Themes from the ‘OS wars’

Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
It feels like every day we are seeing articles about the “operating system wars” and who the winners and losers will be. The questions and analysis seem endless. What about Nokia’s purchase of Symbian? Will Google’s Android gain traction? What is the impact of Apple’s proprietary OS on the marketplace? Is Palm going to survive? Is Windows Mobile 7 going to allow Microsoft to finally break out in mobile? What about LiMo? Will Adobe be able to do for mobile what Flash did for the Web? RIM: mainstream or destined to be only 10% of the market? Then there are the “Mobile 2.0” widget/browser technologies. How many widget containers (AXcess, Plusmo, Widsets, Opera, Plaza, etc.) will make it? There’s lots of confusion out there when it comes to finding answers to these questions.
And while I’m always one to offer a point-of-view, I am definitely not the one to forecast who the winners and losers will be – I’ll leave that to the industry analysts. However, I am seeing a few themes emerging that should get the attention of those who make, retail, develop or merchandize applications (or widgets) across all of these platforms.
1) Fragmentation is here and we better get use to it.
The “winners” will have to support multiple OSs. We all know applications run best in a native environment. Developers are going to have to build their applications across multiple environments in the future (vs. primarily Java or BREW today for feature phones). Prioritization of which environments to support and near ubiquitous coverage of the OS will be key to success.
2) Customers don’t care.
Ask any customer what OS the Apple App Store rides on and you will get a shrug of the shoulders. Ask them if they have downloaded an app on their new 3G iPhone and most will say “yes.” The reason is that Apple has done a fantastic job of tying their OS, the device, the store, and the user experience together into a seamless experience. In my opinion, while this has negative implications for the “ecosystem” due to the fact that it is 100% closed and proprietary, the positive side is that Apple has focused on the user experience above everything else. Those companies that can keep the “my OS is better than yours” mentality away from the customer and focus on the benefits are more likely to succeed.
3) “Open” is a simple word that has become very complex.
There is so much confusion today about what “open” means and what the impact of open will be in mobile. Is it the network? The OS? The applications? The APIs to the network? All of the above? Each stakeholder seems to have their own “spin” on what “open” means to advance their cause. Ironically, the success of the Apple App Store is within the context of the most “closed” system in the marketplace. Open systems are likely to create benefits such as lower costs, more choice and more innovation which come from increased competition in the marketplace. But they could also create some negative consequences. Security? Viruses? Worms? Certification? Testing? Legal infringements of IP? Bugs? We need to acknowledge there is likely going to be good and bad.
4) Business models will be key.
There is a lot of hype about the applications and widgets that run on smartphones. One of the important factors is understanding that mobile is more complex than the fixed Web. The need for developers to support multiple OSs, distribution to the end consumer, the licensing of the content, etc. all adds costs. But the other factor is understanding that while the cost to deliver data on the fixed web is minimal, mobile bandwidth costs anywhere from $.10/MB to $.40/MB depending upon what technology and assumptions one has. A simple example of taking a video application like You Tube, Break, etc. and monetizing it via advertising will be tough. Even if the content provider could get $100 CPM (unlikely) for a pre-roll ad, which is about $.10/video, a video is typically larger than 2MB, which makes the network costs greater than the ad revenue. Application providers will need to recognize that for better or worse the carriers will want to recoup their costs of the network. Furthermore, the fragmentation in the OS chain means that others are going to require their ROI too. Ultimately some blend of advertising and customer purchase are going to be required.
5) We are in the midst of the “hockey stick” of growth.
There were only 25 million smartphones in 2006 and today there are over 100 million with many forecasts showing 500 million over the next 24 months. Spurring this growth will be the customer realizing they now have a “computer in their hand,” carriers realizing these devices have higher ARPUs (i.e., more subsidy) and the marketing resources of companies like Apple, Google, Nokia, RIM, Microsoft, etc. ensuring the benefits of the hardware and software are communicated to the marketplace.
The bottom line is that the world is getting more complex and for those who want to benefit from the hyper-growth of smartphones and smartphone content, it will require a deep understanding of the trends and support of multiple OS frameworks.
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