May 26th, 2009

Smart Phones (shortened eval)

Posted by bert at 10:16 AM on May 26, 2009 in Tech, ME.

It's funny when work FINALLY intersects with personal interests.

I'm helping with an assessment of the smart phone industry and the various value chains baked into it.  Thanks to a certain relative, I have a pretty decent preview of things as well.   Not that it really matters since my job is to look 2-3 years out, not 6 months.

Of course, the most interesting thing in my eyes is the battle of Apple’s iTunes vs Google’s mobile marketplace vs Microsoft’s ability to migrate Office processing capability onto its smart phones.  Yes I am ignoring Blackberry.  Like all things Canadian they are irrelevant. (ok, j/k on this one)

Basically you have 2 OS’s against 1 “all-inclusive”, where the all-inclusive has managed to lock away a significant share of the market.  Long story short, Apple has people locked in on the iTunes platform since people have spent money to use Apple-only merchandise from iPod song and video purchases to iPhone and iPod Touch application purchases.   All those things are non-transferable so basically Apple has basically scaled up the barrier of entry for all competitors.  

(side note, this is why I still refuse to purchase music on iTunes…   I buy CD’s and rip them to MP3 so I am not completely attached to my iPod.  In fact, I have NEVER purchased music from iTunes&hellip

Apple really is the incumbent here, so I’m going quickly into how Google can win.  As for Microsoft, they’re getting backed into multiple corners.   They needed to win a battle of convergence (mobile OS’s + office suite portability) and are now being attacked by smart phones and net books.   (funnier side note… I told MSFT this during an interview last year with their Office group, and they really didn’t like my answer.  One day I’ll learn to hold back.)

Google has a huge advantage over Apple.   They do not have hardware costs for their phones as they do not make any of their phones.   You have companies like HTC and Sony making various “google phones.”  These companies are bearing the brunt of diversifying their phones for each of their target audiences.   Unlike Apple, they are forced into a slow release process of ONE type of phone each generation.  Unless something changes soon, Google will have multiple phones to compete against the stylish iPhone.  

Soon, we’ll see a second phone, the HTC “magic.”   It’s a serious sexy phone that has already improved upon many of the drawbacks I see with the iPhone.  It’s lighter weight, has better battery time and has one of those sexy “pearls” to help navigate.  There’s a sony Erickson model that looks to be an iPhone mimicker.  Some other smaller Samsungs in multiple colors to woo the fashionable female demographic.    If done right, Google will have multiple competitors with many demographics covered competing against each other for price, across all phone networks.   Essentially, they are shotgunning the market and have spread most of the risk to the manufacturers.  Pretty smart if you ask me.  

So who wins?  I’ll bet on whoever treats their developer forums the best.   This is very much like the video game industry.  He who gives the best toolkits and in this case the best kickbacks to their applications developers, will have the more complete application library.   He who has the best/most games wins.

Oh and Linda.  That new phone is seriously sexy.  If they need more alpha/beta testers  for that, I’ll be happy to get off of AT&T for awhile.

3 spoke it