Market growth of smartphone will spark mobile platform war
Posted on 27-Jan-2004 11:00.
Filed under: News
As first seen on Linux Devices, the Zelos Group predicts by 2008, sales of smartphone handsets, mobile phones that incorporate full-featured operating systems, will grow to about 290 million, or about 43 percent of global handset sales. Mainstream adoption of these devices will have a significant, disruptive impact on the entire mobile electronics sector––in markets for wireless, personal electronics and computing technologies.
“The mass adoption of full-featured handsets will be disruptive,” said Seamus McAteer, senior analyst and managing partner, Zelos Group, the report’s author. “Consumers will substitute use of PDAs, digital cameras, gaming consoles and music players. An early indication of this is Nokia becoming a leading distributor of digital cameras.”
The report, Defining the Market for Full-Feature Handsets, asserts that leaders in other portable device categories like Sony, Apple, Nintendo, Hewlett-Packard and Casio will respond to the competitive threat from handset OEMs. McAteer says these vendors will focus on improving the core functionality of special purpose devices, and by adding mobile WAN connectivity.
“As handsets with multiple gigabytes of storage are launched in the next two or three years, it is possible to envision, for example, Hewlett-Packard launching an iPod with integrated W-CDMA transceiver and dual-use headset and speaker,” observed McAteer.
Zelos Group expects that shipments of full-feature handsets will overtake shipments of personal computers in 2006. There is no economic reason to question why growth will not be explosive. Full-featured handsets will be available from manufacturers at price points as low as $157 in 2006 close to the market average selling price for a mobile phone of about $138 in that year. Mobile handsets are the largest single consumer electronics category driving research and development in electronics, power and display technologies, and the market has become a major battleground for computing operating systems.
“The market for full-feature handset platforms will continue to be highly competitive over the next five years,” commented McAteer. “In the medium term, the battle will be dominated by Symbian. But in the long term, the fight for supremacy is far from over.”
Based on Zelos Group’s analysis, the long-term prospects for Linux as the preferred operating system for connected devices are very strong. Zelos Group scored all mobile platforms across five criteria: business viability, completeness, cost, end user appeal and openness. Linux scored highest on the two criteria that matter most to OEMs and carriers: openness and low cost, whereas Microsoft scored lowest in these criteria.
Although Microsoft will be a powerful contender against Symbian in the next two years, it will not dominate the market in the long-term. Microsoft will seek a premium for the Windows brand and will seek to promote its own proprietary take on open standards.
“Symbian beats Microsoft due to the flexibility of its licensing terms,” commented McAteer. “Microsoft’s prospects will be stymied to an extent by its desire to strictly manage how its brand is used. Although we expect at least five million Windows mobile devices to ship in 2004, we find it doubtful that Microsoft will succeed in its stated goal of shipping over 100 million mobile devices running Windows in 2007.”
Full-Feature Devices Define the Mainstream. Devices based on full-feature operating systems will define the next stage of technology evolution in the mobile handset market. Sales of full-feature handsets will grow to about 290 million in 2008, or 42.5 percent of all handsets, from about 10 million in 2003. Sales will be driven by falling components costs that will result in full feature handsets at manufacturer price points of about $180 in two years and $120 in 2008.
Linux will Threaten Symbian Dominance. While Symbian will be the market share leader in the next 24 to 36 months, thanks to its endorsement by market makers Nokia and NTT DoCoMo, Linux will threaten for long-term dominance. Linux leads other platforms in openness and low cost - factors that are essentials to success in a market defined by tight margins, rapid innovation, and standards adherence.
Microsoft Must Broaden Appeal of Windows Mobile. Microsoft will face a severe uphill battle to succeed in its stated goal of achieving global shipments of 100 million devices based on its platform in 2007. While Windows will provide advantages for OEMs in the productivity device segment Microsoft will have a tough time defining new hybrid device categories and matching the innovation of more open platform ecosystems.
Carrier Channel Control will be Endangered. By distributing full feature handsets carriers will create new service opportunities but will also create new competitors. The proliferation of full feature handsets with flexible I/O (input/output) will yield new channels for providers of handset features and content publishers using OTA download, PC synchronization, or retail distribution via memory cards.
DRM will not Stymie Flood of Piracy. The proliferation of full-feature devices will create a major new venue for content piracy. Pirates will be attracted by the ease of distributing to open platforms and the higher production quality supported on full-feature handsets. Tighter DRM will help but will not totally assail pirates and others that will test the legal bounds of fair use of digital content.
Mobile Electronics Sector will be Redefined. The use of full-feature operating systems will yield markets for hybrid devices including handsets that are optimized for productivity, imaging, game play and music consumption. Leading providers of mobile devices will be forced to respond by touting improvements in core functionality and facilitating WAN transmission via a Bluetooth-bridge or through direct integration of cellular modems.
Embedded Platforms Will Survive. Full-feature platforms will be viewed as overkill by some manufacturers for market segments that lack the interest in, or financial ability to subscribe to, data services. Full-feature platforms will be competitive with embedded OSes such as Nucleus or ITRON in design wins for devices that will represent 50 percent of market shipments in 2008.
Developers will Reassess Value of Java. While vendors highlight support for device middleware such as Java developers will shift their focus to develop natively for full feature OSes as their installed base grows. Developers will be attracted to consistent implementation, higher performance and less restrictive native platforms.