Saturday, October 25, 2008

The Mobile OS Market

These days we are reading in the news that Symbion is going Open Source. As you may recall this summer Nokia bought the UK based Symbian firm with the intention to go in the direction of open sourcing Symbion. The move made sense not only from the strategic point of view but also from the financial point of view because Nokia was the biggest contributor.

From the strategic point of view, the roots of this movement could be situated in the Innovation Jam that Nokia held two years ago and in the resulting decision to become a services company and the creation of OVI.

Symbian is going Open source in stages, beginning with a community open source EPL (Eclipse Public License) to go most of it open source on 2010. EPL is a weak copyleft license that allows to have linkages with proprietary modules.

However, this provides us with an excellent opportunity to take a look at the resulting OS landscape.  

On one side we have Apple that is using its technological platform to align developers to its strategy. Apple relies in the complete control of the end product, both software and hardware.

We also have Windows Mobile, that sells the OS to integrators and is also trying, clearly less successfully, to create a platform encompassing application and contents.

Google is the new kid in the game with Android. Android has an Apache 2.0 license allowing derived works to be commercialized and probably aims to capture value through the same ad based model that uses in its search engine.

And finally Symbian where most notably Nokia controls around 40% of the market and now is going Open Source.

The most obvious question is about the sustainability of the Windows Mobile offer when competing with 2 open source offers, backed by companies like Google and Nokia. Probably the only alternative could be to have such a huge difference in quality that it could compete with the perceived quality market leader (Apple). However this is against the best interest and the survival of a player like Nokia or against the growth of Android and in any case, because of the lack of tight integration in the product /strategy components looks unlikely. Therefore tough times ahead for Windows Mobile …

What about Apple? Apple is maintaining a market leader position that in that environment forces him to a frenetic rhythm of innovation. Apple can only take advantage of its complete control on product/strategy components by constantly pushing the product to its maximum possibilities, by being constantly in the fence. This is probably the reason why it bought PA Semi (ARM) in an attempt to not only gain exclusive access to hot technology but to secure a temporary competitive advantage.

However, there are two forces that go against Apple, the first is modularity. As the market matures, technology standardizes effectively reducing the level of complexity of a product and equaling the playing field. The second is the standardization of user needs. Look for example, to the way PCs evolved, they are now a mature technology with pretty standard and accepted user interfaces. Nobody wants a car with 5 wheels, even if possible …

Anyway, there is room left for innovation and being in the cutting edge is obviously profitable but demanding.

And Android – Symbian? Well, both aim to play in the peer production market, taking advantage of modularization and the innovation potentially created by a huge number of developers.

If you take a closer look you could recognize that we are assisting at the same duality than in PC’s OS: a company that controls all the components of the strategy and others who only controls part of it. However with a change: two big names want to play the role of integrators, Google and Nokia, this contrast with the actual situation in the desktop (not so much in servers where IBM plays partially this role) and one of them also produces hardware.

 If you don’t control a majority of your strategy components you will perform very well when complexity is low but you could be easily beaten by the best integrated player (although as an average the whole group of innovators will perform better). However, as you increase the number of players upon you select for integration, the chances of the integrated player are being reduced (note that you still need an integrator who selects among the best – not the case of desktop linux).

We are therefore, confronting a new scenario, with new possibilities. My prediction: very tough times for Microsoft and harder to compete for Apple, Android and Symbion, do really have a chance. In terms of strategy we are going to witness peer production with lead integrators that I believe are going to play a role more as orchestrators of the platform than just integrators. The key issue for them will be their ability to capture the attention of a sizeable community of developers and have a system with enough modularity and granularity to allow peer production (Android’s architecture seems indeed to go in that direction).

A related, but not less interesting question, is to what extend a success in the mobile area could be translated to the desktop/laptop arena. 

P.S. This is part of our ongoing research with Prof. Ramon Casadesús 

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