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Winners and losers in the smartphone race

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Smartphones took a giant leap into the future when Apple released the iPhone which, when combined with all-you-can-eat unlimited data plans, revolutionised the way we use phones. With Morgan Stanley’s Mary Meeker recently predicting that mobile internet connections will overtake desktop internet connection by 2014, the potential market for internet enabled mobile phones is huge. While consumers may be enjoying this constantly-connected revolution, it is worth noting that service providers have not been quite so comfortable with the enormous load these bandwidth hungry little devices have placed on their networks.

While the smartphone market seems to be getting all the attention, it should be remembered that they still account for a small proportion of global mobile handset sales. According to figures recently released by Gartner, worldwide mobile phone sales totalled 417 million units in the third quarter of 2010 with smartphones accounting for less than one in five. However, this is up from one in ten (in 2009), and in some markets like the US, smartphones will account for 50% of all mobile devices by the end of 2011.

Smartphone leaders

Although the iPhone was by no means the first smartphone to market, it revolutionised the sector and quickly established itself as the top dog. The original iPhone shipped an estimated 250,000 units during its launch weekend, with each new version gaining further ground (opening weekend for the iphone 3G was 1 million units, and 1.7 million for the iPhone 4). Apple, and then Android, set the bar so high that RIM’s smartphone market share seems to be on the wane, even among business users.

Google’s Android OS has been making significant strides since launching in November 2007 and looks set to overturn Apple’s lead. Of the 81 million smartphones sold in the third quarter of 2010, a quarter were running Android making it number two worldwide.

In November 2010, Microsoft launched Windows Phone 7 which it hopes will reverse the slide that the previous versions of Windows Mobile have suffered. The new OS is a significantly improvement, however Microsoft may struggle to break out of the smartphone peloton. Also in the pack is Samsung which launched its own operating system, bada, But even then, Samsung is hedging its beds with bada, and installing Android on some models.

And where is Nokia?

And then there is the enigma of Nokia, which remains the world’s largest mobile device company. Nokia has struggled with smartphones, although Q3 2010 has seen improvement with sales reaching 26.5 million units.

Nokia is hard at work on a new OS called Meego to replace Symbian on high-end handsets. Nokia spokesman Doug Dawson recently told Reuters: “Going forward, N-series devices will be based on MeeGo.” MeeGo is a Linux-based OS being developed in partnership with Intel. Nokia have a huge installed base, much of which is stubbornly loyal. This, combined with their financial and manufacturing strength, may yet help them retain their number one ranking even in the face of the rise of smartphones.

The future of Symbian, which is recording increased sales but declining share of the smartphone market, hangs in the balance. Nokia recently retook full control of the OS – commentators believe that the Symbian OS is destined for Nokia’s feature and dumbphones.

Fragmentation and the developer community

So consumers now have a wide choice of smartphones and OS including iPhone, Android, Blackberry, Microsoft, Nokia, Samsung. The question is, what impact will this have on mobile application developers?

According to Oded Ran, head of consumer marketing at Windows Phone, Microsoft UK said: ”The good news with all these operating systems is that the consumer gets choice.” He also suggested that the fragmentation “provided developers with an opportunity to really excel and showcase their creativity.”

Developers may not agree with Mr Ran and risks losing sales if they back the wrong horse in the OS race.

Cross-platform application frameworks such as Qt, and the work of the Wholesale Applications Community (WAC), may help solve the developer’s problem. They allow them to write applications that subsequently work on different operating systems but the idiosyncrasies of the various handsets still cause problems.

An application written for an Android handset with lots of onboard memory may not port to an iPhone with less memory. Developers have to decide to ignore the market potential of a particular operating system, or spend more time and money trying to write for the various platforms. Their decision is ultimately influenced by which OS has the best revenue potential but this isn’t the only consideration. Ease of developing in a particular OS is a factor, with developers reporting Android as the easiest platform to master and Symbian the hardest.

The future of mobile is notoriously difficult to predict and few could have called today’s scenario, with Apple on top, five years ago. RIM will have to address the weakness of its application base to claw back market share. Apple may be forced to release new models in response to calls for more than one flavour of iPhone. Android is likely to come under pressure from Windows Phone 7, perhaps more so than Apple as those who refuse to be seen carrying an iPhone find themselves with a raft of viable WP7 alternatives. Meanwhile Nokia is hard at work restructuring and reinventing itself after the appointment of former Microsoft man Stephen Elop as CEO. Nokia have the manufacturing ability, resources and drive combined with a massive installed base and so it would be wrong to write the Finnish giant off just yet.

Glenn Le Santo is a journalist and social media commentator

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