At last week’s Web 2.0 Summit in San Francisco, Morgan Stanley’s Mary Meeker gave an insightful talk on the economy and internet trends. She asserts that the mobile internet will be bigger than most people think. Her slides are here with the ones on internet trends beginning on page 28. Let’s look a little more closely at the complex, rapidly morphing telecoms market – where the action is now largely in mobile devices. For a pithy overview of the telecoms industry, allow me to copy from that industry’s changes as cited by the eComm conference in Amsterdam that is concluding today:
• Telecom is becoming software
• Today’s model of the telephony and SMS cash-cows will significantly dry up long-term
• “Phones” are becoming general purpose always-on computers
• A march is underway to change how spectrum is allocated and utilised
• Applications innovation is being democratised
• The media industry is converging with personal communications
• Internet-style ecosystems are starting to pressurise the traditional value chain
• Search engines and computer manufactures are encroaching into the space
• App downloads; media content and even communication streams are increasingly routing-around operator’s billing systems
• The telecom kingdom is fragmenting daily.
What is a supplier to do? Let’s look at smartphone operating systems and the Symbian operating system in particular, backed by the likes of Nokia, Sony Ericsson and Samsung, and as of this year, an open source venture. Speaking on the subject of innovation at a London’s Symbian SEE 2009 show yesterday, noted author Geoffrey Moore declared that the only recourse for members of the Symbian ecosystem is to copy as fast as they can the innovations made by Google and Apple, commoditize those innovations, and use Symbian’s huge installed footprint to turn the tables on its competitors – or lose share to Google and/or Apple. In other words, copy Microsoft’s strategy when faced with the upstart Netscape and use its platform to commoditize and integrate its competitors’ functionality. His slides are here.
Moore also predicts that there will only be one winner amongst smartphone mobile operating systems. He expects that within two or three years we will see which one will reach a critical tipping point. In Symbian’s favour, Google he said is disadvantaged by attention deficit syndrome – it keeps on innovating and has trouble concentrating on anything long enough outside its core advertising/search business. Apple he claims prefers to occupy prestige brand positions. Microsoft has problems breaking out of blue collar mobility.
Whilst copying competitor innovations and leveraging a huge installed base may help guard aganst some encroachment, I am not so sure we will see a consolidation in the near term. I suspect mobile ISV’s will continue to have to port to several OS’s for the next decade if they want to grow from tens of millions of dollars turnover to hundreds. Mobile infrastructures vary widely between regions and consumer profiles. Where Japanese demand high sophistication, developing countries need inexpensive basics. An elderly person is likely to use a different handset to that of a much younger facebook, YouTube addict. The sheer size of the smartphone market, diversity in use types and supporting infrastructures have made it possible for different mobile business ecosystems to thrive, unlike the simpler and smaller early PC era that Moore often cites. There is room in the mobile market for diverse approaches, devices and ecosystems – so fragmentation will probably continue for at least a few more years.