We're about a year from the smartphone demand curve crossing over the feature phone demand curve. I see this from the vantage point of being on the board of both Teleca and VirtualLogix. Single-chip, single-core Android phones will within 6-8 months cost approx. $60 to manufacture, which means mobile operators will give them for free with a one year €15/$20 per month calling plan.
My firm belief is that 0.6 billion smartphones will be sold in 2012. The big question is, however, which operating systems will dominate. There are several drivers that will determine who the winners are:
- Great hardware: Cool devices still rule. A lackluster device running a great OS won't sell. A great device with a lesser OS can do well. Just think of BlackBerry.
- A low-friction app buying experience: The combination of iPhone and iTunes means that consumers can easily and simply buy an app. The operators as well as Amazon and PayPal have something going for them here. They all know how to bill people.
- Ease of developing apps: The app model on iPhone and Android has revolutionized and democratized the concept of being an app developer. The barriers are coming down to a level where it's possible for a much broader set of developers to write cool apps.
- Powerful distribution: Getting the OS out on a wide range of devices and letting Darwin's Law loose will help drive reach, as well as take care of ensuring that the devices on a given OS get better and better.
- Developer Monetization: It's clear that long-tail developers can't make the economics work by monetizing their apps though a $0.99 per app charge. They need to have access to multiple monetization avenues, such as Location Based Ads.
We're seeing the battle lines being drawn up now. The other device manufacturers have clearly seen how Apple has gobbled up an order of magnitude more value-per-consumer, and more important, profits-per-consumer, than the classic device players in the market.
It's clear that the analysis in the boardrooms across the industry have led everyone to conclude that the control point is ownership of an operating system.
Conversely, the mobile operating system field is getting more crowded than ever with players like Symbian, WebOS, LiMo, Azingo, Windows Phone, BlackBerry, Android, iPhone, MeeGo, Bada and Openmoko.
iPhone and Android has the all important momentum. I am, however, becoming increasingly impressed by MeeGo. I confess to be biased since key components come from Trolltech, where I served as a board member until Nokia bought the company. I do believe there is something to be said for the combining Nokia's market share, distribution clout and software skills with Intel's ability to lead the market with rapidly evolving reference designs. Intel has hundreds of OEMs who trust them, which could mean that if Intel plays their cards right, they get to own and define both the software and semiconductor stack with MeeGo and Atom. This is, of course, contingent on Atom increasingly becoming a viable alternative to the ARM juggernaut in terms of cost, performance and power consumption. So consider Intel a very strong contender in the mobile platform space. With the added clout from Ken Klein's team at WindRiver, which Intel bought for approx. $800 million, they have a very clean shot at being a contender.
I am impressed with the new Symbian 4 stuff, but with Nokia as a departing anchor tenant, and only DoCoMo left, the Symbian Foundation guys will have to find a new hardware manufacturer to build their future on, or realize the game is lost. It's sad, and it was certainly not the intention when we founded the company, but the harsh reality is: Symbian gave up owning the UI layer in 2000, and that was the beginning of the end.
Windows Phone is showing some great promise after some years of lackluster performance. I like the innovative user experience, and have been super thrilled to see that the team has realized (or re-realized) that people aren't EITHER consumers or enterprise users. They are both. It's clear that Dell is a good anchor tenant, but it will take more to win.
RIM has built a strong franchise with BlackBerry, but you have to wonder how long they can keep the patient alive. Their OS appears to me to be on it's last leg. RIM needs to secure their OS future soon, or get orchestrated by another OS vendor. Very soon, email will be a hygiene factor rather than a unique feature. Everyone will have good Exchange and email sync.
HP has a chance of being an alternative to Apple. This statement might shock some, since HP to many is a boring, colorless brand. However, look at the assets they have quietly been building up over the past years. There could be a great consumer/enterprise mobility story in the making. On a side note, I think Todd Bradley from HP and Steve Kessel from Amazon should hook up and find a way to solve each other's problems. Together, they could be present a formidable alternative in terms of both devices, consumer reach, enterprise integration and business model.
LiMo in my mind still dark horses. Depending on how well the relationship between Google and the Android OEMs and operators goes, some might be motivated to move over to LiMo. However, it's hard to be hardware independent, open and agnostic without creating a binary compatibility problem. Developers will want to write once and run anywhere, rather than have to build multiple versions of their apps.
Again, the all important momentum is with iPhone and Android. In order to beat Apple and Google, it's important to think of them as the incumbents, and to realize that Nokia, HP and others are the new entrants who have to disrupt the Android and iPhone business models. You can't out-Google Google and out-Apple Apple...