Dominant Design Evolution: Strategic Implications for Firms in the Smartphone Market

PGSEM FINAL PROJECT REPORT

Student [Roll No.]: Anuroop Gaonkar [2005011] Pankaj Kurse [2006039]

Faculty Guide: Rishikesha T. Krishnan, Ph. D. Professor, IIM - Bangalore

Indian Institute of Management Bangalore

Towards partial fulfillment of the requirements for the Post Graduate Diploma in Software Enterprise Management of the Indian Institute of Management Bangalore

TABLE OF CONTENTS
1 2 3 PROJECT AIM, SCOPE AND METHODOLOGY ............................................................. 4 EXECUTIVE SUMMARY ...................................................................................................... 5 DOMINANT DESIGN ............................................................................................................. 6 3.1 3.2 3.3 3.4 3.5 3.6 Concept of a Dominant Design .................................................................................... 6 Context for the evolution of a Dominant Design ......................................................... 6 Paths to a Dominant Design ......................................................................................... 6 Dominant Design Lifecycle ......................................................................................... 7 Factors influencing the emergence of a Dominant Design ..........................................10 Strategic implications for the firms competing to establish a Dominant Design ........12 3.6.1 Understanding the context ..............................................................................13 3.6.2 Strategic Plans and Actions ............................................................................14 Lessons from history for establishing dominant design ..............................................17 3.7.1 PC ...................................................................................................................17 3.7.2 BetaMax vs. VHS ...........................................................................................18

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SMART PHONE INDUSTRY OVERVIEW ........................................................................21 4.1 4.2 Smartphone .................................................................................................................21 4.1.1 Features expected of a Smartphone ................................................................22 Smartphone Industry ...................................................................................................23 4.2.1 History ............................................................................................................23 4.2.2 Current state ...................................................................................................23 4.2.3 Qualitative Factors regarding the Various Smartphone Vendors ...................25 4.2.4 Projected growth in smartphone market .........................................................27 4.2.5 Traffic by Smartphone Vendor and OS ..........................................................29

5 ANALYSIS OF SMARTPHONE VENDORS FROM DOMINANT DESIGN PERSPECTIVE. .................................................................................................................................31 5.1 Smartphone eco system ...............................................................................................31 5.1.1 OEM/ODM .....................................................................................................33 5.1.2 Developers ......................................................................................................33 5.1.3 Mobile or wireless operator (MO) ..................................................................33 Nokia Symbian ............................................................................................................34 5.2.1 Strategy...........................................................................................................34 5.2.2 Mobile Operators ............................................................................................35 5.2.3 OEM/ODM .....................................................................................................35 5.2.4 Developers ......................................................................................................36 5.2.5 Summary of Nokias Smartphone strategy .....................................................37 Microsoft Windows Mobile ........................................................................................38

5.2

5.3

5.3.1 5.3.2 5.3.3 5.3.4 5.4

Strategy...........................................................................................................38 Mobile Operators ............................................................................................39 OEM/ODM .....................................................................................................40 Developers ......................................................................................................40

Apple Mac OS X .........................................................................................................41 5.4.1 Strategy...........................................................................................................41 5.4.2 Mobile Operators ............................................................................................41 5.4.3 OEM/ODM .....................................................................................................41 5.4.4 Developers ......................................................................................................42 Palm (Palm OS)...........................................................................................................42 5.5.1 Strategy...........................................................................................................42 5.5.2 Developers ......................................................................................................42 Research in Motion (RIM / Blackberry) .....................................................................43 5.6.1 Strategy...........................................................................................................43 5.6.2 Mobile Operators ............................................................................................45 5.6.3 Developers ......................................................................................................45 Google Android...........................................................................................................46 5.7.1 Factors for Android ........................................................................................47 5.7.2 Factors against Android ..................................................................................47

5.5

5.6

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FUTURE SMARTPHONE TRENDS AND POSSIBLE SCENARIOS ..............................49 6.1 6.2 6.3 6.4 6.5 6.6 6.7 Data oriented device becomes the norm......................................................................49 Differentiation through feature / functionality addition ..............................................50 Internet based services become integral part of smartphone offering .........................51 Move towards Open Source OS from Proprietary OS ................................................52 User Interface evolution ..............................................................................................54 Rise of outsourced manufacturing, ODM and search for economies of scale .............55 Enterprise adoption of smartphones will increase .......................................................56

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CONCLUSION ........................................................................................................................58 APPENDICES .........................................................................................................................60 8.1 8.2 8.3 8.4 Glossary ......................................................................................................................60 The smartphone market data .......................................................................................62 Worldwide traffic by Manufacturer and Operating System as of January 2009 .........70 Contract/Integrate strategy table for innovators Specialized asset case ...................71

REFERENCES ........................................................................................................................72 9.1 9.2 Books and Journals .....................................................................................................72 Web Site References ...................................................................................................73

Project Aim, Scope and Methodology

This project aims to track how dominant design patterns have evolved over the years, understand the successful and not successful evolutionary patterns and then define what could be the strategic implications of these patterns for the participants in the smartphone market and products.

The study should help mobile application developers and enterprise CIOs besides all the players in the smartphone eco-system to get a sense of the current state of affairs, possible future trajectories for each of the products and factors and actions which would make some of them more dominant than others.

The methodology that was followed was 1. Understand from books, papers and case studies the way in which a dominant design emerges and define the key factors that influence the eventual outcome. This helped in defining the patterns commonly observed when a dominant design emerges. 2. Collect data regarding the smartphone industry evolution as well as the participants at this moment. This involved product features and product market shares. This helped us determine the top players in the smartphone market. 3. Identify the key players in the smartphone eco-system along with their strategic positioning. 4. Evaluate the major players on the parameters which usually determine dominant design. 5. Identification of important future trends and its impact on the various players in the smartphone eco-system using data regarding the industry and the key players. These key trends also resulted in the possible future scenarios. 6. The analysis of the firms, the key trends and the scenarios helped to infer whether there is some pattern in the evolution of smartphones as indicated by dominant design evolution and what it would mean to the key participants in the smartphone industry. 4

Executive Summary

This project aims to understand the common themes that drive the evolution of the dominant design and then derive implications that affect the strategic actions the firms must undertake to eventually succeed in an industry where a dominant design may emerge.

The smartphone industry has been analyzed to check for the possibility of the emergence of a dominant design. The analysis indicates that the smartphone industry is currently in the fluid stage of evolution of a dominant design. Hence it is not possible to define the eventual dominant design in case of the smartphone. But key trends that would influence the plans and actions of the players have been discussed. This study has been able to derive certain implications for strategic actions for the key segments of the market. The possible evolutionary path of the smartphones could involve: 1. The themes of performance improvement, feature addition and consolidation at the device chipset level as well as the operating system will progress in parallel. Once the smartphone is able to provide basic document processing and web browsing experience as compared with PC, the performance improvement or device architectural changes would happen at lower rate and we will enter the transitional phase. In this phase there would eventually be few operating systems (either open source or proprietary) deployed on majority of the smartphones. Thus there could be a dominant design in terms of the features and OS features as in the case of the PC. 2. The few smartphone players who would work well with the operators and provide users with applications and content they require will eventually stand to gain due to access to complementary assets and network effects.

Dominant Design

3.1 Concept of a Dominant Design

Dominant Design is the design (product architecture and feature set) preferred by the majority of the users and adhered to by majority of the producers. It can also be defined as the product and/or process architecture that becomes widely accepted as the industry standard.

A dominant design has a well defined internal structure and external interfaces. It also provides a well defined function for a product based on the dominant design. The dominant design makes many of the product related requirements implicit by incorporating those in to the product architecture. The dominant design need not be the design that is used in the product with the best performance, but it is the design of the product that is used by majority of the producers and preferred by majority of the users of the product as indicated in the definition.

3.2 Context for the evolution of a Dominant Design

The dominant designs emerge mostly in products that are produced in large numbers to serve a mass market and where the consumer tastes are relatively homogeneous as noted by Teece9 and agreed by Utterback2. The subsequent sections will focus on determining the state of the smartphone market and see if a mass market with homogenous functionality is emerging.

3.3 Paths to a Dominant Design

The dominant design emerges primarily in 2 ways. 1. Through an evolutionary process involving multiple competing entities where some interfaces and features become well accepted and become the norm De facto way

2. The participants co-operate to evolve a standard for a certain entity that most of the participants adhere to De Jure way There are multiple views regarding how a dominant design evolves when many competing entities are trying to establish their design as the dominant design. The process through which a dominant design emerges in this case may be a. Akin to the evolution process in which eventual outcome is influenced by the probability with which each available alternative is chosen by various participants other than the creator of the design5. - The evolution is dependent on the path followed during evolution as each successive choice is dependent on the previous choices and system as a whole moves towards reinforcing the choices made previously. b. Influenced by the strategic plan and action of the firm trying to establish the dominant design6.

3.4 Dominant Design Lifecycle

Dominant design creation for a product and the associated production process follow the pattern indicated below. The lifecycle7 involves a. product innovation (Fluid Phase) b. establishing a dominant design (Transitional Phase) c. process innovation and leveraging on the scale based economies (Specific Phase) This life cycle of a product where a dominant design may emerge along with the path chosen for creating the dominant design has strategic implications for the firms competing for dominant designs.

Figure 1 - Product and Production Process Innovation Lifecycle involving dominant design.

Fluid Phase In the fluid phase, the industry participants realize the existence of the market and start creating products to serve the market. The exact specifications of the product that would satisfy any one segment of the customers in the market are not known. Hence this phase is characterized by the entry of many firms and experimentation with addition of features and performance improvements to the basic product. The experimentation happens with the way components are organized and also at individual component level. The performance frontier is redefined frequently. The production processes are not streamlined. Premium is associated with a firms ability to bring products with newer features to the market at a faster pace. The integration within the firm is high and internal communication is high to create the required product. The firm is more integrated or organic. The transaction costs are high. The competition among industry participants in this phase is based on creation of entry barriers, acquisition of complementary assets, creation of IP to gain competitive advantage, and attempts to create positive network effect. The customers are choosing the product based on the features and performance that they need. Near the end of this phase some of the firms clearly understand the

customers needs and they start producing that whole product. Some of these firms also understand what other complementary assets are required and gain access to these assets through mechanisms of entering to alliances, building on their own, licensing etc. This phase may see consolidation in the industry for acquiring the product feature development related capabilities.

Transitional Phase This phase begins only if the product has survived the infant mortality stage. The market for the product starts taking off and demand grows. The feature based competition reaches a peak. At sine time during this phase feature addition stops. Only improvements in the existing features or performance keep happening by improving the components of the product. The dominant design has been established. Products based on this dominant design satisfy the needs of the majority of the customers. The firms start shifting focus to streamlining the production processes in order to gain cost competitiveness. The process innovation begins. The firms that have necessary complementary assets and innovate quickly on the process side will usually succeed in gaining the advantage and widening their lead over others. The industry as a whole will enter consolidation phase and some firms are forced to exit due to non competitiveness arising out of irrelevant products or costs. If products have performance that is better than the expected performance and if the firms are able to extract premium for this performance, then the firms may remain as niche players while the remaining market moves towards the products based on the dominant design. In order to reduce costs firms try to gain economies of scale and also reduce transaction costs. This leads to well defined interfaces for product components as well as communication. These lead to disintegration of product value chain and the rise of some specialized producers with scale.

Specific Phase In this phase the product design is well known. The competition shifts completely to costs. The process innovation peaks, and only few firms remain because these are the firms that are the leading producers of the product at the lowest cost. At each stage in the

value chain, there are very few producers and mostly the value chain is completely disintegrated with specialized firms at each stage.

3.5 Factors influencing the emergence of a Dominant Design

In this section, the various factors affecting dominant design as per existing literature would be noted. These would then be considered in the subsequent sections when analyzing the smartphone players. (Though not on a one-to-one basis)

As stated by Utterback the following factors play key role in the creation of a dominant design. 1. Existence of complementary assets 2. The regulatory environment and government actions 3. Strategic actions by the firm 4. Through communication cycle between users and producers

Complementary assets: These are the resources other than the engineering know how and the product creation capabilities, that a. Enable the firm to provide the required product to the customer in effective and efficient ways. b. Influence the customer to choose the firms product. There are different types of complementary assets such as general that need no specific customization for the product under consideration co-specialized that need some degree of customization, and specialized that are acquired specifically for creating the product. The details of these could be found in paper by Teece9.

The existence or non existence of the complementary assets influences the firms capability to compete for the creation of the dominant design because these influence the firms choices about a. creating entry barriers b. licensing the technology and design c. timing of entry in to the market 10

d. creating alliances

Regulatory environment and government actions: The two key factors here are a. The way the regulatory environment influences the innovating firms capability to derive benefits from that innovation - called regime of appropriability b. The way the government can mandate certain thing to be a standard - forcing everybody adhere to the standard. Usually in the competitive scenario, the regime of appropriability plays the key role as it influences the firms strategic decisions to be lead producer, or to enter in to alliances or to license the technology.

Strategic Actions by the firm: Even though the firm has the technology, the innovation, and product manufacturing capability unless it gains access to the missing complementary assets it needs and takes up the right competitive position at the right time, it would not be able to create the dominant design. Hence an active role by the firm to understand the context, create strategy to compete with a definite intent and strategy are important.

Communication cycle between the users and the producers: In the creation of dominant design the characteristics of the design that will eventually become dominant design are not known well ahead. Hence it becomes important for the creators of the product to maintain a frequent communication with the users to get feedback and incorporate features. The regular and frequent communication also enables the product manufacturers to bring newer versions of the product with newer features to the market quickly. The firm has the opportunity to establish its own design as dominant design once most of the customers agree that all the required features at the required performance level are present

Robert M. Grant based on the newer ideas states that the standards evolve based on 1. The need from the side of the consumers 2. Existence of positive network externalities that arise from

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i. Products users linked to a network ii. Availability of complementary products iii. Economizing on switching costs

The key to winning the competition that involves creating the industry standard or a dominant design involves the following b. Allies c. Fast entry, deals with key customers and product cycles d. Creating complementary assets e. Defining a balanced way to appropriate the value Most of these are the ones that have already been discussed. The key addition is the creation of a positive network effect.

Network effect is created when the value of the product is determined by the product and the number of users who are using the same product. Positive network effect means that the value of product increases as the number of users using the product increases. Presence of such an effect would aid the creation of dominant design as the value of certain design keeps increasing because more and more users are using products based on that design.

3.6 Strategic implications for the firms competing to establish a Dominant Design
In competitive scenario when firms are trying to establish a dominant design there are certain key strategic planning and action steps they can perform in order to compete well and also to succeed eventually. Even though adopting the advocated strategy and performing the actions in line with the strategy may not guarantee the success it would enable the firms avoid the pit falls. Fundamental to strategy formulation is the understanding of the context in which the strategy is enacted. The other important step is to understand the key factors that underscore success or failure in the given context.

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This section hence tries to provide a. Questions based on the answers to which decisions regarding the competitive context can be made. b. Some strategic steps that must be performed in order to gain the advantage with respect to the key factors that influence the success of a firm trying to establish the dominant design.

The planning steps and actions are derived from the papers, case studies and strategy literature that analyze the strategy of a firm to gain competitive advantage using the factors under consideration.

3.6.1 Understanding the context

The firms must first determine if the dominant design is possible. As indicated in section 2.2 the dominant design mostly emerges in product segments that serve the mass market and where the user needs dont differ significantly.

Firms may use the following set of questions to determine if the dominant design is possible at all. 1. Does the product cater to a mass market? 2. Are there positive network externalities? a. Does the value of the product depend on or increase because it can interoperate with many other product units of same type? b. Does the value of the product increase because it has well known interfaces that could further be used for more value creation for the end user? 3. Are there economies of scale?

If the dominant design is possible then the firm may decide on the strategy to become the innovator or follower depending on its industry context, resources it has, and its own strategic intent. The firm must also understand the current stage of lifecycle for the

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dominant design under consideration. This could be done based on analysis of the data with respect to the product under consideration. The fundamental questions to determine the phase of the lifecycle are: 1. Is new functionality being added to the product by adding components or reconfiguring the components? 2. Is the competition based on the features being offered by the product or is the competition based mostly on price? 3. What is rate at which new entries or exits happening from the industry? 4. Is there a growth or decrease in the number of variants of the product?

3.6.2 Strategic Plans and Actions

As per paper from Teece9 and also from Grant3, the keys to success for a firm trying to create a dominant design are a. Being able to understand the nature of the supporting appropriability regime. The appropriability varies across various industry segments. Patents are not the best way to secure appropriation. b. Ability to build the complementary assets a. specialized b. co-specialized c. generic assets In regimes of strong appropriability created by a combination of the patents and a tacit knowledge, or by patents alone, the innovator may have more chance of securing the profits from the innovation / establishing the dominant design. Hence creating high entry barriers through patents is desirable.

In weak appropriability regimes the mode of competing changes depending on the phase of evolution of the dominant design. In the fluid phase the ability of the innovator to stay close to the market and introduce products in quick succession to understand the customer needs become important. If innovation involves very low cost associated with production of variants but very large sunk costs in acquisition of associated

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complementary assets then in that scenario the innovator may lose out if the innovator has chosen to invest in assets that eventually do not become part of the dominant design ecosystem. In transitional phase as the competition shifts to price, economies of scale, access to the complementary assets becomes important. Among the complementary assets having specialized or co-specialized assets becomes important as these are not easily accessible when compared to the general complementary assets. Hence in weak appropriability regimes the profits from innovation may accrue to the firms possessing the complementary assets.

The decisions with respect to creation of complementary assets and possible outcomes are summarized well in the paper by Teece. The table (8.4) that indicates the possible outcomes for the innovators based on the regimes and paths taken to gain access to the complementary assets will be used in our study to indicate the possible outcomes in the smartphone market.

The strategic considerations during the fluid phase are due to the essential nature of the fluid phase. The fluid phase is characterized by experimentation to determine the characteristics of the eventual dominant design. Hence the organization needs to function well under uncertainty in this phase.

Any new design must survive first before it can grow to become dominant. The key aspect to ensuring the survival a new dominant design is that a product built using this must meet the requirements of at least one set of users completely. It has to be a whole product a product with the minimum set of features necessary to ensure that the target customer will achieve his or her compelling reason to buy (Moore)12. Many a times the companies fail because they do not commit to any one whole product. So as indicated by Porter in what is strategy?11 the firms must be ready to do the tradeoffs and choose competitive positions.

Firms which intend to create a dominant design need to understand that during the fluid phase there is premium attached to creating product differentiation through feature

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addition as well as performance improvement. The creators of the product do not know what customers really need. The products created do not completely meet the customers performance requirements. Hence performance must be improved by deviating from the existing designs. Apart from this the speed with which these variants with new features or improved performance in line with users expectation is also important. Hence the interaction with the end user must be frequent and time to market a new product variant should be very less. In this phase the components that go in to the creation of the product are not modular. The inter component linkages keep changing. The performance frontier of the processes used for creating the products is being constantly redefined11 as the processes are still evolving. Hence the attempts to standardize usually fail as these attempts go against the need for flexibility and experimentation. The firms committing to possibly less efficient processes will not be able to succeed in the longer run.

The firms do not know what will eventually emerge as the dominant design most of the times. So it also requires the firms to commit resources to unproven designs. The communication interfaces, the product requirements, production processes are not well defined during the fluid phase. Most of the knowledge is tacit. Hence very strong internal communication along with the external communication is needed. The emphasis is not on minimizing the transaction costs. Therefore the firms should focus less on operational efficiency related measures in this phase and focus more on effectiveness.

It happens that the focus shifts to making the design more modular only when the product performance and features start exceeding whatever the targeted user segment is expecting. The users start focusing on price as most of the products satisfy their needs. Once this happens the design of the product at that moment becomes foundation of the dominant design. There will be minor variations and dominant design is created. Once the dominant design emerges the productivity race begins. As the users switch from feature based preferences to price the transitional phase transitional phase in the dominant design lifecycle has begun. Hence through out the product and design lifecycle it is important for the firms to ask questions associated with the context to plan the strategic actions.

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3.7 Lessons from history for establishing dominant design

3.7.1 PC
The architecture introduced by IBM became the de-facto standard for all the personal computers. The history of evolution of PC provides some good lessons regarding some right and wrong strategies that can influence the evolution of the dominant design. IBM was a late entrant to the market of personal computers. There were well entrenched and technically competent competitors like Apple and Atari. These first movers had time and technology advantage over IBM. When IBM entered the PC industry it adopted a completely different strategy for building the product than the ones followed by the existing participants. The PC was built using mostly off the shelf components and even the OS (Microsoft DOS) was built outside the company. The operating system was not exclusive to the PCs manufactured by IBM. IBM also acquired the needed application development company such as Lotus to provide the users with a suite of spread sheet and word processing programs. Competitors tried beating the PC with superior technology and performance, but with systems whose architecture was closed from the hardware as well as software perspectives. IBM PCs open architecture enabled many clones. This also gave fillip to the application creation activity on the IBM PC platform. The platform binding was very tight and this created huge network effect as the data exchange standards during PC era were not as open they are now. This enabled it to become the defacto standard in personal computer industry25.

If we look at what made it possible following emerge as the salient points about what enabled IBM PC to become the dominant design. 1. IBM created the whole product with required office applications. 2. The open hardware and software architecture and many IBM PC compatible hardware and software created positive network effect. 3. The IBMs brand name, availability of large number of applications, and distribution channel reach - Complementary assets enabled PC to become the computer of choice in business establishments.

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4. The performance of the PC was never as good as other personal computers offered by Apple or Atari. This lack of performance never became a hindrance as the performance provided by PC met the user expectations of performance. The players offering performance became niche. PC in essence disrupted the personal computer industry model of building closed systems.

Even though IBM PC became the standard, IBM was able appropriate value only through the sales of the hardware and software. In essence creating a dominant design may not have been the intent but it turned out so with the sequence of events and the actions performed by IBM.

3.7.2 BetaMax vs. VHS

The competition for the dominance of the VCR between Sony the proponent of BetaMax and Japan Victor Corporation (JVC) the proponent of VHS format provides some more interesting lessons for the firms trying to establish the dominant design6. In contrast with the IBM case, from the beginning the two key firms involved in the competition understood the importance of creating a dominant design and intentionally moved towards that. Even though both tried to establish alliances, both tried to produce technically superior products there were some key differences in the way both players enacted their strategies. These actions seemed to have played a decisive role in retrospect. These key differences again relate back to what we have seen in the section providing the strategic implications for the firms trying to establish the dominant design.

The specific actions of JVC and Sony and key differentiators that eventually led to the success of one and the failure of the other are as below: 1. Sony was the first to introduce the BetaMax format in 1974, even through it tried to make this format the standard format in collaboration with others, its actions did not indicate an accommodative stance. It went and built capacities to build the systems based on BetaMax even before all the participants in discussion agreed on the standard. Sony engineers were also reluctant to make changes because they

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had considerable experience in the earlier U-Matic recorder and considered their technology superior. This made others wary and non committal on the standard. 2. Sony created a product that had only one hour replay time. This was identified as the key technical short coming. Even then Sony took time to create the tape with 2 hour recording time. This delay enabled JVC to erode the time and product advantage that Sony had. - If the is not the whole product for any segment of customers however superior technologically the product will not gain foot hold. While competing with technically competent customers who have access to IP, the time is the most important source of competitive advantage. 3. Sony never agreed to become and OEM citing its technological history and corporate view limiting the number of alliance partners and its scale and reach of complementary assets. It also underscores the fact that one strategy does not remain correct in all contexts. On the other hand JVC allied with Matsushita which had huge built up capacity for manufacturing the VCRs and also had experience with the manufacturing of the VCRs. Thus JVC got access to the complementary asset it lacked. Matsushita also was instrumental in ensuring RCA the main player in the US market came in to VHS fold by introducing the tape with capacity to record for 4 hrs. This created a huge shift towards VHS format as most of the participants who were hedging their bets till that time suddenly jumped on to the VHS bandwagon. This is clearly indicative of the positive network effect. 4. JVC also went ahead and recruited smaller allies in the European market whose demand pattern was in line with the manufacturing capacities it had. This also pre-empted the European market for Sony. 5. JVC also ensured that VHS became the preferred format at the tape rental firms. This ensured that VHS became the preferred format across the value chain.

Thus it is very clear that in establishing the dominant design actions need to be in line with the interest of the group and the firm. The pioneering firm has to play the role of the supporter to create a network that provides economic benefits to all. The summary of such a strategy is provided in the paper by the name Shaping Strategy in a world of

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constant Disruption. The other key element to note from this study is that even though it appears that creation of the Dominant design was based on few decisive events, most of the technology adoption may happen or evolve as cumulative effect of some small events which lead to the events of much higher significance as indicated by paper on competing technologies by Arthur5. .

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Smart Phone Industry Overview

4.1 Smartphone
According to PC magazine19, A smartphone is a cellular telephone with information access. It provides digital voice service as well as any combination of e-mail, text messaging, pager, Web access, voice recognition, still and/or video camera, MP3, TV or video player and organizer. According to Wikipedia20, A smartphone is a mobile phone offering advanced capabilities beyond a typical mobile phone, often with PC-like functionality. There is no industry standard definition of a smartphone. For some, a smartphone is a phone that runs complete operating system software providing a standardized interface and platform for application developers. For others, a smartphone is simply a phone with advanced features like e-mail and Internet capabilities, and/or a full keyboard. In other words, it is a miniature computer that has phone capability.

We define the smartphone as a mobile communication device with an identifiable generic operating system with the ability to add applications. Hence based on this definition any of the mobile communication devices that have one of the following operating systems (OS) may be considered a smartphone. 1. BlackBerry OS 2. Linux 3. Mac OS X 4. Palm OS or webOS 5. Symbian 6. Windows Mobile 7. Android The smartphones running the above OS command more than 90% market share in the smartphone market as of 2008.

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4.1.1 Features expected of a Smartphone

1. Productivity/ Lifestyle Tools - Smartphones must include organizing features like calendars and task lists. They should be able to synchronize with home computers allowing for document viewing and editing. They need to include practical tools like calculators, map applications and GPS. Ability to support third-party or browser-based programs that can perform a variety of specific functions would be good. These third-party applications are becoming a key component of a smartphone, allowing the user to customize their phones to support their lifestyles. It is a key feature which allows more data or content to be added to a phone and results in increased adoption. 2. Voice/Text Features - The main purpose of a phone is communication, and a smartphones first function is as a cellular phone. Smartphones for business should include all typical cell phone features including speakerphone, three-way calling, voice dialing and call waiting. 3. Internet Features - Most smartphones can access the internet and display full web pages. Top ranked phones will connect via Wi-Fi and 3G for faster browsing speeds. 4. Multimedia Features - Good business cell phones have at least a 5 megapixel camera with zoom features and the ability to play and record audio and video. Technical Specifications - To enable the functionality the smartphone feature set that may be delivered by the possible dominant design based smartphone, the hardware must have high resolution display with touch screen (4 VVVGA), QWERTY keyboard, large storage (32-64Gb), Wi-Max, Wi-Fi, high resolution camera (8-16 mega Pixels), Bluetooth, Infrared, Music player, Motion sensors, GPS device, capability to connect to external display and input devices, and a battery that supports entire days usage.

From the software perspective in addition to generic operating system and capability to run any application written for the OS hosted by the smartphone it must have e-mail, office document processing software, voice recognition software, a very good internet browser.

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These features may enable the smartphone to disrupt office PC usage and at the same time deliver the functionality expected from a smartphone.

In addition smartphone may have mobile TV, gesture control, biometric authentication, RFID solutions.

4.2 Smartphone Industry

4.2.1 History
Smartphones evolved from basic mobile phones. The evolution of a smartphone is a technological discontinuity as noted by Tushman. In smartphones the more specific phone operating system is replaced by a general purpose operating system which can manage general purpose computational functions such as running multiple applications simultaneously, managing files and large amount of memory much better than existing phone operating systems.
45 40 35 30 25 20 15 10 5 0 Cumulative No. Of Patents filed by 3 largest handset manufacturers / 100 Number of new firms launching new handset Number of new models / 10 handset

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Figure 2 - Historical mobile phone market: Graph indicating fluid / transitional phase with stabilization in the number of new handset launches and number of patents filed.

4.2.2 Current state

In the smartphone market Symbian OS commanded 49.8 per cent of the global sales to end users in the third quarter of 2008 (see Table 1) and for the first time its share went 23

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below the 50 per cent mark. Nokia's decline in smartphone sales during the quarter, and continued weakness of the Japanese mobile device market, have impacted Symbian's share.
Table 1 - Sum of Sales to End Users per Quarter in 2008 Grand Total 54,984 15,706 7,338 11,784 7,909 2,181 1,083 100,986

Operating System Symbian Research In Motion Mac OS X Microsoft Windows Mobile Linux Palm OS Other OS Grand Total

1Q 18,401 4,312 1,725 3,857 2,928 657 370 32,250

2Q 18,405 5,594 893 3,874 2,359 744 353 32,221

3Q 18,179 5,800 4,720 4,053 2,622 780 361 36,515

The success of iPhone 3G sales in the third quarter of 2008 propelled the Mac OS X to the No. 3 position in the global OS provider rankings. In the shorter term, open-source initiatives like Android and Symbian Foundation will challenge Windows Mobile's licensing model. In addition, the lack of a competitive user interface will continue to limit Microsoft's mobile device usability when facing competitive consumer smartphones.
Table 2 - Smartphone Market Share in 2008 - No. of devices sold per quarter in thousands. (From Gartner) Grand Total 45,359 15,706 7,338 4,264 3,891 3,151 3,404 3,228 2,855 3,274 2,176 1,637 612 Market Share 44.92 15.55 7.27 4.22 3.85 3.12 3.37 3.20 2.83 3.24 2.15 1.62 0.61 Cumulative M. Share 44.92 60.47 67.74 71.96 75.81 78.93 82.30 85.50 88.33 91.57 93.72 95.34 95.95

Vendor Nokia Research In Motion Apple HTC Sharp Samsung Fujitsu Panasonic Palm NEC Motorola Sony Ericsson Others

1Q 14,589 4,312 1,725 1,277 1,324 1,042 1,318 1,300 931 1,246 568 500 220

2Q 15,298 5,594 893 1,331 1,328 994 1,071 918 947 1,062 803 553 183

3Q 15,472 5,800 4,720 1,656 1,239 1,115 1,015 1,010 978 967 805 585 209

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T-Mobile Cingular Pantech Mitsubishi Asus HP Toshiba LG i-mate O2 E-TEN Verizon Lenovo Orange Vodafone TCL Mio Technology Grand Total

348 127 147 542 29 85 33 65 81 93 41 38 25 115 104 4 25 32,250

281 142 134 55 67 62 54 63 69 48 67 37 15 90 59 4 32,221

203 131 125 73 64 55 45 43 43 42 39 38 20 10 6 4 36,515

832 401 406 670 160 202 132 171 193 184 147 113 60 214 170 12 25 100,986

0.82 0.40 0.40 0.66 0.16 0.20 0.13 0.17 0.19 0.18 0.15 0.11 0.06 0.21 0.17 0.01 0.02 0.00

96.77 97.17 97.57 98.24 98.39 98.59 98.72 98.89 99.08 99.27 99.41 99.52 99.58 99.80 99.96 99.98 100.00 0.00

The top 10 vendors command more than 90% market share. The Japanese players Sharp, Fujitsu, NEC, Panasonic will not be analyzed. The strategies of the remaining 6 will be assessed. 1. Nokia 2. RIM 3. Apple 4. HTC 5. Samsung 6. Palm

4.2.3 Qualitative Factors regarding the Various Smartphone Vendors

The table below lists the various smartphone operating systems and other parameters regarding the same.

Table 3 Qualitative factors for the smartphone iPhone (Apple) Closed OS BlackBerry OS (RIM) Closed Window Mobile (Microsoft) Open Android (Google) Open Symbian (Nokia) Open Palm OS webOS Open or

Platform

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Source Code

Closed Strong user growth and data-hungry user base;

Closed Large reach and data-hungry user base;

Closed

Open Open source could help accelerate pace of innovation; Manufacturerindependent could help accelerate consumer adoption; Technology support (e.g., touchscreen, GPS, accelerometer, video and still cameras);

Open

Closed

Strong user reach

Massive reach;

global

More than 10 million iPhones sold;

Leads US market with 31% of smartphone traffic;

#2 in US market with 30% of smartphone traffic;

Leads WW market with 62% of smartphone traffic;

3.8% of worldwide smartphone web/data traffic and 7.8% in US; Application store creating a vibrant app ecosystem with great momentum; More than 3K applications (~20% free); More than 1 million downloads; Powerful technology enablers (e.g., multi-touch, GPS, accelerometer);

#2 in worldwide market with 11% of smartphone traffic ; Developers not limited to single distribution channel;

#2 in worldwide market with 13% of smartphone traffic;

57% market share of smartphones sold in Q2 08; Like Android, being open source could help accelerate pace of innovation;

Manufacturer agnostic;

>18K apps;

Pros

App approval process is largely a black-box to developers; Apps viewed as competitive to Apple are often shut down;

Developer momentum appears to be shifting to iPhone Less reach outside of North America

Current version in market (Windows Mobile 6) lacks support for some popular technology enablers (e.g., multi-touch, GPS, accelerometer) Next-gen version will be late to market

Late to market relative to iPhone At least initially, demand is expected to trail iPhone demand

Limited reach in the US Application distribution more difficult today vs. iPhones app store

Issues

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Downloads highly dependent on featured or top download promotion in store; App store is the only authorized distribution channel; Apple / hardware dependent;

Application distribution more difficult today vs. iPhones app store Users more email focused vs. web consuming iPhone users RIM / hardware dependent

Less developer enthusiasm vs. that for iPhone and Android Application distribution more difficult today vs. iPhones app store

Microsoft to launch Skymarket applications marketplace for Windows Mobile 7 (planned for launch in 2H 09); Speculation that Windows Mobile 7 will support revamped UI and multi-touch;

Aug 08: Awarded $3.75MM to 20 developers in the Android Developer Challenge;

What is becoming clear is that content creation via a marketplace wherein independent developers develop application or content for the various phones may ultimately decide which of the Operating System or vendor might prevail.

4.2.4 Projected growth in smartphone market

The market for smart phones is beginning to grow and is in the first stage of product evolution. The projected growth is as below (source Informa Mobile)

Table 4 - Historical and Projected Smartphone Sales - Strategy Analytics 2002 Symbian Apple Linux Others Research In Motion Microsoft Palm Android 1 0 0.4 0.2 1.1 0.7 0 2003 6.7 0 0.6 0.7 2.6 0.4 0 2004 14.4 0 1 2.1 4.7 1.1 0 2005 34 0 5.5 3.7 6.9 2 0 2006 51.7 0 11 5.4 9.7 2.5 0 2007 77.3 3.7 12.6 11.4 15 3 0 2008 90.2 16.4 18.2 22.7 19.3 4.2 0.6 2009 107.3 30.8 22 29.3 24.3 3.8 7.2 2010 129 46.4 27.2 36.2 28.7 1.9 15.7 2011 155 65.1 34 44.2 35.5 1 31.1 2012 173.7 82 44.5 50.5 42.5 0 55 2013 185.6 90 55.7 55.2 48.2 0 72.4

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Others Total

3.5 6.9

3.6 14.5

4.6 27.9

2.1 54.1

0.4 80.7

0 123

0 171.6

0.2 224.9

0.3 285.5

0.3 366.3

0.4 448.5

0.5 507

Table 5 - Worldwide Converged Mobile Device Shipments by Operating System, 20072012 IDC 200712 CAGR (%) 13.2 48.4 16.5 38.5 37.8 21.5 -100 22.2

Symbian Mac OS X Linux BlackBerry OS Windows Mobile Palm OS Other Total

2007 78.307 3.704 14.100 12.263 13.654 2.258 19 124.31

2008 78.925 10.076 20.316 22.857 21.526 3.420 8 157.13

2009 92.255 15.780 22.505 32.535 31.011 4.171 198.26

2010 112.623 19.554 25.167 42.165 42.881 4.868 247.259

2011 129.637 23.183 28.042 51.711 54.850 5.383 292.807

2012 145.758 26.629 30.268 62.390 67.784 5.970 338.798

Table 6 IDC - Global Mobile Device Sales by Region, 20062012 (Source Informa Mobile)

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Figure 3 Predicted Smartphone Sales by Region

4.2.5 Traffic by Smartphone Vendor and OS

The figures below provided by AdMob23, provides an overview of the total internet traffic across the various mobile phones. This is an important indication of the various applications and content access features across these smartphones. This is an important indicator of future adoption of the phones and their OS.

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Figure 4 Traffic on the US Smartphone in August 2004

The table lists the smartphone traffic and is followed by an overview of the key findings.

Table 7 Traffic against Top US Smartphone Manufacturers in Aug 2008 Share of Smartphone Traffic (%) 31.2 18.7 14.2 10.5 7.8 82.4 Monthly Change (%) 0.2 -0.3 -1.7 1.9 2.6

1 2 3 4 5

Manufacturer RIM Palm HTC Samsung Apple Total

Highlights 1. Smartphones accounted for 23.7% of US traffic in August, up 3.5% since May 2008. 2. The top 5 devices, RIM Blackberry Pearl, Palm Centro, RIM Blackberry Curve, Apple iPhone and the Samsung Instinct generated 54.1% of US smartphone traffic in August. 3. RIM leads with 31.2% of US smartphone traffic. 4. Samsung and Apple saw the largest month over month share increases due to the strong performance of the iPhone and the Instinct. Section 7.2 indicates the worldwide traffic by manufacturer and OS.

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5 Analysis of Smartphone Vendors from Dominant Design Perspective.

Understanding whether a dominant design would evolve in the smartphone industry is important and challenging because: 1. The predicted market size of the smartphone industry by 2013 is around 400 million devices at the lowest range. Hence the stakes involved are high for all the players. Hence making the right moves would need a good understanding as to how this industry may evolve. 2. The smartphone industry is seeing the entry of new firms, competition based on features, OS consolidation and competition to build and acquire complementary assets. These usually characterize the fluid stage of a dominant design evolution and make the prediction/understanding of the eco-system all the more worthwhile. 3. The emergence of a dominant design usually implies mass market products, network effects and economies of scale. This may significantly alter the strategy of a firm due to the varied nature of the risk involved based on the current position of each of the players.

There are many players in the smartphone industry competing against each other. So even if a dominant design emerges, it would happen through the de-facto way where feature based competition allow one of the participants to emerge victorious.

When evaluating the possibility of emergence of a dominant design, we need to evaluate the eco-system for each of the players since these would eventually lead to dominant design. An assessment of each key smartphone manufacturer is done using the positional method, resource based method for the parameters chosen.

5.1 Smartphone eco system

The mobile communication device ecosystem may be represented using the diagram below:

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Figure 5 - Source: MIT Open courseware (Technology Strategy, Spring 2005, Professor Rebecca Henderson) The value chain involves: 1. Chipset and component manufacturers 2. Device design/Device Manufacturing (OEM and ODM belong here) 3. Operating system vendors 4. Application development platform vendors / application developers 5. Mobile network operators 6. Users

The smartphone ecosystem is characterized by weak appropriability regime at the level of features, but very strong appropriability regime at the level of basic communication technology and chipset design levels. Thus the suppliers of chipsets can appropriate higher value. The mobile phone manufacturers, operating system vendors and the others in the value chain have lower ability to appropriate value based on the IP position.

From the perspective of the device manufacturers the key complementary assets in the smartphone market are a. the relationships with the chipset vendors and operators 32

b. the reach of the distribution channel c. the manufacturing capability in order to be able to quickly reach the market d. the IP assets e. availability of applications through the support of developers for the specific OS used in the smartphone. The smartphone choice is also impacted by the network effect created due to the availability of applications and specific features such as number of people on the social networking sites that the phone provides inbuilt access.

The section below describes the importance of each of the ecosystem partners to a smartphone. Then the ecosystem for each of the smartphone vendor is analyzed.

5.1.1 OEM/ODM
An OEM is a company that puts their brand name on the device and markets and sells it via their own and various other channels. An ODM is a company that actually designs and manufactures the hardware. They either produce devices with their own brand-names or they build devices for other known companies, which brand and sell the devices. Chipset manufacturers and firms involved in device design or manufacturing are considered as part of OEM/ODM.

5.1.2 Developers
Developers write applications that provide useful applications and increase the likelihood of an adoption of a platform over others.

5.1.3 Mobile or wireless operator (MO)

They are a key feature in the distribution channel and contribute the maximum towards any platform based on new device sales. They determine which OEMS will provide

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hardware handsets, work hand-in-hand with Microsoft on SDKs/AKUsbuild and differentiate their offerings, and lead the charge in sales efforts to large enterprises. It is the Mobile Operator that needs to certify and accredit (CA) the device as "approved" on their particular network before anything hits the market.

5.2 Nokia Symbian

Nokia is the market leader and commanded an overall 39% of the mobile phone market in terms of volume. In the smartphone segment it had 44% market share. (For all the data refer to Appendices and tables 1-1 to 1-4)

5.2.1 Strategy
Corporate Strategy Nearly 80% of Nokias revenue is derived from the sales of mobile communication devices. It is hence very much prone to any downturn that may occur in this market. To avoid such scenario, it is trying to diversify in to internet services, navigation services.

Smartphone Strategy Features and Performance: Nokia has been adding features consistently but without making these features accessible or usable. The users have consistently indicated that the device is too clumsy to use. Nokia has been adding navigation capabilities, more memory, and capability to play music. The earlier smartphones have lacked the required performance due to archaic operating system and S60 software platform using which all of Nokias smartphones are built. Nokia is also building Linux based internet tablets that have lacked the traditional mobile phone capabilities.

Internet and Service Integration: Nokia has come up with its own internet based service portal named Ovi. It provides users facilities to share files, photos. It also provides internet based e-mail. Nokia has also enabled users to get access to unlimited amount of music just by paying for the device with its Comes with Music scheme in certain

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countries. Nokias smartphones have come with a web browser that has been overshadowed in performance by the Opera browser packaged with the iPhone.

5.2.2 Mobile Operators

Buyers Nokia has been dominant in the volume market. It has traditionally been very weak in the operator dominated markets due to its strategy to sell unlocked phones or not to customize the phones for the operators. Nokia even though has had acceptable level of relationship with European operators such as Vodafone and Orange, its relationship with operators in key North American market has been very poor. Nokias entry in to services segment has also made some operators wary as services area has predominantly belonged to the operators.

5.2.3 OEM/ODM
Suppliers Nokia is trying to broaden the base of chipset suppliers depending on the type of devices. Chipsets for smartphones come from Qualcomm or ST Micro which has recently agreed to merge the mobile chipset business with Ericsson. Nokia sources the basic phone chipsets from Broadcom. Nokia has been active incorporating the 3G features in phones with major emphasis on WCDMA and HSPDA. It also entered in to 15 years IP sharing agreement with Qualcomm that enables it to gain access to some key IP at lower cost than the historical prices. Nokia is also shifting its manufacturing focus from high cost locations to low cost locations.

OS and Software: Nokia has based all of its smartphones on Symbian operating system. It also has application development platform called S60 to enable the deployment of applications quickly. As indicate earlier Nokia also is the sponsor of Symbian foundation and agreed to donate the S60 software assets to this foundation so that all members can use the proven OS and software assets to build phones.

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Apart from Symbian operating system Nokia is also hedging its bets by developing capabilities in creating smartphones using the Linux operating system by introducing the Linux based internet tablet. Nokia has also acquired the software development toolkit and framework provider Trolltech to enable it to develop cross platform software quickly.

Complementary Assets Nokia has been in acquisition mode to shore up the software development assets (Trolltech), navigation related assets (Navtech), and internet content development and service related assets (Loudeye). It also has very good distribution network and scale economies in manufacturing. It has closed down high cost manufacturing facilities and moved manufacturing to low cost locations such as Romania, India. Nokia trying to preempt the threat posed by open source mobile phone operating environments such as Googles Android has created Symbian Foundation by acquiring Symbian Operating system and providing the Symbian OS freely to the members of Symbian foundation.

Nokia has also ensured that it gains access to critical IP in the mobile communications devices world by resolving its disputes with Qualcomm.

5.2.4 Developers
Network effect creation: Nokia hasnt been very effective in building a positive network effect through creation of applications for end users on its mobile phones. Even though it has tried for long time to get developer support through its developer support portal called Forum Nokia (http://forum.nokia.com) and events it hasnt been well publicized and effective effort. Nokia hasnt played well with the operators, content providers, and application developers. There is no feature other than familiarity and brand that can lock in the users.

User Interface The biggest challenge Nokia is facing comes in this area as the rules of competing have been changed here very drastically by Apple which has taken the lead by introducing many new usability related concepts such as touch based UI and easy access to frequently 36

used functions. Nokia has been very late in reacting to this threat. In late 2008 it has introduced a touch screen based device and positioned it so that it could preempt the threat by Apple in mid range Touch screen devices. In the same device it has tried to move away from predominantly menu driven approach it has used based on the S60 platform.

5.2.5 Summary of Nokias Smartphone strategy

Strengths a. Hardware design and scale in manufacturing b. IP assets c. Brand d. Experience in the design of smartphones

Weaknesses a. Aging OS and software platform b. Lack of operator support in large smartphone markets c. Lack of differentiating features d. Lack of speed in bringing new features to market e. Lack of support from application developers and content providers f. Lack of a smartphone that satisfies the needs of a business or home user completely

Opportunities a. Has access to fast growing developing world markets b. Has end to end competence (hardware design, supply chain, IP, low cost manufacturing, marketing) and assets that can be used to create a true differentiated device c. North American market can be addressed if interplay with Operators is agreed upon. d. Can play the role of innovator and industry shaper by bringing together other participants due to its long standing position, technology portfolio. 37

Threats a. Seen as a laggard / technologically inferior b. Operators not agreeing to sell Nokia branded smartphones in USA c. Apple agreeing to license its hardware design and OS. The lock in created by Apples application store becoming a significant threat d. More Android based phones due to lack of legacy related issues and also due to support from operators and low cost manufacturers. Samsung, LG and Sony Ericsson moving away from Symbian foundation and aligning with OMA to support Android as it happened with Motorola.

Nokia has not had a sense of direction in its smartphone strategy. It has taken the role of the follower rather than the innovator in the smartphone segment. The feature introductions such as very good internet browser, touch screen UI, a good e-mail solution, large storage capacity all have lagged the leaders. It has been able to gain some allies through its work in the direction of resolving disputes with Qualcomm and signing a multi year agreement to access IP. These have limited its access to the most significant smartphone market in the world namely North America. The service and internet strategies have not had significant positive impact. The network effects that could be created by the large number of smartphones produced by Nokia are not present due to user lock in. At the same time there are significant threats from aggressive, technically competent new entrants with high degree of feature level differentiation and better interplay with operators.

5.3 Microsoft Windows Mobile

5.3.1 Strategy
Microsoft leases out its Windows Mobile OS and works with other players in the ecosystem to get it on the mobile phones. At a high level it has adopted a strategy similar to its PC distribution business. While the Windows Mobile ecosystem shares many similarities to the Windows OS computer ecosystem, the key difference is that the

38

Windows Mobile operating environment must be customized on a device-by-device basis and is dependent to a large degree on proper interoperability with specific hardware being utilized. This differs greatly from the notion of "one standard image" or a "gold image" of Windows which can be loaded onto virtually all "standard" computers. There simply is no such thing as "standard" in the mobile world at this point in time.

The adoption of a standard OS increases volume and consistently pressures the price of component hardware and software downward. And because there is a common software platform, issues of interoperability are prevented. For example, you have essentially the same experience on an IBM PC as on an HP or a Dell. The aim of Windows Mobile seems to be to create a common user experience similar to the full Windows desktop experience. This makes it easier for a user of a Windows PC to pick up and use a Windows Mobile device, and it allows enterprises to leverage their existing Microsoft IT investments.

Windows Mobile is compatible with Windows and the associated software like Outlook and Exchange server. Also no Client Access License is needed. So enterprises who have invested in Microsoft PC platform can easily extend to Windows Mobile since Exchange and others are sunk costs. Also, these software have built-in support for Windows Mobile which makes integration easy.

5.3.2 Mobile Operators

Microsoft has an Enterprise Mobile Solutions Specialist (team of around 16) who works with the 4 mobile operators namely Cingular Wireless/AT&T, T-Mobile, Verizon and Sprint. This sales team is the key26 to getting Windows Mobile onto new devices. Also the fact that it has devices virtually on every network indicates its relationship with the MOs.

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5.3.3 OEM/ODM
Samsung, Motorola, Sanyo, Toshiba, Palm, HP, Dell, and Audiovox all build for Windows Mobile27. New companies such as HTC - which makes their own brand of devices as well as various branded devices for companies like Palm and Pantech, also use Windows Mobile. The Microsoft Windows Mobile OEM/ODM ecosystems enjoy economies of scale and distribution advantages. For instance, a Samsung or HTC device can be bought by anyone, anywhere in the world from multiple sources. In the US, Windows Mobile is certified on nearly all the MOs. Microsoft recently entered into an alliance28 with LG so that 50 of its smartphone models run on Windows Mobile.

5.3.4 Developers
Windows Mobile provides a standard platform that works well over various providers and handsets. Also competition among the 12 million users of Visual Studio will keep the cost of developing for Windows Mobile low; much lower than it would be for Apple, Symbian, or UNIX devices, which have a smaller developer base and lack the standardized tools that their Microsoft counterparts enjoy. Unfortunately, the marketing and sales model for those applications started out mediocre and got worse over time. There was no software store on device, so users had to go out on the web to find apps. This cut the number of people looking for applications. Those who did look online usually landed in the mobile application stores, which over time took a larger and larger share of the developer's revenue. Eventually, the stores' cut grew to more than 50% of revenue, making development uneconomical for many companies.

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5.4 Apple Mac OS X

5.4.1 Strategy
Apple is continuing its long-standing practice of following a vertically integrated hardware/software business modelthe "we do it all" approach. The only difference with its PC business seems to be the Apple Store where independent developers develop content for it.

5.4.2 Mobile Operators

Mobile operators see multimedia applications, such as music and video downloads, as a major money maker. And for more than a year, the largest players, including Cingular, Verizon Wireless and Sprint Nextel, have been building services that allow customers to download music and video and take it with them on the go. But Apples strategy of iTunes with the iPhone is a direct threat to these MO providers because the iTunes runs off a PC and the user need not download over the air. Thus they cut out the data related usage dramatically. So adoption by other MO providers seems remote and could cut out key distribution channels. Besides, Apple has tied up with AT&T alone. So existing customers of other MOs will be left out or are forced to migrate. Can Apple phones have such a demand to allow them to upstage the MOs?

5.4.3 OEM/ODM
Apple itself is the OEM due to its vertically integrated model. Most of the big OEMs like Sony Ericsson, Samsung, Motorola or LG make music-playing handsets by themselves. So the iPhone will be a direct threat to an existing channel for them. The ODM ecosystem is not negatively affected. The high sales of the iPhone would be a plus.

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5.4.4 Developers
Apple with its high sales and content adoption makes for an attractive platform to develop on. Apple keeps 30% of the revenue while 70% goes to the developer. This was higher than what developers got before Apple stepped in with the iPod/iPhone.

5.5 Palm (Palm OS)

5.5.1 Strategy
That the Palm OS was a dying platform29 was known for quite some time. But the Palm CEO announced recently (this week around 11-Feb-09) that future versions of Palm phones will not be released on their old OS. Instead it is moving to a new platform called webOS30 and it supports CSS, HTML and JavaScript similar to the web. This move by the former number one PDA maker is a significant step. Also an important feature is the supposed need only for HTML, CSS and JavaScript to create applications unlike C, C++ which were needed in the past. It supposedly has the capability of unprecedented integration to existing web services and web sites. This means that existing web developers can create applications quickly, Palm is also trying to get developers to port the existing 10000 odd applications onto this new platform. Palm is also developing an online software market for webOS applications, analogous to Apples App Store and Googles Android Market.

5.5.2 Developers
Palm when it started had a huge developer base. The graph32 below lists the phenomenal growth of applications from 1998 to 1999.

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Figure 6 Growth in the # of Palm applications between 1998 and 1999 Unfortunately, the marketing and sales model for those applications started out mediocre and got worse over time31. There was no software store on device, so users had to go out on the web to find apps. This cut the number of people looking for applications. Those who did look online usually landed in the mobile application stores, which over time took a larger and larger share of the developer's revenue. Eventually, the stores' cut grew to more than 50% of revenue, making development uneconomical for many companies. When sales of Palm OS and Windows Mobile devices failed to grow rapidly, the financial model for many developers fell apart, and the ecosystems faded. But with the Palm Pre (device based on webOS) attracting good reviews before its release and the planned launch of a cloud based online Palm Software store, the trend might reverse for Palm.

5.6 Research in Motion (RIM / Blackberry)

5.6.1 Strategy

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Enterprise Strategy The BlackBerry solutions leadership in the enterprise market continues to be evident and there are now over 100,000 BlackBerry Enterprise Server installations33 operating around the world. RIM continued to enhance BlackBerry Enterprise Server with powerful new administrative features for IT departments and innovative features for mobile users. Below is a SWOT analysis35 for RIM Strengths 1. RIM's delivery strategy - Mobile applications were delivered using a vertically integrated model which includes hardware, software and services. Resellers can charge for maintenance and support as part of a subscription, rather than charge an annual fee. 2. RIMs Enterprise Server makes it easy for IT departments to deploy and maintain. These allow users an easy upgrade path as their requirements grow, without placing heavy financial and resource burdens on the enterprise. 3. RIM's brand is very powerful and BlackBerry is now almost a synonym for wireless email. 4. RIM is carrier-friendly and maintains good working relations with them.

Weaknesses 1. Scalability and global coverage - RIMs business model (selling purely through operators) means that it is dependent on operators to launch the BlackBerry service. This takes time, and the cost associated with launching can be high for smaller operators. Global presence, including small and emerging markets, can be crucial to win and extend contracts with multinational corporations (MNCs). 2. Security concerns due to the relay centre architecture where all information is sent and received by BlackBerry subscribers transits, albeit in an encrypted form. The data transition process via a third-party server would be a corporate security issue.

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3. BlackBerry is a high-end product that is not cost effective for enterprises wishing to deploy email across a large part of their organization. Almost all RIMs competitors have cheaper equivalents to cater to other segments apart from enterprise.

Opportunities 1. Differentiated offerings for the various categories of mobile workers. 2. Extend the range of third-party BlackBerry devices by licensing its software.

Threats 1. Large global players such as Nokia, Microsoft and even Mobile Operators have launched their own branded email services.

5.6.2 Mobile Operators

RIM historically has good relations with the mobile operators and has made it an important distribution channel. RIM sees this use of the mobile operators36 as one way to prevent commoditization in the smartphone market.

Even for its application store, RIM is working with its carrier partners to provide carriercustomized, on-device application centers to help foster after-market application downloads. The BlackBerry application center will allow each carrier to offer a convenient catalog right on the device where a customer can discover and download applications.

5.6.3 Developers
There are currently more than 600 BlackBerry Alliance Members33 offering BlackBerry applications for both enterprises and individuals. RIM continues to provide an open, standards-based development platform and supports developers with robust tools and technical assistance. The BlackBerry JDE provides developers access to almost every functional component and application on a BlackBerry smartphone, including the camera,

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BlackBerry Messenger and GPS APIs, support for numerous audio formats for routing playback, and XML and Web Services for use in application development. The BlackBerry JDE has been downloaded by more than 125,000 registered developers and the growing BlackBerry development community is expected to significantly expand the number of applications available for the BlackBerry platform. RIM plans to launch the application storefront in March 200934 and BlackBerry application developers can begin submitting their applications and content for inclusion in the storefront in December 2008. The storefront will allow developers to set their own prices for applications and developers will retain 80 percent of the revenue generated from their applications. RIM is working with PayPal, a leading global online payment service, to provide consumers with a convenient and trusted way to pay for applications within the new application storefront, right from their BlackBerry smartphone. Organizations that have deployed BlackBerry Enterprise Server or BlackBerry Professional Software will retain control of what applications can be downloaded to BlackBerry smartphones within their corporate deployments.

5.7 Google Android

Android is a relatively new software platform for mobile devices that includes an operating system, middleware and key applications. The operating system is free and can be customized fully. Even the applications developed will have equal access to the phone resources as the core applications unlike the iPhone. There is an Open Handset Alliance37 consisting of mobile operators, handset manufacturers, semiconductor companies, software companies, and commercialization companies. Google has ensured the cooperation of these members of the eco-system to ensure that handsets are manufactured with the Android OS and sold to the customers. Google has made a huge upfront investment rumored to around 150 million US dollars. Googles strategy38 seems to be to monetize Android in the long run using its bread and butter advertising business. With more smartphones coming to the market it sees a huge potential of extending its various Internet services to the mobile. And unlike the PC

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world where Microsoft Windows owns the market, Google does not want to loose out here. By ensuring a free viable OS, it ensures that no other platform has a monopoly. Also, it plans to have features like when users sign-up with their Google account credentials, their online contacts and calendar appointments can be downloaded to the mobile phone. The tie-in to these personal services is important to Google as it hasn't made as much headway as Search when it comes to more deeply personal uses of its services such as e-mail, photo sharing, and social networking.

5.7.1 Factors for Android

The biggest plus for Android is that comes for free and with ability to modify the source code. Coming from Google, the OS is expected to be better than the current existing phone OS platform. So the handset manufacturers are expected to use this platform.

5.7.2 Factors against Android

1. Managing the Handset Alliance One of the key objectives with Android is to create a standard free OS which will help more of Googles services to be accessed. For this buy-in from the major alliance players would be crucial. But there are a few issues already40. T-Mobile lobbied for VoIP features to be removed as most operators like T-Mobile, O2 and others expressly exclude Voice over IP usage from their "unlimited" internet access package. But Hutchinson Whampoa's Three network - which offers free Skype to all its users. There would be similar conflicting issues with each of the players and maintaining the alliance would be difficult. Also, AT&T and Verizon are noticeably absent from this alliance. 2. Adoption Google is ultimately dependent on all the partners mentioned in the eco-system to get Android commercial adoption. None of the open alliance partners have pledged exclusivity to Android. 3. Long term support Google would need still further investments to keep the project going over the long run. Other opportunities would stretch this project since no direct revenues would be attributed to this project.

47

4. Platform Fragmentation As each of the partners adopts and customizes the platform, they would definitely create differentiators which mean customizations to the platform. It is debatable then as to how standard the OS would be. 5. Vested MO Interests - The main problem for all the cellular carriers around the world would be the availability to download and use free applications that could block almost every communications product they sell. A user does not need to pay for GPS mapping service anymore. He can simply download a free one that taps into Google Maps. Why pay for text messages to his friends when he can download an instant messaging client? In fact, why pay for cellular minutes at all when a user can download Skype, GTalk or other client and just use his data plan? OS such as Android threaten carriers with a loss of control over the applications on the phones on their network and they may find themselves becoming nothing more than wireless Internet service providers, forced to compete on price and bandwidth. 6. Vested Handset Manufacturer Interests - Because the handset/hardware manufacturers would not want control to eventually to go the software platform like in the PC industry.

48

6 Future Smartphone Trends and Possible Scenarios

The analysis in the above section shows that most of the key players are ramping up on their phone platforms apart from creating online application stores for getting more useful content/applications available. The rules applicable to the ecosystem players are also changing. Hence it is not possible to predict a clear winner or the emergence of a dominant design pattern. So the subsequent sections look at key future trends and its impact on the various players in the eco-system.

The key evolutionary trends are: 1. Data oriented device becomes the norm 2. Differentiation through feature / functionality addition 3. Internet based services become integral part of smartphone offering 4. Move towards open / Open source mobile OS from proprietary OS 5. User Interface evolution 6. Rise of outsourced manufacturing, ODM and search for economies of scale 7. Enterprise adoption of smartphones will increase

The subsequent sections focus on these key trends and the outcomes for each of the players.

6.1 Data oriented device becomes the norm

Push towards 1. Better power management 2. Incorporating network connectivity protocol stacks 3. capability to do data input and output at a high rate over the network and inside the device Push towards 1. OS that does power management 2. Capability to manage large amount of data (akin to desktop OS) 3. Search and retrieve may become part of the OS

Chipset Vendor

Mobile OS provider

49

Device Manufacturer

Has to 1. Create devices with large memory 2. Can provide storage of data on the network in co-operation with the operator 3. Ensure accessibility to required data efficiently and effectively

Design and industry implication

Need for 1. High upload/download speeds 2. Higher battery life 3. Different ways to connect to the network 4. High storage capacity 5. Ability to store and retrieve data quickly 6. Ability to interoperate with other devices to transfer data 7. Better data processing applications 8. Security of stored data becomes very important 9. Retrieval of accidentally lost data also is important 1. Applications must be capable of handling diverse types of data. 2. Application developers can not get carried away by the storage capacity, as the OTA transfer charges may be very high. 3. Data security becomes important in applications.

Application and content developer

Mobile Network Operator (Operator)

1. Provide users with data oriented plans. 2. Can think of opportunities to provide the user the data storage services 1. User may do away with the computer as most of the data processing functionality seen in today's computer may be provided on the mobile phone.

User

The key impact of this will be felt by the device manufacturers, the network operators and the users. The network operators will have the biggest say as they act as the pipe through which all the data flows. Hence to realize the need for the data oriented device the mobile phone manufacturers and operators must work together. The smartphone manufacturers are building capability in the smartphone to access the network through wireless local area networks to bypass the constraints imposed by the operators in exchanging the data over the mobile phone network.

6.2 Differentiation through feature / functionality addition

Chipset Vendor 1. Mobile phone on a chip??

50

Mobile OS provider

OS needs to 1. Have true multitasking capability 2. To be modular to be able to incorporate newer requirements 3. have capability to manage diverse hardware

Device Manufacturer

1. The feature addition and performance improvements need to keep happening till it meets the needs of at least one segment of users at least. 2. The architectural reconfiguration may be one option to provide better performance. The improvement in each components capability must also keep pace with needs. 3. Should be focused in creating a variety of smartphones targeted at specific sub segments of smartphone users for speedy evolution. 4. As mobile phone operating system gets commoditized, the hardware layer or the layer above the OS will be the key to adding features. Hence focus on hardware, and application layer to create differentiation. 1. Component and Architectural innovation remain possible 2. Growth in the variety of the products offered 3. Time to innovate remains key differentiator 4. Processing power needed in the devices will be high 5. Need for variety of well integrated usable and useful applications 6. Opportunity for vendors with tightly integrated software and hardware stacks by providing better performance 1. The application developers can take advantage of open OS, enhanced hardware capabilities to create new applications. 1. Operators can try to differentiate their own mobile phone offerings through more tightly integrated applications and services.

Design and industry implication Application and content developer Mobile Network Operator (Operator)

User

1. User may choose the specific device from a variety of devices on offer. 2. User also has a greater say in which variants are retained.

The key influencers of this trend are the smartphone manufacturers and the users. To move towards establishing dominant design, as we have seen the device manufacturer needs to bring products with varying features in quick succession to the market. The target customer segment should also be very well defined for the device manufacturer. This is in line with expectation during the fluid stage of the emergence of the dominant design.

6.3 Internet based services become integral part of smartphone offering

51

Chipset Vendor Mobile OS provider 1. Browser and web application runtimes may need to become integral part of the OS. 1. May try enter in to service provider space with manufacturer branded service portals (iTunes, Appstore, Ovi etc) 2. Conflict with the network operators who have been the principal beneficiaries of service orientation 1. Fight for gaining control of the services market opportunity among various participants 2. Web browsers and web application runtimes become the key. 1. The application and content developers can create applications and content that is meant for devices that are constantly on the web. It must enable high speed access to internet through the infrastructure it operates, otherwise customers may move away. Will start using the smartphone as the preferred device to connect to the internet rather than the PC.

Device Manufacturer

Design and industry implication Application and content developer Mobile Network Operator (Operator) User

The device manufacturers need to build device lock-ins and generate additional service revenue through services hosted on the internet and users needs to be on the internet constantly are the key influencers of this trend. The data oriented device trend supports this. The users usage of the internet will be dependent on the network infrastructure and cost of access, both of which are controlled by the operator.

6.4 Move towards Open Source OS from Proprietary OS

Chipset Vendor 1. Has to create a well defined binding for all the important chipsets 2. Has to differentiate based on performance. 3. Can differentiate based on the facilities provided to manage diverse hardware seamlessly. 4. Need to provide well defined and backward compatible interfaces to access OS functionality by the platform and application developers.

Mobile OS provider

Device Manufacturer

1. Provides choice 2. Reduces the software development and maintenance costs. 3. Well defined OS programming API enable vendors to create OS agnostic application development platform layers. These provide portability and enable applications to be deployed on multiple hardware platforms.

52

Design and industry implication Application and content developer Mobile Network Operator (Operator)

User

1. Standardization of OS functionality and loss of differentiation at the OS level. Differentiation possible only through choice of different OS. 2. Modular OS 3. May lead to further fragmentation as need for differentiation through performance is high. 4. Magnitude of smartphone vendor adoption and application developer support (Network effects) shall determine the success of the OS 5. Enables value chain disintegration - most complex software component in the mobile phone (OS) can be an off the shelf component. 1. Provides opportunity to create best in class applications without having to go through intermediate platform layers. 1. Enables operator to enact the "operator branded smartphone" strategy with ODM, Open OS, and outsourced app development. The users choice to pay for the proprietary OS will depend on the differentiation that the device with proprietary OS provides. It also depends on users view of getting locked in to some platform.

Open Source Operating Systems: Symbian, Linux, Android Proprietary Operating Systems: Windows Mobile, Mac OS X, Blackberry OS
Very risky if the OS does not evolve to support the newer features. Provides opportunity to new entrants without incurring OS licensing costs. Provides the higher value appropriation opportunity to the firms manufacturing devices. This risk mitigation strategy may adversely impact the speed and feature addition capability of mobile device manufacturers. Highest market share at the moment making it attractive for developers to build applications. Attractive to the large MVNO that create own branded phones. Nokia, Sony-Ericsson

Open source

53

Proprietary

Tighter integration and greater opportunity to differentiate with performance and features. Opportunity to charge premium. Low risk, but requires higher investment. Unless licensed, OS will be limited to the device from specific vendor. Will evolve as niche player in the face of competent open source alternative. RIM, Apple

Allows deployment of proprietary OS till the alternatives are found. Minimizes the risk that may arise by completely switching over to Open Source OS. Mostly firms use Windows mobile OS in addition to some open source mobile OS. HTC, Samsung, LG, Palm

Dont hedge

Hedge

Mobile Phone Manufacturer Stance The most likely eventual scenario in this case would only have fewer Open Source operating systems and fewer Proprietary operating systems. The majority of the market would be using the devices based on open source operating systems. The firms like Apple like with its strategy similar to the one adopted during era of Macintosh computers may choose to become a niche high end player. Most of the other firms would use a mix of open source OS as these would provide highest value appropriation opportunity for them. Some firms like HTC may choose to provide support to enterprise users by using Windows Mobile as that may provide easier access to many applications that get used in the day to day office work.

6.5 User Interface evolution

Chipset Vendor Mobile OS provider 1. Need to drive larger displays and responsiveness 1. Support for GUI with multiple types of data input and output are a must.

Device Manufacturer

1. Multiple interfaces must exist for receiving user input and provide output. Integration through touch, voice, writing and gesture based control are all valid. Context awareness with the help of sensors is the key. User interface rather than being reactive may be made proactive with context awareness.

54

Design and industry implication Application and content developer Mobile Network Operator (Operator)

1. Opportunity for context aware, proactive user interface with different input methods such as touch, voice, and writing. 1. Applications must work with more than one type of data input and be capable of providing the output using different methods.

1. 2. User

Enables user to be more efficient. As the functionality gets added, easier access to functionality through good UI will become more important

The biggest influencers of this trend will be the operating system vendors, mobile phone manufacturers and users. The trend is influenced by feature addition trend. This trend is favorable to the device manufacturers such as Apple and RIM who have tightly integrated hardware and software assets.

6.6 Rise of outsourced manufacturing, ODM and search for economies of scale
Chipset Vendor Mobile OS provider The ability of the chipset vendors to negotiate premium prices would decrease as there would be cost pressures. The OS that gets chosen by OEM/ODM will obviously have larger share and will survive. 1. Can reduce the amount of time taken to market. 2. Reduces the resource commitment needed 1. Need for modularity 2. Value chain disintegration rather than integration The application development if not done in house, the independent developers and 3rd party developers stand to gain. 1. Enables operator to enact the "operator branded smartphone" strategy with ODM, Open OS, and outsourced app development. Will not get devices that provide differentiated performance or usability. The user would choose devices based on cost.

Device Manufacturer Design and industry implication Application and content developer Mobile Network Operator (Operator) User

This trend is important because the ODM and OEMs are gaining the critical knowledge and eroding the time advantage that the other innovators have built over them. This trend will have great influence if the open source OS gains ground. This trend in combination with the Operator dominance can enable the power to move away completely from the traditional mobile phone manufacturers like NOKIA, LG, Samsung etc.

55

6.7 Enterprise adoption of smartphones will increase

Smartphones will gain more and more market share in the years to come and will be high on the list of CIOs for deployment within the organization. The mobility/accessibility that comes with it is high and will override any security issues that are bound to come in especially when it comes to accessing critical enterprise data. The features that would be needed from a smartphone from a commercial perspective would be 1. Corporate deployment features 2. Phone features (including voice quality) 3. Web access, e-mail and messaging options (Use of 3G or WiFi) 4. Security safeguards most companies deploying smartphones still do not have a strategy for the same because they are mainly used for email. 5. Productivity applications 6. Battery life. This enterprise segment will be critical for any of the smartphone vendors and its ecosystem as they will be able to fully utilize the capabilities offered besides providing greater revenues.

Chipset Vendor

Mobile OS provider

Device Manufacturer Design and industry implication

Application and content developer

Mobile Network Operator (Operator)

The smartphone seems to be converging to the Web. More and more productivity applications will make their way onto the smartphones. This necessitates increased computation needs. So chip manufacturing would be crucial. Intels foray into mobile chipset manufacturing is an indicator of the same. Enterprises would want more controlled OS rather than fully open source platforms because of issues with upgrade and maintenance. So maintenance and providing a vision for your platform is essential for enterprise adoption. All the platforms including open source will have to be managed to avoid platform fragmentation and subsequent consistency issues. Enterprise usage would necessitate greater battery power so that on field personnel can work throughout the day without re-charging. So battery enhancements need to be there. Like PCs, the smartphones would have to have QWERTY keyboards for easy and fast typing. Therefore innovations in key board design and UI would be needed. Scope for third party infrastructure management solutions would arise. Existing ERP and other product vendors would also start looking at this segment and can deliver customized offerings. This could be a key differentiator in these segments. Enterprise usage entails heavy usage. Hence the tariffs would have to go down else switching to WiFi may become rampant. They would also have to be provide more value added services to keep the enterprise customers locked in.

56

User

Just like a PC, the smartphone will get cluttered with multiple applications and diverse functionality. User interface and familiarity may end up becoming a key lock-in.

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Conclusion

It can be inferred from the previous sections that the smartphone market currently is in a state of flux and undergoing dramatic changes in each of the target (consumer as well as enterprise) segments. The roles of the various players in the smartphone eco-system are being re-defined. The feature additions are still in progress, no one vendor has been able to zero in on the exact set of features that the customer wants. So the eventual dominant design for the smartphone cannot be predicted as of now.

But as we have seen from the evolution till date, the current state and the evolutionary trends, we believe that we are in the fluid stage of dominant design evolution for the smartphone. We can make the following predictions regarding the evolution 1. The themes of performance improvement, feature addition and consolidation at the levels of device chipset as well as the operating system will progress in parallel. 2. Once the smartphone is able to provide basic document processing, web browsing experience comparable with PC, the performance improvement or device architectural changes would happen at lower rate and we will enter transitional phase. At this instance whatever elements go in to the making of the smartphone and their architectural arrangement may define the dominant design. In this phase there would eventually be a few operating systems (open source or proprietary) deployed on majority of the smartphones. Thus there could be a dominant design in terms of the features and OS features as in the case of the PC. 3. This scenario of few players in the OS but maybe multiple hardware players all following standard specifications just like the PC industry is a very favorable scenario for the mobile operators as they could get the own hardware manufactured through and OEM/ODM in combination with a specific OS. The network operators would emerge as the key players and device manufacturers will face the scenario similar to that faced by the PC manufacturers of current date that is of dwindling margins and survival of the players with economies of scale. This is a highly probable scenario as chipsets are trying to include more mobile 58

phone functionality on a single chip, operating systems level consolidation is happening and network operators control a scarce resource namely Spectrum and hence are firmly entrenched. This is also the most likely situation in which a dominant design would emerge. Only if there is no dominant design the device manufacturers will be able to differentiate based on the features. 4. The few smartphone players who would work well with the operators and provide users with applications and content they require will eventually stand to gain due to access to complementary assets and network effects. 5. Vendors like Apple and RIM seem to be in the middle. They realize that revenues due to handset sales will soon be outweighed by data service based revenues. A standards based OS eco-system may work either ways for them. Apple or players following walled garden strategy or differentiated performance through integrated hardware and software will eventually become niche players as it has happened in PC industry.

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Appendices

8.1 Glossary
Term Meaning Third generation mobile phone technology, the first generation being analog voice and the second being digital voice with limited data connectivity. There is some disagreement about the minimum download speed that a 3G technology must offer; the term 2.5G has come into use for technologies like EDGE that offer data at rates comparable to wireline dialup connections or slightly faster. Average revenue per user. The amount of revenue generated by the average user of a mobile service. Generally expressed on a monthly basis, ARPU is calculated by dividing the total applicable revenue (e.g., revenue from voice services, total subscriber revenue, etc.) by the average number of subscribers during the period. A radio frequency communications technology designed for relatively short range communications (up to about 10 meters) between devices such as computers and peripherals, mobile handsets and headsets, etc. Binary Runtime Environment for Wireless. An application development platform for mobile applications developed by Qualcomm; also refers to the certification and distribution program that Qualcomm administers for BREW applications. Code division multiple access. A digital cellular technology that uses the entire frequency band available for each communications session at a single base station, keeping them separate by assigning each a unique code. CDMA is used in Korea, by Verizon and Sprint in the U.S., and by some carriers elsewhere in the world. About 13% of mobile subscribers worldwide are currently on CDMA networks. CDMA Evolution-Data Optimized. A 3G technology in the CDMA family, offering typical download speeds of 300-500 kbps. CDMA EV-DO Rev A increases typical download speeds to 450-800 kbps, and is sometimes referred to as a 3.5G technology. CDMA Radio Transmission Technology. A 3G technology in the CDMA family. Sometimes abbreviated as D2C. In the mobile context generally refers to the sale of content and application directly to the consumer, without going through the mobile operators sales channel. Nokias Ovi program is an example of D2C marketing. Enhanced Data Rates for GSM Evolution. A data communications standard in the GSM family; it is sometimes referred to as 2.5G because its typical download speed of 120 kbps is between GPRS and true 3G technologies like UMTS. In the context of wireless mobile communications, used to refer to more or less distinct stages of technology with evolving network data speeds. First generation refers to analog mobile communications. Second generation uses digital technology, and supports typical data rates of 9.6 or 14.4 kbps. Enhanced second generation technologies like GPRS are sometimes referred to as 2.5G, and support 56- 128 kbps. Third generation (3G) supports data speeds of 144 kbps and higher. 4G is being discussed, with multi megabit data rates, but the term tends to be used somewhat loosely.

3G

ARPU

Bluetooth

BREW

CDMA

CDMA EV-DO CDMA2000 1xRTT

Direct to consumer

EDGE

Generation

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GPRS

General Packet Radio Service. A data communications standard in the GSM family; it offers typical download speeds of 56 kbps and is considered a 2.5G technology. GSM Global system for mobile communications. A digital cellular technology that uses time division multiplexing (TDM) to assign different time slots to different communications sessions at a single base station. About 86% of mobile subscribers worldwide are on GSM networks. High Speed Downlink Packet Access. A data communications standard in the GSM family; it is sometimes referred to as a 3.5G standard, since it offers download speeds of 1 Mbps and higher. A packet-based mobile data service developed by NTT DoCoMo, used by other operators around the world. Sometimes abbreviated IVR. A process in which a users spoken words and keypad entries are used to conduct a mobile transaction. Information in which either the mobile users location or the location of a point of interest or both are critical elements. Examples include turn by turn driving directions, restaurant and entertainment information keyed to the users current or projected location, and traffic updates. In some cases the mobile users input current location and/or destination manually (for example, by entering a zip code); alternatively, the handset or application can automatically detect the location, typically either through GPS capability embedded in the handset or through cellular tower triangulation. Mobile network operator. A company that owns and operates network facilities to provide mobile communication services to individual and corporate customers (e.g., Vodafone, AT&T, NTT DoCoMo). Compare to MVNO. A short video segment created or re-purposed for delivery on a mobile handset. Minutes of use. A common measure of the traffic volume generated by a mobile user. Generally expressed in minutes per user per month. Mobile Virtual Network Operator. A company that provides mobile communications services to end users over facilities owned by an MNO. MVNOs may own and operate some of the network assets required to provide services, or they may simply market services and provide customer support. Virgin Mobile and Tracfone are examples of MVNOs. Near Field Communication. A very short-range (1-2 inches) radio frequency communications technology used most frequently in card-reading applications (e.g., transit passes, contactless credit cards, mobile phone payment systems). Original design manufacturer. A company that designs and manufactures mobile phones to an operators specifications, typically for sale under the operators brand name. Flextronics and HTC are examples of handset ODMs. Compare to OEM. Original equipment manufacturers. In the mobile phone world, the term is typically applied to firms like Nokia, Samsung, Motorola, and Sony Ericsson that design and manufacture handsets that are predominantly sold under the firms brand name, although they may be co-branded with a mobile operator. Compare to ODM. See off portal. Refers to any channel of delivering content or applications to a mobile user that does not involve the mobile operator. See on portal. Refers to any channel that relies on the mobile operator to deliver content or applications to a mobile user. Delivery of content and applications directly to the mobile device using the operators mobile network. Compare to sideloading.

HSDPA i-mode Interactive voice response

Location-based information

MNO Mobisode MOU

MVNO

NFC

ODM

OEM Off deck Off portal On deck On portal Over the air

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Porting

Modifying content or an application designed for one platform so that it will run and display properly on another. A payment system for mobile phone use in which the consumer is billed periodically, typically monthly, for mobile phone usage incurred during the preceding month. Postpaid customers generally are on one- or two-year contracts. compared to prepaid. A payment system for mobile phone use in which the consumer pays in advance for a certain amount of talk time and/or data usage. As the initial credit is used, the consumer can top up the account by making additional payments. Prepaid accounts generally do not require a contract. Compare to postpaid. A way to use SMS communications to generate payment by the mobile user. Typically, a premium SMS message will carry a special rating code that alerts the mobile operator to add the amount of the transaction to the customers bill. A two-dimensional bar code used primarily in Japan. Initially used in industrial parts tracking, QR codes can be used to disseminate mobile content. A mobile user takes a picture of the QR code, in a magazine ad, for example with a camera phone. The phone decodes the content and initiates the appropriate action. Short phone numbers that, when sent an SMS message by a mobile device, cause a preprogrammed response, such as recording a vote on a reality TV show or sending users a ringtone or other digital content. The practice of downloading content to one device, such as a PC, then transferring it to another device, such as a mobile phone. Short message service. A system for sending and receiving short text messages on a mobile device. Synonymous with text messaging or texting. Universal Mobile Telecommunications Standard. A 3G data communications standard in the GSM family; it offers typical download speeds in the range of 220-320 Mbps. Refers to the practice of a network provider allowing a subscriber to access only content and applications offered or authorized by the provider. Wireless Application Protocol. A set of specifications that allow mobile devices to access the Internet.

Postpaid

Prepaid

Premium SMS

Quick Response QR

Short codes Sideloading SMS UMTS Walled garden WAP

8.2 The smartphone market data

Table 1-1 Worldwide: Smartphone Sales to End Users by Vendor, 3Q08 Market Share Market Share Growth 3Q08 3Q08 3Q07 3Q07 3Q07-3Q08 42.4% 48.7% -3.1% Nokia 15,472 15,964 15.9% 9.7% 81.7% Research In Motion 5,800 3,192 12.9% 3.4% 327.5% Apple 4,720 1,104 4.5% 4.0% 25.9% HTC 1,656 1,315 3.4% 4.7% -19.3% Sharp 1,239 1,535 20.9% 29.4% -20.9% Others 7,626 9,643 100.0% 100.0% 11.5% Total 36,515 32,753 Note: For HTC we only count the company's own-branded devices. The devices that HTC designs and which have the operator's brand are given separately under the operators name in our statistics. Source: Gartner (November 2008)

Table 1-2

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Worldwide: Smartphone Sales to End Users by Operating System, 3Q08 Market Share Market Share 3Q08 3Q08 3Q07 3Q07 49.8% 63.1% Symbian 18,179 20,664 15.9% 9.7% Research In Motion 5,800 3,192 12.9% 3.4% Mac OS X 4,720 1,104 Microsoft Windows 11.1% 12.8% Mobile 4,053 4,180 7.2% 8.8% Linux 2,622 2,884 2.1% 1.2% Palm OS 780 383 1.0% 1.1% Other OSs 361 345 100.0% 100.0% Total 36,515 32,753 Note: The "Other OSs" category includes sales of Sharp Sidekick devices based on the Danger platform. Source: Gartner (November 2008)

Growth 3Q07-3Q08 -12.0% 81.7% 327.5% -3.0% -9.1% 103.3% 4.6% 11.5%

Table 1-3 Worldwide: Smartphone Sales to End Users by Region, 3Q08 Market Share 3Q08 3Q08 27.5% North America 10,033 23.7% Western Europe 8,646 20.1% Asia/Pacific 7,343 13.3% EEMEA 4,868 12.7% Japan 4,648 2.7% Latin America 976 100.0% Total 36,515 EEMEA = Eastern Europe, the Middle East and Africa. Source: Gartner (November 2008)

3Q07 5,978 6,817 8,237 5,030 6,066 625 32,753

Market Share 3Q07 18.3% 20.8% 25.1% 15.4% 18.5% 1.9% 100.0%

Growth 3Q07-3Q08 67.8% 26.8% -10.9% -3.2% -23.4% 56.2% 11.5%

Table 1-4 , Source: Gartner (November 2008) Worldwide: Smartphone sales world wide by vendor, region and by operating system per year. 2008 only up to 3rd Quarter (In thousands) Years Grand Vendor Region Operating System 2,006 2,007 2008 Total Nokia United States Symbian 320 481 291 1,091 Western Europe Symbian 10,261 17,126 13,595 40,982 Asia/Pacific Symbian 15,910 23,886 16,481 56,277 Japan Symbian 245 18 116 379 Middle East and Africa Symbian 8,350 11,860 8,804 29,014 Eastern Europe Symbian 3,277 5,398 4,261 12,935 Latin America Symbian 503 1,642 1,795 3,940 Canada Symbian 34 54 16 104 Nokia Total 38,899 60,465 45,359 144,723 Research In Motion United States Research In Motion 3,589 7,837 11,526 22,952 Western Europe Research In Motion 1,109 2,324 2,315 5,748 Asia/Pacific Research In Motion 210 365 413 987 Japan Research In Motion 3 10 7 20 Middle East and Africa Research In Motion 17 41 68 126 Eastern Europe Research In Motion 18 56 84 158

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Latin America Canada Research In Motion Total Apple United States Western Europe Asia/Pacific Japan Middle East and Africa Eastern Europe Latin America Canada

Research In Motion Research In Motion Mac OS X Mac OS X Mac OS X Mac OS X Mac OS X Mac OS X Mac OS X Mac OS X

66 483 5,496

130 1,006 11,768 2,953 350

164 1,129 15,706 4,528 1,846 370 275 1 35 128 155 7,338 406 2,436 886 136 149 167 19 65 4,264 692

360 2,618 32,970 7,480 2,196 370 275 1 35 128 155 10,641 526 5,274 1,876 334 358 568 46 110 9,091 2,860 51 10 17 12,210 5 10 15,163 2,994 730 1,029 839 909 166 8 3 32 1

Apple Total HTC United States Western Europe Asia/Pacific Japan Middle East and Africa Eastern Europe Latin America Canada HTC Total Sharp United States Western Europe Asia/Pacific Japan Latin America Canada Sharp Total Samsung United States Western Europe Microsoft Windows Mobile Symbian Microsoft Windows Mobile Symbian Microsoft Windows Mobile Linux Microsoft Windows Mobile Symbian Microsoft Windows Mobile Microsoft Windows Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Other OSs Other OSs Symbian Other OSs Symbian Other OSs Other OSs

3,303 120 725 130 35 40 168 12 2,114 859 164 169 232 15 45 3,719 1,183 18 12 5,673 0 6,885 1,268 54 452 86 340 91 3 3 4 1

1,109 986 33 10 5 3,338 5 10 4,387 277 22 91 700 176 34

3,199

3,891 1,449 655 486 53 393 41 5

Asia/Pacific

Middle East and Africa Eastern Europe

Latin America

28 1

64

Canada Samsung Total Fujitsu Western Europe Japan

Mobile Microsoft Windows Mobile 1,303 Microsoft Windows Mobile Symbian Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Symbian Microsoft Windows Mobile Linux Microsoft Windows Mobile Palm OS Microsoft Windows Mobile Palm OS Microsoft Windows Mobile Palm OS Microsoft Windows Mobile Palm OS Microsoft Windows Mobile Palm OS Microsoft Windows Mobile Palm OS Microsoft Windows Mobile Palm OS Linux Microsoft Windows Mobile Other OSs Symbian Microsoft Windows Mobile Linux Other OSs Symbian Microsoft Windows 8 2,663

26 2,325 11 5,510

40 3,151

66 6,778 19 11,573 3 2 10 11,607 2 0 13,261 13,264 1,813 4,764 316 81 120 86 9 5 25 4 42 497 50 159 7,972 11,984 11,984 2,762 461 198 91 110 11 15 89

3,401 3

Middle East and Africa Eastern Europe Fujitsu Total Panasonic Asia/Pacific Japan Panasonic Total Palm United States

0 5 2,676 2

1 5 5,527

3,404

5,192 5,195 468 1,310 59 70 7 44 1 5 1 4 14 124 13 96 2,215 4,599 4,599 900 12 16 1

0 4,841 4,841 846 1,438 166 11 59 42 5

3,228 3,228 499 2,016 91

Western Europe

Asia/Pacific Middle East and Africa

54

Eastern Europe

15

Latin America

22 214 31 58 2,902 4,111 4,111 1,304 120 116 58 101 5 10 48

7 159 6 6 2,855 3,274 3,274 558 341 70 16 7 6 5 42

Canada Palm Total NEC NEC Total Motorola

Japan

United States Western Europe

Asia/Pacific

65

Japan Middle East and Africa

Eastern Europe Latin America

Canada Motorola Total Sony Ericsson United States Western Europe Asia/Pacific Japan Middle East and Africa Eastern Europe Latin America Canada Sony Ericsson Total Others United States

Mobile Linux Other OSs Symbian Microsoft Windows Mobile Linux Microsoft Windows Mobile Linux Symbian Microsoft Windows Mobile Linux Microsoft Windows Mobile Symbian Symbian Symbian Symbian Linux Symbian Symbian Symbian Symbian Microsoft Windows Mobile Palm OS Microsoft Windows Mobile Palm OS Microsoft Windows Mobile Linux Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile

4,001 34 2

1,734 7 6 3 12

647 43

6,382 50 40 6 12 2 11 12 147 742 91 11,231 56 898 1,183 3,516 111 299 955 53 3 7,073 67 2 165 1 1,036 453 78 80 10 5 1,898 1,705 1,252 47 3,005

1 0

2 11 12 7 17 24 5,016 28 283 316 1,089 74 365 65 4,039 26 461 455 1,839 65 360 2 2,176 3 154 412 588 111 68 284 18 1,637 37

144 209 15 3 2,086 17 2 45 1 488 6 12 16 2 2 592 351 359 4 715

87 462 20 3,350 13

Western Europe

54

66

Asia/Pacific Middle East and Africa Eastern Europe Latin America Canada Others Total T-Mobile United States Western Europe Eastern Europe T-Mobile Total

323 242 30 26 3 4 695 820 616 22 1,458

225 205 36 38 5

612 534 276 22 832

66

Cingular Cingular Total Pantech Pantech Total Mitsubishi Mitsubishi Total Asus

United States

Microsoft Windows Mobile Microsoft Windows Mobile Symbian Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Symbian Microsoft Windows Mobile Microsoft Windows Mobile Linux Microsoft Windows Mobile Microsoft Windows Mobile

629 629

1,029 1,029 39 39 2,376 2,376

401 401 406 406 670 670 4

2,059 2,059 445 445 5,270 5,270 4 75 83 24 177 363 212 428 189 76 133 107 23 1,167 103 164 39 7 312 52 99 40 528 2 10 731

United States Japan

2,224 2,224

United States Western Europe Asia/Pacific Middle East and Africa Eastern Europe

15 6 3 15 38 98 199 111 26 39 29 11 511

33 39 13 81 166 81 162 51 39 58 52 11 454 53

27 38 9 82 160 33 67 28 11 36 26 1 202 50 52 23 7 132 35 59 32 35 2

Asus Total HP United States Western Europe Asia/Pacific Middle East and Africa Eastern Europe Latin America Canada HP Total Toshiba Western Europe Asia/Pacific Japan Eastern Europe Toshiba Total LG Western Europe

56

57 16

56

125 17 40 8 249

Asia/Pacific Middle East and Africa Eastern Europe LG Total

243

243

3 317

7 171

67

i-mate

United States Western Europe Asia/Pacific Middle East and Africa Eastern Europe Latin America Canada

Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Symbian Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Symbian

82 141 52 173 48 4 7 507 289 187

89 81 37 197 45 4 7 460 363 95 4 462 52 21

64 3 33 83 6 1 4 193 178

235 225 122 454 98 9 18 1,160 830 283

i-mate Total O2 Western Europe Asia/Pacific Eastern Europe O2 Total E-TEN Western Europe Asia/Pacific Middle East and Africa Eastern Europe E-TEN Total Verizon Verizon Total Lenovo United States Asia/Pacific

477 15

6 184 22 29 12

10 1,123 89 50 12 165 316 415 415 27 485 513 930 14 944 391 18 409 167 167 3 39

18 33 184 184 23 188 211 294

63 136 118 118 4 237 242 430 6 436 177 11 188 46 46

84 147 113 113

Lenovo Total Orange Western Europe Eastern Europe Orange Total Vodafone Western Europe Eastern Europe Vodafone Total TCL TCL Total BenQ Mobile Asia/Pacific

60 60 206 8 214 163 7 170 12 12

294 51

51 109 109 3 21

Western Europe Asia/Pacific

18

68

Middle East and Africa Eastern Europe Latin America

Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Symbian Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile Microsoft Windows Mobile

13 3 1 1 2 44 53 49 2 37

15 3 1 1 2 63 17 8 111 104 7 74 2 298 324 324 7 7 303,487

BenQ Mobile Total Mio Technology Western Europe Asia/Pacific Middle East and Africa Eastern Europe Latin America Mio Technology Total Sprint Sprint Total Cyberbank Cyberbank Total Grand Total United States

20 41 47 5 37 2 132 184 184

142 140 140 7 7 80,186

25

Asia/Pacific

122,316

100,986

69

8.3 Worldwide traffic by Manufacturer and Operating System as of January 2009

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8.4 Contract/Integrate strategy table for innovators Specialized asset case

The table to plan the contract or build capability within the firm (integrate) strategies under different appropriability regimes (Source paper by Teece9) Weak Appropriability Innovator has Innovator lags followers in access better access to complementary to complementary assets assets than follower
Contract Contract

Strategy Outcome

Strong appropriability

Innovators and followers have a better position than owners of complementary assets Complementary Asset owners are better positioned to extract the profits than innovators or imitators

Contract

Innovator will win

Innovator should win

Innovator or follower will win and asset owners will not benefit Contract (to limit exposure) Innovator will probably lose to followers and asset holders

Contract if competitive terms can be agreed, otherwise integrate Innovator will win, but may have to share profits with asset holder

Integrate

Innovator should win

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References

9.1 Books and Journals

1. Paper: Dominant designs, technology cycles, and organizational outcomes Research in Organizational Behavior (1998), 20, pp. 231-266, Tushman M. L. and Murmann J. P. 2. Book: Mastering the Dynamics of Innovation - James M. Utterback 3. Book: Contemporary Strategy Analysis (6th Edition) Robert M. Grant 4. Book: Strategic Management of Technology and Innovation (4th Edition) Robert A. Burgleman, Clyton M. Christensen, Steven C. Wheelwright 5. Paper: Competing Technologies: An Overview W. Brain Arthur 6. Case Study: Strategic Maneuvering and Mass-Market Dynamics: The Triumph of VHS Over Beta Michael A. Cusumano, Yiorgos Mylonadis, and Richard S. Rosenbloom 7. Paper: Patterns of Industrial Innovation Technology Review (Jan-July, 1978), 80(7), pp. 40-47, W.J. Abernathy and J.M. Utterback. 8. Paper: Dominant designs and the survival of firms - Strategic Management Journal (1995), Vol. 16, 415-30, Fernando F. Suarez and James M. Utterback 9. Paper: Profiting from Technological Innovation: Implications for Integration, Collaboration, Licensing and Public Policy Research Policy (1986), 15, pp.285305, David J. Teece. 10. Paper: Customer Power, Strategic Investment, and Failure of Leading firms 11. Paper: What is Strategy? HBR (November December 1996), Michael E. Porter. 12. Paper: Crossing the Chasm and Beyond Geoffrey A. Moore 13. Paper: Technological Discontinuities and Dominant Designs: A Cyclical Model for Technological Change Philip Anderson and Michael L. Tushman 14. Paper: Architectural Innovation: The reconfiguration of existing product technologies and the Failure of Established Firms Administrative Science

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Quarterly 35 (1990), Cornell University, Rebecca M. Henderson and Kim B. Clark. 15. Paper: Disruption, Disintegration and the Dissipation of Differentiability Industrial and Corporate Change (November 5, 200), Volume 11, pp. 955-993, Clayton M. Christensen, Matt Verlinden, and George Westerman. 16. Shaping Strategy in a world of constant Disruption HBR (October 2008), pp. 81-89, John Hagel III, John Seely Brown, and Lang Davison.

9.2 Web Site References

17. Gartner 2008 Press Release, http://www.gartner.com/it/page.jsp?id=827912 18. CNET - Smartphones, http://reviews.cnet.com/smartphonereviews/?sa=1000036&tag=mncol;dir2 19. PCMag - Smartphone, http://www.pcmag.com/encyclopedia_term/0,2542,t=Smartphone&i=51537,00.as p 20. Wikipedia - Smartphone, http://en.wikipedia.org/wiki/Smartphone 21. Cell Phones - 2009 Smartphones Product Comparisons, http://cellphones.toptenreviews.com/smartphones/ 22. Wikipedia, http://en.wikipedia.org/wiki/Comparison_of_smartphones 23. AdMob Mobile Metrics - http://www.admob.com/s/solutions/metrics 24. The Rise of the PC - http://www.jeremyreimer.com/total_share.html 25. The Rise of the PC - http://arstechnica.com/old/content/2005/12/total-share.ars/1 26. Windows Mobile Ecosystem Part II http://www.smartphonemag.com/cms/_archives/Oct07/wmeco.aspx 27. Windows Mobile EcosystemPart III: The Independent Software Vendors http://www.smartphonemag.com/cms/_archives/Aug08/WMEcosystem 28. More LG Phones to Use Microsoft System http://www.nytimes.com/2009/02/17/technology/17soft.html?_r=1

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29. Palm OS - http://www.washingtonpost.com/wpdyn/content/article/2008/04/30/AR2008043000556_pf.html 30. Palm OS - http://www.networkworld.com/news/2009/021109-palm-kills-palm-osbets-on-webos.html?page=2 31. Palm OS http://www.computerworld.com/action/article.do?command=viewArticleBasic&a rticleId=9011687 32. App stores and APIs: It's the ecosystem, stupid http://mobileopportunity.blogspot.com/2008/09/app-stores-and-apis-itsecosystem.html 33. CBR, Research in Motion Limited http://www.cbronline.com/companies/research_in_motion_limited?section=comp anyView 34. RIM to Launch BlackBerry Application Storefront and BlackBerry Application Center - http://press.rim.com/release.jsp?id=1869 35. RIM in the mobile enterprise market http://www.blackberry.com/select/get_the_facts/pdfs/vendor/OVUM_RIM_in_the _mobile_enterprise_market.pdf 36. BlackBerry co-CEO on iPhone marketing: a dangerous strategy - http://blogs.zdnet.com/blackberry/?p=323 37. Android - An Open Handset Alliance Project http://code.google.com/android/index.html 38. Analysis: Google's Android mobile strategy explained http://www.computerworlduk.com/technology/mobile-wireless/mobile-os/newsanalysis/index.cfm?articleid=890&pn=1 39. Android: An upsell attempt for Google services - http://news.cnet.com/androidan-upsell-attempt-for-google-services/ 40. 10 Challenges that Google's Android Platform Faces In the Next 12 Months http://security.itproportal.com/articles/2008/09/24/10-challenges-googles-androidplatform-faces-next-12-months/3/ 41. BT: Ribbit deal start of 'global telecom platform wars' http://telephonyonline.com/global/news/ribbit-deal-starts-global-platform-war0730/

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