Smartphones Reignite the OS Wars

Smartphones have become the preferred computer of the masses. Sales surpassed
those of personal computers in 2010, having grown over 50% per year for
several years. Nearly 500 million smartphones shipped
in 2011. This radically shifts the terrain in the consumer operating
system competition that was, for years, firmly decided in favor of
Windows. This article analyzes the New OS Wars.This chart shows how, over the past three years, smartphones have
decimated Windows’ long OS dominance in popular
computing.

The_OS_Wars

Source: Horace Dediu of Asymco


Tablets play a role in this change, too. TechCrunch projects
iPad sales of 66 million this year. Forrester Research optimistically predicts
that tablet sales will explode to 375 million yearly by 2016.

Smartphones are killing off dumb feature
phones.
The shrinking light blue shading at the top of the chart below shows
the
rate at which feature phones are losing market share to smartphones in
the U.S.:

Smartphones Installed Base

Sources: Asymco
and comScore


The chart also shows that Android and iOS market shares grew greatly,
while those
of Palm OS/webOS, BlackBerry OS, and Windows Phone/Mobile dwindled.

Now, let’s consider the future. Here is International Data
Corp’s
projection for world smartphone OS market share in 2015, contrasted
with real 2011 numbers. These estimates show Android and iOS doing
well over the next several years, with minor decline for BlackBerry OS
and major decline for Symbian OS.
The key point here — one that some other predictions dispute — is
that
Windows will dramatically come back in the market.

Smartphone OS Market Shares

Source: Mobilemancer
and IDC

Winners

Google Android and Apple iOS are the big winners in the
new OS wars. Results over the past two years show dramatic growth
for
both. IDC projects that Android will gain another 5 to 10% market
share by 2015. They believe that iOS will retain about the same market
share in 2015, but
this still represents a cummulative annual growth rate (CAGR) of 17.9%
for
the OS, given the rate at which the total market is growing. (These
predictions exclude tablet sales, an area in which Apple currently has
a huge lead.)

Windows?

Windows is the big question mark in all smartphone predictions.
Microsoft’s
smartphone market share has atrophied over the past couple years and is
only
about 5% of the worldwide pie today. In response, in February 2011
Microsoft inked a deal with Nokia, which agreed to
replace its popular Symbian OS with Windows Phone. The duo debuted
their first
Windows Phone 7 devices in 2011. Analysts
were generally positive about the products.

Microsoft’s goal is to create a third “smartphone ecosystem” to compete
with Apple iOS and Google Android. To that end it has not only signed
on
Nokia but also other partners including HTC, Dell, Samsung,
Acer, Fujitsu, and ZTE.

One challenge Microsoft faces is whether it can get developers on
board to create a viable universe of apps and downloadable content. The
New York Times estimates
that Windows Phone has over 70,000 apps, versus 600,000 for Apple
and 400,000 for Android. Beyond the numbers, there is the question of
whether Windows Phone has the right apps: those the public wants.
Microsoft pays
developers to join in. While some analysts see this as a sign of
weakness — which it is — I also see it as an astute move. Some
companies with Microsoft’s history might be too inflexible
or arrogant to pursue this necessary strategy.

Another issue is whether the Windows brand is a draw or a
liability. Microsoft believes it’s a big plus. They’ve kept the
Windows name and have even gone so far as to combine their smartphone
and
laptop/desktop operating systems. But it’s possible smartphone buyers
will see Windows as a legacy OS rather than a cutting edge offering.
(Do you want IE on your phone? How about Windows malware?) My feeling
is that the Windows brand will attract consumers and turn off the
technically-oriented.

The Microsoft – Nokia partnership presents interesting asymmetries. For
Nokia, it’s do or die. They’ve bet their company on this. In
contrast, Microsoft could survive a failure. It is diversified
with its sales of personal computer, enterprise, and gaming software.
The two
companies have different geographic strengths. Nokia sells best in
Europe and Asia, whereas Microsoft’s trump card has always been its
U.S. monopoly. Will these two
companies synergize? Or is this a mismatch?

My guess is that
consumers will give Windows Phone a fair test. If the
software is appealing and featureful, and if the apps are those
consumers want, there is room for a third smartphone
ecosystem to grow and prosper.

Niche Systems

BlackBerry OS — Only a few
years
ago, “BlackBerry” was synonymous with “smartphone” among North
Americans. But failure to respond in a timely fashion to the dual
challenges of Apple’s iPhone and Google’s Android are slowly but surely
reducing
RIM’s market share.

A recent article titled “RIM
To Give Up Most Consumer Markets
” quotes RIM CEO Thorsten Heins as
conceding the consumer smartphone market in order to concentrate on its
business customers: We plan to refocus on the
enterprise business and capitalize on our leading position in this
segment… BlackBerry cannot succeed if we tried to be everybody’s
darling and all things to all people. Therefore, we plan to build on
our strength.”

If RIM indeed concedes the consumer market, BlackBerry OS will lose
market share faster than the above IDC
projections. RIM could end up with a strong niche serving business
customers.

Symbian OS — Symbian OS has a
larger presence in Europe and Asia than in the United States. Symbian’s
market share will recede
as Nokia pulls its support from the OS in favor of its
deal with Microsoft for Windows Phone. Nevertheless, over 400 million Symbian
phones have been shipped over the lifetime of the
OS.


webOS —
webOS
was
introduced by Palm, Inc., as a successor to Palm OS in 2009.
Hewlett-Packard acquired webOS in April 2010, intending to use it in
smartphones, tablets, and printers. Since then HP
has backed off its aggressive plans, and in December 2011, it announced
it would open source webOS.

Does open source webOS have a future? It all comes down to whether
OEM’s use it and developers accept it. I believe that if Microsoft can
grow a Windows smartphone
ecosystem, a fourth ecosystem won’t be viable. WebOS will
be confined to niche status.


Bada, Tizen, and Others — There
are many other smartphone OS’s around, including Samsung’s Bada and Tizen
(evolved from MeeGo). Like webOS, these could be useful to
consumers and profitable for vendors, but I doubt any will achieve the
major market share required to become a third smartphone ecosystem. All
will be niche products.

Summary

Smartphones are now the preferred computer of
the common man. Sales are exploding; soon almost everyone will have
one. Smartphone
operating systems hugely impact overall OS market shares. iPads and
other tablets will also have
an affect. After years of stasis, the rise of the handhelds is
shaking up the somnolent market for personal computing operating
systems.

Google Android and Apple iOS are the big winners in this
OS shakeup. BlackBerry OS and especially Symbian OS appear
destined for lesser roles in the future. Samsung has a good niche with
Bada. webOS and Tizen might become niche products
or they could fail altogether.

The big question is whether
Microsoft and its partners can nurture a third smartphone ecosystem. If
so, we’ll have three dominant standards and a handful of popular niche
systems. Otherwise the Android/iPhone duopoly continues, with small
market share for Windows, and larger
possibilities for niche alternatives.

– – – – – – – – – – – – – – – – – – – – – –
Howard Fosdick (President, FCI) is an independent consultant who
supports databases and operating systems. He also consults for vendors
as an industry analyst. Read his other articles here.

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