Sunday, March 22, 2009
Want to play in mobile control your destiny, control your operating system
Reading about the profit warning and the giant loss in SonyEricsson sparked the following thought. We are witnessing an enormous transition on the mobile business from HW to SW and services.
For SonyEricsson matters are going to be worse as the mobile phone market has polarized into high-end and low-end. The financial difference between mid range and high end is not so significant that consumers care, if you shed more then spending the extra €200 is marginal, as you really get much more. If you want to pinch you go with a voice + sms only device or simply use the existing to death. The mid range where SonyEricson has excelled at past couple of years has vanished. It looks like they have given up on capturing the low-end, it is not easy to compete with Nokia and no brands.
Why I think matters will get much worse is that they do not own or control an operating system that enables creation of rich computing like experiences. I use the word computer more as a place holder of something new and different from phone. The iPhone is in my mind still, like my daughter calls it, a mini computer. I use my iPhone mostly as a connected computer; battery and RF quality is not good enough.
The lack of controlling a computer style operating system puts them in the same league as Motorola, not a place where one wants to be.
What makes matters grim for SonyEricsson is that they seem to want a divorce. Sony seems reluctant to share one of its last gems, the Playstation brand. As Apple is charging ahead with new business models of in app purchase of digital assets, which will massively successful, as we have seen it work in numerous services on the net. This model is great in gaming, where spending €0.99 in the heat of the game is nothing. The Playstation asset could become jeopardized, like the Walkman brand, who people say is something dad had, and it is hard to become less cool than that.
Looking forward to other players not having computer style operationg systems like LG and Samsung, I wonder how this will impact them. What I think could come to their rescue is Android, but the master question in that is who will control the UE, or ensure that the lives of the developers is decent. In the past this is something only the Americans have figured out how to do, but I am not absolutely convinced will Google have the motivation and dedication it takes, they have not figured out to make money in other ways than increase number of searches, but pouring down 1BN+ might be too steep a bet even for Google, which means we get more fragmentation. A €1bn+ reSearch project is big even for Google.
Nokia has two operating systems that enable rich app development, Symbian and the Linux stuff seen in the tablets. Symbian is more phone+ rather than computer like. The Linux one is still in the works. This should in my mind insulate Nokia from same risks facing the others. I do not get it why the market does not see them as a SW player, they are. I think their core problem is that their business model is too anchored in a B2B model selling to operators, which is needed if one wants to maintain big market share. I also think Nokia will suffer short term as mid range is evaporating, as they traditionally have ben strong there, but like so many times before the old mid range becomes the new low end.
01:40 PM | Permalink
I think Android is a lot more flexible than people think. Look what this startup did, the UI (and attached service) they built on top of Android: http://www.engadgetmobile.com/2009/02/19/sonar-hopes-to-power-social-featurephones-we-get-a-demo/
Ultimatley the poloarization you described, a trend my team and I in Corporate Strategy picked up last year, will enable low volume high end devices made my more manufactures than what we imagine today. OS fragmentiation will likely get worse, but that is where I think extending the power of the browser to hook into the capabilities of a device, with standard calls across all operating systems, will come to save the day.
What I'm trying to say is that it is less about controlling the operating system, and more about using the most flexible operating system to tailor an experience that differentiates you enough from the competition.
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