Last week two big events worth noting have been happening. The first: last week was the 5th birthday of the iPhone. It has been with us for 5 years and it has changed almost everything to do with computers in that time. The second was the Google I/O Conference. I decided to write this blog post and try to give a bit of a prediction for where I see the mobile market in the next 18 – 24 months, who will dominate, who will disappear etc. I must put a disclaimer that this is all based on my opinion, which I have formulated on the basis of reading, talking to customers, talking to analysts etc.
Let’s start with Apple. There is no doubt that they’ve really succeeded stamping their imprint on the market with their paradigm in the last few years and have become one of the most valued companies on Earth. The iPhone has become the paradigm that everyone is trying to copy/improve. The idea of a flat screen with no buttons really started with Apple. It is quite safe to assume that in the next 2 years, Apple will continue growing and increasing their market share especially in emerging markets (maybe with a new version of their phone – low cost) and will definitely continue making strong waves in the tablet market. I will come back to Apple later on.
With regards to the Android consortium led by Google, although on paper it looks like they have the lions share of the market (especially in the emerging markets), that platform is not very profitable yet. In a previous post ‘The beginning of the end for Android’, I discussed the problem of multi ‘flavours’ of Android and quoted that nearly 64% of the Application/Developers are still using ‘Gingerbread’ as their platform.
Android just released version 4.1 ‘Jelly Beans’ and to me it seems that the segmentation in the Android space is just growing. Android would really need to try and consolidate its operating systems into a unified platform, which would allow developers to focus on developing applications and make money from the platform. Without that the world of smartphones will really be lost; but knowing Google at some point that will be addressed. I will come back to my view on Apple versus Google towards the end of this post.
The really big question, is what is going to happen with Nokia and RIM in the next 2 years. It is clear to me that Nokia is dead and any attempt to rescue it will just fail. We have noticed in the last 2 weeks Nokia’s biggest partner, Microsoft, almost entirely kicking them out of their offering. The fact that Windows 7 phones could not be upgraded to Windows 8 phones, and the fact that Microsoft has started developing its’ own hardware capabilities, are a strong indication that the lack of confidence by Microsoft of Nokia’s future; Nokia is currently burning its cash piles and putting these two facts together says it all.
With regards to RIM, we also saw the Sunday Times article and its’ prediction that RIM will sell its handset division and that JP Morgan and RBC are to evaluate an alternative, “including opportunities to leverage Blackberry platform through partnerships, licensing opportunities and strategic business alternatives.” The Sunday Times suggests two potential buyers – Amazon or Facebook; but I would add a third and it is Microsoft. It is very clear to me that Amazon are trying their best to enter the race of mobile technologies as they clearly understand that it will determine the future for IT in the next 10 – 15 years.
Amazon are in a good position as they currently have a huge content store, a large install base with historical transactions, great POS and all that they require is a mobile platform to move them from a cloud vendor to a mobile player. I believe that they won’t be buying RIM, as they have already made a significant investment developing their fork of an Android version with Kindle Fire. It seems to me more likely that Amazon will work with Asian manufacturers to develop their own inexpensive hardware, rather than pouring billions of dollars into making Blackberry 10 (QNX) work with their model.
With regards to Facebook, I think that they are a good contender for buying RIM. I think the lack in mobile technologies and their reliance on other people’s technologies for mobile, reveal a strategic weakness. In other words, as they admit, the majority of their users are accessing Facebook through a mobile device. Their ability to control that technology and add advertisements “Real Estate” to the mobile interaction is key to their revenue generation strategy.
Forrester’s CEO George Colony even went as far as predicting that Facebook is ‘toasted’ because of that strategic weakness; so it seems to me that buying a RIM handset business would immediately make Facebook a serious player in Smartphones which could rectify that.
I added Microsoft because looking at the launch of ‘Surface’ in the last 2 weeks seems to me to be a defensive action against Apple. iPad and the growing numbers of sales of Apple Macs are a direct threat to Microsoft’s core product, Windows. As Steve Ballmer, Microsoft’s CEO, said without Windows Microsoft is nothing.
So Microsoft announced a deviation away from its strategy of Software Distribution over other manufacturer’s hardware and are entering a space they will most likely lose a lot of money on (tablets hardware manufacturing); as a defensive measure to protect their dominance of Operating Systems at the Enterprise level. If my analysis is correct, it seems to me the next logical step for them will be to buy RIM as they dominate the Enterprise market today when it comes mobile technologies. It also seems much cheaper than developing their own handset.
Going back now to the question of the battle between Apple and Google. I think that in the next 18 – 24 months we will still see them both battling. One will be stronger on market share, the other will be stronger on profit. It is important to note that these two giants do not just do battle on our Smartphones, but really on becoming the dominant power in IT in the next 10 years. Each company has a clear strategy on Smartphones, Tablets, TV (PVR), Car Dashboarding, Smarthome and other accessories such as Google Glasses.
Put it simply each one of them has a roadmap of how to let us use the Internet whenever and wherever we are and the evidence for that is just piling up. For example, Google just announced a Siri-like feature called ‘Knowledge Graph’ and Nexus Q, which is a direct competitor to Apple TV.
While there is speculation that Apple is to remove Google Maps from its platform and replace it with its own map version and Yelp. It is in my mind that I see these two giants fighting between them, copying, offering, removing technologies, battling in the Courts on Patents as they both understand the power of being in our pockets. To summarise, Apple and Google will continue battling. Amazon will rise to that battle, Facebook and Microsoft will no doubt join the battle as it is key to their survival and Nokia and RIM will be omitted from our collective memory.