Recently, previously civilized and subtle top executives of the world’s big mobile handset makers took the gloves off and became, well, a little more outspoken. What sticks from this is, of course, always only the most figurative snippets. Because all of these esteemed people have the most vested of all vested interests, their statements tend to distort reality a little. And because of that, we have increasingly lively debates at hand. But, alas, these debates may not necessarily lead to enlightenment.
So I thought I undertake a little mapping exercise and see where we end up…
The War of Words
I don’t know who started this. But we have had a couple of outbursts recently. Nokia’s soon to be former smartphone maestro Anssi Vanjoki (of nGage and other fame) likened switching to Android to boys who pee in their pants for warmth in winter. What he wanted to say is that it gets worse after brief relief. Apple supremo Steve Jobs sees no one (and in particular not RIM) getting anywhere near his beautiful iPhones anytime soon (he probably has not forgotten Mike Lazaridis riposte to the iPhone 4′s Antennagate). Others are convinced that Apple cannot beat Android. Period. Everyone wonders what Nokia will come up with (and, no, we do not think the N8 is it). Etc, etc, etc.
A Lot of Little Worlds
When one looks at the world map and then listens to the good folks cited above (and others), it appears that there is not one but many little worlds out there. Nokia is sitting high and dry in overall handset rankings with over 35% market share across all handsets. It is estimated to ship more than 500m handsets in 2011, too (so hold back with your obituary just yet). However, it is nowhere to be seen in the US (and even less in US smartphones where it is fighting a close fight with Palm around the 4-5% mark). Samsung (one of the few big boys not to participate in the above bickering) is building out its #2 spot with around 20% market share. Apple is well behind (although recording fairly impressive numbers given that it is basically a single handset company).
Does this matter in the discussion who is “winning”? No, it does not. An iPhone is useless if you are in an emerging (or developing) country with no 3G coverage and no abundance of power outlets from where to re-charge your fancy beauty every 8-12 hours or so. On the other end of the spectrum, a Nokia 1100 is useless if you would like to navigate on your handset through the urban jungle of Manhattan whilst shooting photos for the ones at home. But it runs forever, doesn’t mind a bit of sand or water and will never ever break. Ever.
The point is that there is more than one market here. The market is not mobile phones. The market is not even smartphones. There are many. And in some of them, Apple is looking really weak. And in others, Nokia is looking really weak.
Single Segment vs. Multi-Segment
Nokia’s strength (and, to an extent, curse) is that it wants to be everything to everyone. The N8 is a great handset from a hardware perspective but, after having played around with it for a week or so, I think it has a distinct 3-years-ago feel to it. It makes great phone calls though (which, well, the iPhone does not always). However, will Apple be able to challenge Nokia (and Samsung) in the broad lower-end mass market? Not for a long time, I would say.
The situation is a little more serious for other single-segment OEM. RIM used to live off the fat of the land in the enterprise sector. And it continues to thrive there. In recent years, it has seen a huge upswing amongst kids – because of the now almost legendary BBM (Blackberry Messenger for the uninformed). However, can you successfully build or expand on a single feature? And then on one that could really also be mimicked, worked around or substituted by something similar? Tricky.
Tricky in a different way is the situation for the likes of Motorola, HTC or Sony Ericsson: they have all committed their life to the Android platform. With Google’s muscle in the Open Handset Alliance, this means that they depend more and more on hardware design only. It feels a little like the movie business: hit-driven. And that is a tricky situation to be in. HTC looks good at this: this is home turf for it. On top of this, it has quickly started to try some gentle steps to distinguish itself (HTC Sense; Google Nexus One, etc) from other Android makers. Motorola’s Blur was less successful initially. And Sony Ericsson has yet to show its hand.
Vertically Integrated vs. Multi-OEM
All this does of course not bother Android (and perhaps also Microsoft’s Windows Phone 7) as they have the advantage of being able to bringing many weapons to the battlefield. Android’s huge advantage is one of price due to its open-source nature: For Windows Phone 7, you need to pay a software license. Android is – basically – free. Both have multiple OEM that fight their corner though. Which is, or at least can be, good. Google will not really care if the next killer phone is produced by HTC or Motorola or Sony Ericsson (or Foxconn directly for that matter).
Apple will likely struggle to match the sheer number of iterations being thrown at it. And therefore it is likely that Android will be winning, or rather continue to win.
Does this matter much to Apple? Possibly not. The margin discussion will, in all likelihood, be one that Apple execs will happily take. They will look better at it. However, will it manage to break the old Mac vs. PC pattern? Probably not. However, Apple’s position looks much brighter than it did in the decades of 5% OS-share mediocrity. The company has perfected the hardware-software-service-sex-appeal equation, which looks likely to cement a much more comfortable niche for it (just have a look at its market cap).
Vertically Integrated Multi-Segment
Nokia and Samsung try (or seem to try) a different way. Nokia is betting on MeeGo (its Symbian support sounds more and more hollow by the day). Samsung, which traditionally bet on almost every horse, made a big push for its proprietary bada OS.
This approach could be a winner: with their strong grip on emerging markets and the ability to roll out a proprietary OS across multiple segments, it presents an opportunity to nurture users in emerging markets (where the real growth will be in the next 5 years) into the use of their respective ecosystems. It did pay off for Nokia the first time around!
The Real Battlefield
In the more saturated markets in the Northern hemisphere though the battlefield is likely to be one involving OEM and network operators. This is where Apple really shook up the markets. A lot of the revenue streams from the iPhone simply bypass carriers. The Android OS opens similar avenues. The reason why Apple managed to pull this off is likely to be seen in the branding side of things: it enjoys such pulling power that carriers were bending over backwards to get their hands onto it (and then of course started moaning about the strain on their networks). Android is now being positioned as the alternative. At least, carriers can put competing offers onto Android devices.
Now, in markets where handset purchases are also driven by the overall package (cf. my recent post on this), this is likely to be important.
Nokia, Motorola, RIM, Samsung, etc all enjoy good distribution relationships with carriers. Apple is in a special position because of a) its brand but also b) its price; not much flexibility here, I suspect.
Nokia for instance struggled however to assert itself with some further-reaching ideas it had: some carriers pushed it back over e.g. plans to put Skype onto its handsets. It apparently has less brand power than Apple. Or the carriers were more used to having a say over what gets onto its handsets and what doesn’t.
Conclusion: We don’t Know What We don’t Know
We are, hence, in essence still in a fairly foggy situation: other than Apple’s brand power, we really don’t know as yet what, who, how will prevail. And that is in itself good news. Because it means we will have some time left with competing concepts, competing OEM and competing approaches. And with more CEO banter of course…
First, Samsung announced it would drop Symbian from its smartphones in 2010 in favour of its new, home-brew bada OS. Then Nokia said it would drop Symbian (albeit not immediately) from its flagship N-series devices replacing it with Maemo, the OS that premiered on a Nokia device on the recently released geek dream, the N900.
It is said that there are
no current plans for Maemo devices in the [...] X-Series range or the popular [?] E-Series enterprise range
but the word “current” suggests that this might well change soon, too.
This would leave Symbian without its two largest OEM supporters. Will there still be a future for it?
Symbian of course boasts a still very impressive number of legacy devices, and it will therefore be here for a while. However, what does the long-term outlook look like? Android, LiMo, etc all “boast” a nimbler, more agile set-up, allowing for faster development and, arguably, better user experience. This is not necessarily Symbian’s fault (it carries with it its legacy around) but it makes it that much harder for it to reinvent itself.
I am not sure if there is place (and – timewise – the runway) to reinvent itself without the backing of big OEMs. I would be surprised if carriers would use it; they – even more than OEM – require adaptability and customization, which the newer platforms seem better suited to serve. Vodafone’s choice of LiMo for their first two Vodafone 360 devices is testament to that.
The ever-bright Tomi Ahonen suggested a comparison with DOS/Windows and MacOS: he compares Symbian to DOS, Maemo to Windows and iPhone to MacOS: MacOS led in UI and leads to this day. DOS outsold MacOS in spite of its dramatic inferiority because of the legacy instal base. Windows then overlaid DOS and rolled out on all the legacy devices with MacOS, as a result, always playing second fiddle despite its superiority.
The market place in mobile looks different though: DOS was nigh dominant (outside the mainframe and large enterprise side of things) whereas Symbian “only” covers about 5% of the current market. It is big but probably not big enough to bridge the DOS/Windows migration gap. With Android, Blackberry, Windows Mobile, LiMo, JavaFX (if that ever takes of properly), etc all on the map, too, the situation is very different to the DOS/Windows/MacOS world. Would Nokia be quicker in execution, I might still look at it differently but, unfortunately, it doesn’t seem to be that way.
So is it good bye, Symbian, then?
Not all is in recession it seems. The handset vendor world #3, LG predicts to ship 110m phones this year, which would represent a 9% increase in volumes on a year-on-year basis (see the market shares for 2008 and Q1/2009 below; courtesy of Strategy Analytics) in the face of what it believes will be an overall flat market this year.
So whilst everyone is shrinking, LG is growing. Everyone? Ah, now, Samsung is growing, too. The victims? Seemingly Motorola and Sony Ericsson with Nokia also suffering. No news then? Well, by 2012 LG wants to be #2 and ship around 200m devices (which would be 100% more than in 2008). So 9% growth wouldn’t get them there, would it?
Joking aside. Is this surprising? I think not. LG had had a couple of very “pretty” devices out. Starting with the LG Prada, they came out with the “Shine” and had a great success with the Viewty. They have been upping their game at a time where in particular Sony Ericsson and Motorola had been struggling to compose a coherent product strategy, and this will have enhanced the overall effect.
No, this post will not muse over Google’s new Wave announcement today. I rather wanted to give a brief update on the wave of Android devices that is promising to roll in over the course of this year. I had posted on this before (e.g. here and here), and Google, at its Google I/O developer conference gave a hint (yes, funny enough through Yahoo! News…) on the size of the deployments we can expect this year. And its not bad at all: 18-20 Android phones this year tells us Andy Rubin, Google’s Sr. Director for Mobile Platforms. The article then goes on to quote a number of analysts on earth-shattering insights but let’s leave these aside.
Android’s advantage was always going to be two-fold:
- As an open-source platform based on a Linux kernel it would be a) cheap and b) stable. This is invaluable for handset manufacturers as it reduces their development costs for new handsets significantly. I have no hard numbers but the rumoured ones are fairly high…
- Because it is a stand-alone OS rather than a combo of hardware and software (as the iPhone or – at least for the time being – Blackberry devices are), it will be used and deployed by a plethora of manufacturers rather than only one. And, well, this results in many more devices in the market (think MS DOS vs. Apple OS).
And this is now starting to show…
In terms of increase of “smart” phones (and these will, I would suggest, in the future include models we would today class as “feature” phones) this is seriously good news. How a slick and versatile operating system can spurn extended use of a mobile device beyond voice and SMS was impressively shown by the iPhone (8% smart phone market share equal 43% of web requests). Others are catching up (cf. here and here) and the more is the merrier when it comes to providing devices consumers actually can use. Avoid the term of “educating the consumer”; the consumer is quite educated but if people need a customer service helpline to even open the box (courtesy of a cider ad in the UK), one must not be surprised that people do not use it. Ease of use rules and well-made operating systems support that.
And it still goes on, it seems: Nielsen published its (digital) media top 10 lists for Q3/2008, and the once cool Motorola V3 still rules the United States – and by a HUGE margin. A whopping 9.3% of all phones in use are RAZR‘s, more than 7 points ahead of its sibling, the KRZR. Apple’s iPhone follows on #4 with 1.5% share. And Nokia‘s call to arms with a view to the US market has as yet to materialize: its best handset is the 6101 series with a meagre 1.1% (compared to a reported global market share of the Finnish giants of close to 40%). Sony Ericsson and Samsung are both notably absent from the list.
1 Motorola RAZR V3 series (V3, V3c, V3m, V3i, V3i DG, V3) 9.3%
2 Motorola MotoKRZR series (K1m, K1) 2.0%
3 LG VX8300 series 1.6%
4 Apple iPhone 1.5%
5 LG VX8500 series (Chocolate, VX8500, VX8550) 1.2%
5 RIM BlackBerry 8100 series (Pearl,8110, 8120, 8129) 1.2%
7 Nokia 6101 series (6101, 6102, 6102i) 1.1%
8 LG VX8350 1.0%
9 Motorola V325 series (V325, V323, V325i, V323i) 0.9%
9 Nokia 6010 series 0.9%
Source: The Nielsen Company, Q3 2008
The financial crisis will – what a surprise – also catch the handset manufacturers. A report tells us that handset sales are bound to fall in 2009, by 5.6% or 1.215 billion units, to be precise. The backend of 2008 already sees the impact, too: growth predictions have been reduced from 10.4% year-on-year to 8.9%.
“While new subscriber additions are continuing at a healthy pace and are poised to grow by 563.9 million in 2008 and by 506.5 million in 2009, an overwhelming majority of the new subscribers are coming from the rural areas of emerging regions,” Teng said. “These subscribers primarily are purchasers of low-cost, entry-level handsets. However, the pricier feature-phone and smart-phone market segments are driven by existing subscribers who are upgrading their mobile devices to take advantage of new features and advanced data services. As the economic climate deteriorates, these customers are delaying their purchases.”All doom and gloom then? Well, maybe not: others predict that the recession (at least in the US) will actually drive the number of wireless-only households. And, after all, a mobile game at €/$/£ 5.00 a pop is not the world, is it?
Little-known handset manufacturer Fly has announced its new MC100 handset which features both Java MIDP2.0 / CLDC1.1. as well as – and that is the cracker – support for Nintendo NES, SNES, Gameboy and Gameboy Colour game formats. There are some neat dedicated gaming buttons and a rather useful-looking “D-pad”.
The handset is powered by a Yamaha chip and also has an MP3-player. Whilst Fly seems to be mainly active in Eastern Europe (that’s at least the only region where they have service centres), the handset is retails at the not too shabby price of $270 a pop; where it goes on sale, remains a miracle: the currency would suggest the US but perhaps it is Russia after all?
Also, the issue if these games are legit remains a bit in the dark. Fly only says that “games (nes/smc/gb/gbc) can be freely downloaded from the Internet and set up in your Fly MC100″.
This would suggest that Nintendo is not involved in this, and there is indeed no active (or passive for that matter) endorsement from Nintendo anywhere to be seen. So this would almost certainly exclude any “proper” Nintendo games from being included (unless Fly wants to risk a visit from Nintendo’s legal eagles). All a bit odd really but, boy, would it be cool were it legit…
