that will run windows X-mas 2010. I spoke with a guy that saw the demo at GSM and he told me that it was fantastic…but too bad it wasn’t launched in 2007; and they may have missed the market. From others that I was talking with (most app companies), they felt it will be easier to develop for MSFT than it is today and it will go up against RIM more than iPhone and Android. I tend to agree, as a MSFT user. That Windows can be a great business tool, with seamless Outlook and Office use. Operators as well have signed on: AT&T, Orange, T-Mobile, Telefonica, Sprint Nextel, Vodafone, SFR, Verizon Wireless, Telstra and Telecom Italia. Microsoft said it will work particularly closely with AT&T and Orange.

Nokia & Intel’s MeeGo

Nokia and Intel are to merge their respective Linux initiatives to form a new platform designed for high-end mobile. Known as 'MeeGo,' the platform will combine Nokia’s Maemo and Intel’s Moblin. Nokia said that they expect 20% of their devices to rum MeeGo by 2011.

This begs the question…what about Symbian?

Nokia & Symbian was nowhere to be found

Nokia had no booth. No new devices launched. No news from Symbian. Device companies did not announce any new Symbian devices. Dying quickly jumped to dead. I believe that Symbian will be reserved for the feature phone market, but no longer labeled a smartphone OS. Nokia is still the largest device manufacturer in the world with tons of cash, but they do not seem to be making any real smart moves in the smartphone market.

My conclusion from the OS part of the GSM event is that there is INTENTIONAL massive fragmentation expected, with iPhone to be the largest single device seller. But the fragmentation will cause complexity for services and operators that need to deal with all – for example gaming, advertising, etc. This fragmentation will be intentional, potentially modeling the laptop market. Windows is still over 80% of the market, but apple is the largest single seller of laptops worldwide. The mobile operators may be hoping that the iPhone may be the single most selling smartphone device in the market – but be only about 10-20% - therefore leaving 80%+ of the market needing applications, services, billing, and strong operating systems.

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