Florian Seroussi's Blog

Mobile industry : Evolution vs. Revolution

Friday, September 11th, 2009

We must give Apple credit for the mobile application raison d’être. Mobile apps have been around for at least two decades and never seemed to be anything else but a gimmick. Cupertino firm re-invented mobile phone distribution and created a viable content delivery model. For years – manufacturers and carriers tried to increase subscriber’s data usage but ultimately failed to find innovative concepts. Motorola and Nokia were dominating telecom market copying each other on small technology evolutions for more than 20 years. Apple started from scratch with one motivation: offer the best possible customer experience on a win-win-win basis (Apple, carrier, subscriber).

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Palm – the missed opportunity

Palm – founded in 1992- was very close to monetize the industry back in 1996 but they thought selling devices was more lucrative. I remember my first Handspring Visor during Comdex 1999. Jeff Hawkins was praising a revolution in mobile devices…we know the story.

Palm wanted a basic handled – in my experience, basic users tend toward basic devices. Palm executives underestimated our capabilities to adapt and kept Treo/Palm a digital agenda.

Realizing that everyone didn’t want to play movies/music on the go was certainly their biggest failure.

It took 10 years for Palm to copycat Apple innovate and launch App Catalog – a marketplace for WebOS mobile applications. So far figures are kept secret and Palm Pre failed to reached its commercial targets. A new device was announced today Palm Pixi with supposedly better capabilities. Let’s hope the hosting carrier will not be Sprint.

Nokia – Double failure

The Finnish phone manufacturer had 3 out of 4 ingredients to make it happen. Firstly they have the audience. Around 1.24 billion phones worldwide. Then they had the carriers – over 700 of them all around the planet. Third they had one of most innovative mobile OS – Symbian. But they had NO vision, NO strategy to sell content.

Symbian was the best thing Nokia did to make their handsets ‘smart’. I must mention Symbian was an independent company backed up by the phone giant. Nokia had the ambition to promote Symbian OS to competitors and make money thru licensing the platform. They believed other device manufacturers would not integrate Symbian if Nokia was the sole owner.

Double mistake – everyone knew Nokia was behind Symbian although Ericsson (15.6%), Sony Ericsson (13.1%), Panasonic (10.5%), and Samsung (4.5%).were partners.

Biggest Nokia’s failure was to understand money was not to be made on the container but on the content.

Unfortunately it took Nokia 10 years to understand their mistakes and decided only last December to acquire Symbian.

Google – The Challenger

I remember when we first heard of a Google Phone most experts were skeptical Google – the service company- could risk it all entering in a hardware world.

Basically Google never manufactured any phone. They made a deal with HTC and Tmobile.

The only reason they worked this way around was to overcome mobile carrier’s cartel. Google executives understood Telco operators would not open their doors easily. This is maybe the major difference between Google and Apple. Apple is first of all a top hardware manufacturer. Google is only a search engine a service technology provider specialized in content delivery.

Android – Google’s OS- is promising not only for mobile but also for tablets and PCs. I was lucky to try the new Archos Internet Media Tablet running Android – true convergence between Mobile and PC. Future laptops, tablets are going to be ‘always connected’.

Admittedly Apple has a serious lead over Google but there is no short time strategy here. I strongly believe Google is the strongest contender in the game today.

BlackBerry – Productivity at best

Research In Motion has been a market leader in many ways. Firstly as a money maker with the best free idea of all times: EMAILS.

Trying to sell a free concept for a fee is definitely a challenge. Mike Lazaridis and Jim Balsillie started in 1984 with Pagers. In 1998 they launched their first Qwerty device launched and only early 2000 did we see the first BlackBerry. [note: BlackBerry website still displays older devices and press releases from their early days.]

RIM business model is simple. Pay to get your emails on the go. They spent 100’s of millions litigating patenting their technology. Today they totally own the market of corporate emails.

3 sources of revenue for BlackBerry:

-       The Device

-       Email access BlackBerry Internet Service [BIS] or BlackBerry Entreprise Server [BES]

-       Revenue sharing with carriers

With over 55 Millions devices sold BlackBerry is now grabbing the Application momentum.

RIM had a closed platform for 15 years and refused to open to mobile applications. This is a big change for the Canadian giant. Creating a friendly development platform on the worse possible OS.

Despite all critics BlackBerry has now an App World store selling highly priced mobile applications. RIM has not yet disclosed figures but I believe

BlackBerry has recently launched a touch-screen device – Storm- and faced huge criticism due to lack of basic features iPhone is offering. We can’t blame users for comparing.

BlackBerry Messenger is the most popular feature among young adults. Another tour-de-force for RIM. Cashing in on a free concept: instant messaging.

I believe BlackBerry is in a hit or miss situation. A lot will depend on their new OS and new devices to be launched. Their current strategy of multiplying similar handsets is certainly not the way to go.

Deliberately I left Motorola out the scope of this post. Despite various rumors of a soon to be announced comeback I think Motorola gave up on R&D and innovation and will exclusively produce Android based handsets. At least for now…

No mention of the already obsolete Windows Mobile OS. The raise and death of WM deserves a post for itself J.

It took Apple one shot to conquer the world with a real smartphone. Best of all – their range of phone is ONE device. They transported the iPod/Music model to the phone, created an industry for mobile applications recycling thousand of jobless developers into entrepreneurs. Telco giants spending billions of dollars in R&D could not achieve it. They can’t even copycat it. We are going to see a vertical renewal of the entire mobile industry. From carriers to phone manufacturers.

But Apple taught us a lesson. No matter how much you spend, how long you have been around and how tricky you are in those carriers contracts– there is no market retention. Customers will go to the best device no matter what.

Tags: android, Apple, Blackberry, google, iPhone, mobile, motorola, nokia, palm, phones, telco, webos, windows
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