TMCNet: Certainty in the Fragmented Mobile Handset Marketplace
TMCNet Column - Mobility Matters: Device Management Insights
by Matt Bancroft
Many technology industries are dominated by a single supplier. While this can have both advantages and disadvantages, it is clear that the mobile device marketplace is not such an industry. Instead, the mobile device marketplace is fragmented and highly competitive. No single supplier dominates market share for either the mobile handsets themselves or for the operating systems on which they run. Looking ahead, there will be no quick consolidation.
There are drawbacks to having a dominant supplier in a marketplace. In high-school economics, this is known as a less-than-competitive market, which can bring with it a range of impacts from high pricing to reduced innovation and inferior functionality. However, having a dominant supplier leads to increased certainty, which can have benefits for many players in a marketplace, especially in technology-based markets, which are characterized by a high rate of change. An enterprise CIO, for example, wants to pick a solution that meets the company’s needs. Just as importantly, they want to be sure that the solution will continue to be upgraded and supported. Buying from a dominant supplier is a low-risk decision from this perspective. On the other hand, while consumers want products that meet their needs, they also may base their buying decisions on simpler criteria and/or incomplete information. For consumers, a dominant solution signals value and a low-risk choice. Another set of key players in a technology ecosystem are third-party application developers and solution providers. Because they build extensions and add-ons to core products and technology platforms — usually with limited resources - they want to be sure that they invest their time and effort on platforms that will succeed. For third-party solution providers, a dominant solution is both a low-risk choice and a means of addressing a wider marketplace.
The Microsoft Windows operating system is, perhaps, one of the most famous and well-known examples of a dominant technology solution in its category. However, there are many other examples in the technology landscape, for example: Oracle in database management systems, Intel in PC processors and SAP in enterprise resource planning software.
THE MOBILE MARKET - FRAGMENTED FOR THE FORSEEABLE FUTURE
Mobility is already one of the most fundamental technology innovations in history. The number of people in the world with a mobile phone is expected to reach 4 billion by the end of 2008 - more than 60 percent of the world’s total population (http://www.cellular-news.com/story/33811.php). Not only is the industry targeting its next billion subscribers, but it also wants to up-sell the current subscriber population with new advanced services and devices. Although Nokia holds the largest mobile handset share - consistently shipping nearly 40 percent of all devices, there is no single dominant supplier. There are four other large players - Samsung, Sony Ericsson, Motorola and LG - as well an extensive range of smaller players - including Palm, RIM/BlackBerry , HTC, Apple, Panasonic, Sagem, Phillips, NEC, Sanyo, Kyocera and ZTE - many of which provide targeted offerings to specific consumer or enterprise segments.
The diversity of handset suppliers is only half the story. Looking underneath the hood, there is no dominant operating system on mobile handsets either. Symbian and Windows Mobile are deployed on quite a few devices, but RIM/BlackBerry, Apple and Palm have their own operating systems. There is also a lot of industry investment in Linux-based mobile operating systems; Google’s Android (News - Alert), for example, is a very high-profile new Linux-based entrant into the market. In fact, most handset manufacturers not only support multiple operating systems within their mobile device portfolio, they also often have their own closed real-time operating system on some percentage of the devices they deploy.
Today’s mobile handset/operating system marketplace is a long way from the PC operating system marketplace. In fact, by just about any measure, the mobile handset/OS market has become increasingly fragmented over the last 12-18 months, with a number of new entrants into the fray. While this reflects a huge ongoing opportunity in mobile, it also shows that this marketplace will remain fragmented over just about any forecasting horizon. There is almost no scenario that shows the mobile market consolidating around any single vendor.
STANDARDS FOR CERTAINTY IN A FRAGMENTED FUTURE
The industry has recognized the reality of ongoing fragmentation, and has come up with a number of strategies to help bring more certainty into the mobile marketplace. Among these strategies is the establishment of standards. With such a high degree of fragmentation for the foreseeable future, standards enable the devices and operating systems to interoperate on different networks and network software, with different applications, across different mobile operators, service providers and enterprises.
There are a number of mobile standards areas, each of which focuses on different challenges. For example, 3GPP focuses on specifications to ensure that devices and services work over GSM core networks and the GSM family of radio-access technologies. 3GPP2 plays a similar role for CDMA-based networks and radio-access technologies. The Open Mobile Alliance (OMA) provides standards covering a variety of areas including authentication, identity, location and messaging.
The OMA Device Management (DM) working group is an example of how standards help drive certainty. The OMA DM working group focuses on creating specifications to ensure that any device using any operating system can be managed and secured over any radio-access technology on any network. Device manufacturers, mobile operators and software companies agree to the specifications on both the network (server) and device (client) side to support this requirement. An OMA DM-compliant client is deployed on each device, irrespective of the manufacturer or operating system on that device. As these specifications are implemented, it means that devices can be managed and secured in exactly the same way, irrespective of the device manufacturer, model or operating system(s). This creates certainty for all - device manufacturers, software vendors, mobile operators, service providers and enterprises.
Being able to manage and secure devices and the data on them is an important requirement in the mobile world. Standards help create the certainty needed in this fragmented ecosystem. Handset vendors can deploy an OMA-DM client across their range of different devices and operating systems. Mobile operators and enterprises can have confidence that these devices will all be manageable when they deploy them. One clear measure of the success of a standard is the rapid adoption of that standard worldwide. According to research from Ovum, most of the mobile devices in the world will support OMA device management standards by 2009, ensuring that they can be consistently managed and supported.
IN CONCLUSION
In many technology marketplaces, a single dominant supplier creates a level of certainty, driving “safe and conservative” buying decisions. However, the marketplace for mobile handsets and operating systems is fragmented now, and will continue to be fragmented for the foreseeable future. In this market environment, standards are one mechanism that helps to create the level of certainty that enterprises, consumers and application developers want and expect. The broad adoption of mobile standards enables mobile operators and enterprises to manage multiple devices and operating systems while ensuring that key business tasks can be supported consistently across all of them. Consumers benefit from a rich choice of devices, and can base their decisions on whether the device fits their needs. Finally, application developers can ensure that their add-ons and extensions work across different device platforms and operating systems, helping them get the maximum value from their investments.