As many as 50,000 people –including the most important movers and shakers of the wireless business -are once again converging for the Mobile World Congress, the annual industry gathering which opens Feb. 16 in Barcelona. Attendance this year is expected to dip, along with sales of mobile handsets, giving the sector less reason to celebrate in 2009. The hope is that mass take-up of the mobile Internet will nonetheless drive revenues.
To be sure hundreds of start-ups will still try to woo venture capitalists. Larger companies will compete for attention by promoting mobile services and network equipment and flashy new handsets like the hot pink NEC touch screen phone in Japanese operator DoCoMo’s PRIME device range, one of a number of phones launched in Barcelona using the LiMo operating system (see photo on Informilo’s home page).
Some of the most important executives in the industry, including the chief executives of Vodafone, Telefonica and Microsoft, are scheduled to give key note speeches. And stars of a different sort, including Hollywood actor Kevin Spacey and will.i.am, front man for the music group Black Eyed Peas, are also due to appear, a testament to the growing importance of mobile entertainment.
But the dizzying growth of the last few years appears to be over. Indeed, Nomura Securities is forecasting a 15% decline in sales of the total number of handsets in 2009. Handset makers and chip makers such as HTC, Motorola, Sony Ericsson, Blackberry maker Research In Motion, Samsung and Texas Instruments are pinning their hopes on the market for smart phones, high-end devices with computing capabilities, anticipating growth of 10% to 20%.
That’s a mistake, says Richard Windsor, a global technology specialist in the London office of Nomura Securities. He predicts smart phones will grow by just 0.8% to 187 million units, from 185 million in 2008. “I have removed smart phones from my list of safe havens,” Windsor said in a February 9 research note. “This leaves revenue forecasts open to being heavily missed and profits could easily become losses.” Strategy Analytic’s Neil Mawston is more optimistic, projecting 20% growth for smart phones. But, he concedes, “we were forecasting double or even triple that for 2009.”
Against that backdrop the emphasis now is on driving the mass market take-up of mobile data with service such as social networking and media sharing. Following on Apple’s success with its App store, expect to see “me too” announcements from operators in Barcelona. Ditto for services that back-up and synchronize user data between the PC/network and the mobile phone. Microsoft plans such an announcement at the Mobile World Congress, according to analysts and press reports. It is following in the footsteps of rivals Apple and Nokia and analysts say they expect RIM and Google to make similar moves. Deals between mobile operators and Google, Facebook, MySpace and YouTube on new services are also likely to be announced.
“We are starting to speak a new language, not the Internet language, not the telecom language, but the language of the four million people waiting for us to work together,” Yves Maitre, Orange’s senior vice-president devices, said in an interview with Informilo. “We have been able to demonstrate with Nokia and Apple that there is enough money for all of us to survive and grow, enough to allow telcos to move from 6% of overall revenues coming from data to 20%.”
That remains to be seen. Google and Apple’s entry into the mobile sector last year, combined with Nokia’s launching of its Ovi services, are transforming the industry and the resulting shake-out is far from over. It is not clear whether operators will reap rich rewards by getting into bed with the newcomers or be relegated to a role as dumb pipes. At stake is both the future of mobile communication and the Internet, as a growing number of consumers around the world access the Web from mobile devices.
STRUGGLE FOR CONTROL
A major struggle over who will control the heart of the handset continues, as the mobile Internet moves from smart phones for early adopters to cheaper mass market phones. One of the strongest contenders is London-based Symbian, a software maker owned by a consortium of phone makers that was majority controlled by Nokia. Last June Nokia announced a plan to buy the 52.1% of shares it doesn’t already own in London-based Symbian, merge the company with parts of its own organization and create an open-source foundation that will give away the resulting software for free to other handset makers. Nokia is hoping the creation of the Foundatiaon will help it move into mass market products and convert millions of customers to wireless Web services.
“There is a collection of things that Symbian has done that will allow us to march down to the mid-tier, including power utilization techniques and support for multiprocessing,” Lee Williams, executive director of the Symbian Foundation, said in an interview with Informilo. “I think we have an 18-month plus head start on Apple on mid-tier.”
The Symbian Foundation now has 78 industry partners, including Nokia rival Qualcomm, which to date has worked closely with Windows Mobile and Android. Its entry into the Symbian Foundation means that it will be easier for other equipment manufacturers to make mid-tier phones running the Symbian operating system, says Williams. Other new Symbian Foundation members include MySpace and Hewlett Packard.
Symbian was set up a decade ago to develop an independent software platform for smart phones and in 2007 was used in 62.8% all such devices. Rivals, such as Microsoft’s Windows mobile, were able to grab only a small percentage of the market, despite years of trying.
But newer rivals like Apple are making inroads much faster. Symbian’s market share is set to drop from 48.7% in 2008 to 38% in 2010, according to projections from Strategy Analytics. Apple, which had just 3% of the smart phone market in 2007, is forecast to grab 18.4% by 2010, ahead of Blackberry maker Research in Motion’s 14.3%, Microsoft’s 11.4%, Linux’s 10.8% and Google Android’s 6.2%
Symbian is not only facing far more intense competition on smart phones. It faces strong rivals who are also offering open-source software for mid-range phones. The Linux initiative called the LiMo Foundation, has the backing of big mobile operators Vodafone and Verizon Wireless and recently added Spain’s Telefonica and Korea’s SK Telecom to its board. Thirteen new handsets using the LiMo operating system are expected to be launched at the Mobile World Congress, including models from NEC, Panasonic, Samsung, LG and Motorola.
LiMo’s draw for the operators is that Symbian, Microsoft, Android and the proprietary systems of the handset vendors are all seen as threatening, promoting other brands over their own. “LiMo has become the operator- friendly smart phone platform and the one upon which (operators) will base their own branded user experience,” says Nomura’s Windsor.
Morgan Gillis, the LiMo Foundation’s executive director, positions his organization as the only truly open platform. “LiMO is particularly attractive to major operators who are acting in support of their own business agendas rather than someone elses,” Gillis said during an interview with Informilo.
Google’s Android still gets lots of the buzz but so far it has only been installed on one handset. Samsung and other manufacturers who are working on Android phones say they will not unveil them in Barcelona.
Microsoft, for its part, is still signaling that it intends to play a major role in mobile but ironically, given the success of notebook computers being sold by mobile phone operators, Windows XP might end up being a far more successful mobile platform than Windows Mobile ever was, says John Strand, founder of Strand Consult, a mobile phone consultancy in Copenhagen.
Many operators are spreading their bets by joining all of the organizations representing competing operating systems. They are also making defensive moves by launching their own App stores, in the hopes of getting the 90% of customers that today do not use mobile data services to become regular consumers.
Analysts such as Strand remain skeptical. Operator run App stores are just an updated version of the walled garden approach of portals such as Vodafone Live! and Orange World, says Strand. It didn’t work then to attract the masses and it won’t work now, he says. “You don’t open a bookstore if you want to teach people how to read,” he says.
Operators would do better to come to a fairer profit sharing with content providers, says observers. They question just how many mobile phone users worldwide will be consuming Internet services on their mobile by the time the industry gathers for the annual Barcelona meeting next year. The answer may very well determine who survives long enough to come back to taste the tapas and swig the Rioja in 2010.