Smartphone War Part I: : Smartphone OS the differentiating factor

Mobile phone technology is driven primarily by two things the wireless network and the mobile handset. The mobile phone use cases have changed exponentially from  a “telephone” on the run model to personal “mini” computer on the run. With the accelerated growth of internet  the web is no longer limited to the personal computer and laptops but much more beyond that, ubiquitous internet comes into the picture. The point to be noted is that users are expecting a similar  user experience from  their handheld devices. This has triggered the need of  mobile phones with a stronger operating system which makes the mobile phone smarter creating not only a richer web experience  with always on data connection but also allowing users to do other personal day to day tasks and communication activities.

Let’s start with basic analysis of  the mobile phones growth and the smartphones’ contribution to it.

The above graph clearly depicts the growth of smartphone category and its contribution to the total mobile phone sales. In 2006, smartphone contributed to almost 8% of the total handset sales and now in 2009 it almost contributed to 15.3% with an average year on year growth of 30% for the last four years. Whereas considering the overall handset sales in mobile industry, it was almost flat in 2009 due to recession and with and average of 6% year on year growth. This shows smartphone is  going to be the category which will fuel the mobile industry and supporting wireless network industry growth. The wireless network operators have already started deploying  faster and fatter piped 3G networks to support this huge surge of data flowing in and out of  the hungrier and smarter devices.

If we deep dive into this mobile industry and more into the smartphone industry, we can see the game is changing. The mobile wireless industry forces were  dominated only by the powerful network operators network and mobile device manufacturers hardware design. But now the success of a mobile device manufacturer is no longer limited to the hardware design of their mobile devices but instead is powered by multiple functionalities, more features, the  demand for near web- user experience on mobile devices. So what is the differentiator? It’s the Mobile Operating System and software platform which is and will be the key differentiator in carving out a richer user experience and the bucket of features satisfying these new generation data hungry “always on”  users. i.e. Always on the web and always on the move(ubiquity).

The dynamics between network operator, mobile OEM is being acted upon by different industry forces. Let’s apply Porter’s five force analysis to smartphone industry and analyze the threat levels to the incumbents.

These forces have great effect on the OEMs and there has been a  relative shift in power from the manufacturers to the OEM smartphone OS developers in terms of accountability for sales and services. The primary example being Google Android System with Droid (Motorola), Android (HTC), Symbian (Nokia(all), Samsung i8910 Omnia, Sony Ericsson Satio, LG KT615). The success of the phone is tied directly with the OS’s performance, brand, sales and the support expected. We have already seen with T-Mobile Sidekick (Windows Mobile OS), Nexus by  Google(Android) service issues with users seeing the OS as the main force behind their smartphones.

Let’s see which are the top mobile operating systems and their growth,

Symbian OS is the world leader in Mobile Operating Systems with a substantial market share followed by RIM’s Blackberry OS  and Apple MAC OSX. Though Symbian has lost its market share over two years due to phenomenal success of Apple iPhone in consumer world and Blackberries in enterprise world but the latest move by opening the Symbian OS platform to the development community will definitely result in a better user interface design, lots of apps and hence a better user interface to combat with likes of iPhones and Blackberries. But, all eyes are on Google Android Operating System gaining traction in the smartphone market, cashing in on its brand equity and reputation. The recent Google Nexus’s launch was a  clear example of the world’s leading search engine and online advertiser employing its marketing muscle, indicating a start to an intense battle between the smartphone operating systems in claiming its supremacy.

But what is the outcome of this intense rivalry ?? In first case why is this rivalry ? The answer is the mobile user’s pyramid of needs which a smartphone tries to satisfy with the ultimate goal of taking  the user to the tip of the pyramid.

The above pyramid highlights the priorities and  needs of  the  users which integrates with their mobile phones. The most important basic needs are at the bottom of the pyramid, whereas  the more richer experience creating needs are top of the pyramid. The smartphone which fulfills all the needs right from the bottom to the top of pyramid will stand out to be the most successful smartphone. And, the Smartphone OS is the key element for the user reaching at the top of the pyramid . From smartphone manufacturer point of view the top of the pyramid is the key differentiator in gaining  a competitive advantage. Apple iPhone has succeeded in taking the user experience to the topmost level  with its huge and wide variety of apps from its app store.

In the next part we will  conduct a comparative study in this battle of operating systems. We will chalk out what differentiates these OS and makes the mobile phone smarter. We will also analyze the apps( app stores comparative business model), which brings the ultimate satisfaction to the smartphone user  and hence  prove to be the biggest differentiating factor in the smartphone market.