War of the Worlds (or the March of the Androids Revisited) - 30 Aug 10 - by gins

This morning, RCR Wireless Unplugged published an updated table comparing Android hardware specifications. It brings clarity to just how important Android is becoming to operators, handset vendors, and application developers. The diversity of form factors, price points, and (less fortunately), OS version levels, demonstrates the vibrancy of customer choice offered by the Android ecosystem, and is reflected in Android device and developer growth. And, as expected, as I've covered in the past, it begs the question... what is to become of Windows Phone 7, RIM, HP-Palm, and Symbian. I'll leave off Apple due to the company's stated intent to focus on a more limited, higher-end market (with margins to show for it.... to be specific, Apple doesn't need to be #1 or #2 in volume to succeed), as well as the iTunes/iOS ecosystem. Looking into the near future, the other four have tall orders in front of them.

We'll assume Android consolidates at #1. There is probably room for a viable #2, and then there are the table-scraps. Take a page from Jack Welch's GE playbook: Welch's public philosophy was that a company should be either #1 or #2 in a particular industry, or else leave it completely. Welch's strategy was later adopted by other CEOs across corporate America. Although this mantra has been questioned of late, I do think that at least in the smartphone space, there is little room for carving a niche.

Worldwide Smartphone Sales to End Users by Operating System in 2Q10 (Thousands of Units)

Company	2Q10 Units	2Q10 Market Share (%)	2Q09 Units	2Q09 Market Share (%)
Symbian	25,386.8	41.2	20,880.8	51.0
Research In Motion	11,228.8	18.2	7,782.2	19.0
Android	10,606.1	17.2	755.9	1.8
iOS	8,743.0	14.2	5,325.0	13.0
Microsoft Windows Mobile	3,096.4	5.0	3,829.7	9.3
Linux	1,503.1	2.4	1,901.1	4.6
Other OSs	1,084.8	1.8	497.1	1.2
Total	61,649.1	100.0	40,971.8	100.0

Source: Gartner (August 2010)

HP faces challenges. Although they've stated their intent to push webOS across a diversity of form factors including tablets, there is only so much top-down leverage within the enterprise. Just look at Windows Mobile, and HP does not have a stellar track record in this regard with the the iPAQ. They'll face the iPad, an assortment of Android tablets from the likes of Cisco (cius) and Samsung, and developer apathy. Looking at Cisco's positioning, I expect the cius to be a strong contender within the enterprise, and they were smart in focusing on their skillsets rather than trying to reinvent the OS. Sure, HP they may carve out a niche, but that begs the question of the investment in Palm and the distraction that it creates. 3PAR (still in-play as I write this) seems to be a safer bet.

Microsoft will need every weapon in its war chest to make a go of Windows Phone 7. Just this week, another OEM - Dell - was rumored to have jumped ship, leaving LG, HTC, and Samsung. Dell, lacking the WM pedigree of HTC or the volumes that LG and Samsung drive would do themselves a favor by focusing on one OS - Android. In any case, given increasing acceptance within the enterprise of the iPhone, and now Android, not to mention BB, Ballmer needs to get creative, and not creative in the way of Kin. As users consolidate on a single device in may cases, and are given the choice as to what this device may be, the Windows Phone is not top of mind. I'll ask the question voiced by so many... does Microsoft get mobile?

I've always respected RIM, but guys.... you've got to think differently. Last spring I wrote in an open letter to RIM's CEOs that the 9700 would probably be my fifth and last blackberry. I patiently waited through the Torch launch, but it just doesn't do anything for me. I'll hold out for OS6 release on the 9700, though from what I've seen posted on the web, sometime this fall I'll be making that fateful call to AT&T, shifting to the iPhone (more on the back of my in-home iecosystem rather than any love for the iOS experience over Android).

I've read that RIM has sold somewhere around a quarter of a million Torches since launch. In about the same timeframe, Samsung has sold on the order of a million Galaxy S Android devices. The BB App World is uninspiring, and the % of users who plan a BB as their next device continues to drop. This is the most troublesome point, faced by Windows Mobile as well. Given employee choice, the next smartphone is unlikely to be a BB. And, more often than not, where a BB is issued by the enterprise, the employee also carries around an iPhone or Android device. Not a pretty picture if you are looking at things from north of the border. Thus the reasons for downgrades of RIM stock (and not just on the back of concerns regarding India and the Middle East). So what are they to do?

RIMs' rumored tablet is said to be based on QNX, an OS developed by a company RIM purchased earlier in the year. From what I see of the Torch, RIM's existing OS infrastructure, OS6 included, could be coming up against a wall with regard to hardware support and extensibility. QNX could provide the needed clean slate for RIM's next generation of smarphones, but only time will tell. And, they are still limited in the same way as HP (and Apple)... a vertically integrated hardware and software offering. This could continue to be their major challenge in the future (vs the Windows Phone or even HP's webOS if they open it to external hardware developers), but I'll given them the benefit of the doubt and cast them as #3 after Android and Apple, through probably still relevant in terms of market impact.

Then there is Symbian. The mighty ducks. Although still commanding a market lead, due to legacy than anything else. they too face handset vendor apathy (Nokia excepted), marginal developer loyalty, and a Symbian Foundation that has proven to be less than totally effective. The Europeans used to think of the US as being behind the market, based on the sophistication of Symbian devices. In fact, maybe we were just anticipating the market. While Android devices continue to push the limits of hardware design and usability, recent efforts by Nokia and Sony-Ericsson have been less successful. This is reflected in the top smartphones across Tier 1 European operators, a mix of Android, Apple, RIM, and Symbian. This mix would have been unheard of just two years ago, and the tables continue to turn. I suspect that Symbian will continue to find success on the back of Nokia's global presence and S60 momentum, but it will lose the mind and marketshare at the top end. Symbian may take a long time to fall from #1, but when it does, will anyone notice? Looking 2-3 years out, I'll place them at #2 after Android. This ignores Apple, #2 or #3 in terms of volume... hard to tell.

Where does that leave us? Android as a clear #1, eventually dominating vendor mindshare and the majority of operator smartphone offerings across multiple price-points. Apple as #2 in revenue, margin, and impact, if not in volume. An enviable position to be in. Symbian holding on to #2 in volume after Android, though possibly slipping to #3 behind Apple. RIM most probably #4 in volume, though still impactful in the market. I look at the Windows Phone and webOS (as well as the multiple other Linux variants which you notice I’ve ignored) as also-rans, possible successful in niches but having minimal market impact. The real question then will be how the market and ultimately, consumers, take to the #3 and #4 players, the strong and the weak, as characterized by a former colleague of mine. Only time will tell.

The Fifth Wave... The Mobile Internet - 27 Aug 10 by gins

Last fall, Morgan Stanley released a seminal report on the state of the mobile internet (link), providing observations on market growth and opportunities, key vendors, and technology trends.

One of the key conclusions was the potential size of the mobile internet, an order of magnitude greater than what we call the desktop internet of PCs, laptops, and Ethernet. I expanded upon this and termed it the 'Fifth Wave,' an opportunity of risk & reward over the next decade beyond anything those of us in the industry have yet experienced.

In this summer of the iPhone 4, Android, and the iPad, I'm more convinced than ever that the future of the internet, both social and enterprise, is mobile. A diversity of form factors, evolving user expectations, and an 'untethered' generation entering the mainstream will fundamentally change where, when, how, and on what devices we consume content and conduct our everyday business.

More in the coming weeks....

I've included additional slides for background, including estimates of the total mobile market opportunity, growth of the 'i' ecosystem as of last fall, and the original four-phase diagram.

The iPhone 4 and Smartphone Manufacturing: The Price We Pay - 24 Jun 10 - by gins posted to TMCnet

BP's recent difficulties in the Gulf once again highlighted the price we pay for our consumerism. Here is Silicon Valley, in some ways we're at its epicenter, the first in the office to have the latest smartphone, 3D TV, or other gadget that sees a few seasons of use before being cast away.

This reality was made clear to me just this afternoon as I drove through downtown Los Gatos. The lines were already forming in front of our local Apple store. But for every iPhone 4G, the future of some less fortunate Nokia (News- Alert), Samsung, or even previous generation iPhone is called into question.

A small minority makes it to eBay, Craig's List, while some are handed down to the kids. However, for the majority, the next stop is a dark drawer or closet, or a donation bin. There is a price to pay at both ends of the food chain… both creation and destruction.

Most phones, though engineered and branded by the likes of Apple andMotorola (News -Alert), are manufactured by a small group of Electronics Manufacturing Services companies such as Flextronics and Foxconn that are located in lower cost venues such as China.

In the fiercely competitive Smartphone sector, the quest for lower costs results in expected consequences. Given recent press coverage of worker issues at Foxconn, one could conclude that the issue is recent. In fact, it is just the opposite. Back in 2006, a seminal study conducted by SOMO analyzed working conditions and exposure to toxic substances at major EMSs and ODMs. Consider it 'The Jungle' shifted exactly 100 years into the future. Hooks replaced by conveyors and hoofs by microchips. What happens to phones at the end of their lifespan is probably more disturbing, and makes the factory cities of Shenzhen and Nanjing look like Shangri-La.

Over one billion phones are purchased each year, and close to half of these are replacements. Maybe half of these see some future use, while a quarter of a billion phones are sent to their death. RoHS is a step in the right direction in minimizing toxic substances, but it is not universal, does not address batteries to the fullest extent, and does not reduce the sheer volume of electronic waste. A while back National Geographic ran an excellent expose of just where our 'recycled' electronic waste sometimes ends up. Coverage of what happens at the end of the consumer electronic lifecycle is still few and far between.

I'm not trying to change the behavior of the Apple's (News - Alert) of the world. What is achievable, however, is better accountability along the process. We're beginning to see the first changes on the supply side, but whether these changes are only temporal or will take hold is yet to be seen. For returns, when purchasing a new phone, for example, the customer should have the option of returning any number of older phones to the vendor or mobile operator. A documented, socially and environmentally friendly recycling / teardown procedure would then come into play, equivalent to that which exists in other industries. This is one approach. The other? Minimizing the price we pay by hanging up that fanboy shirt for another day.