Mobile vendors set to lose the proprietary battle
It is interesting to see how Apple and Google are threatening the cosy mobile handset market, and how they have been able to steal the lead from Nokia, the international leader in mobile handset innovations. Of course, the battle is far from over but there will certainly be a major shake-up of this extremely lucrative market.
Traditionally Nokia has played the role of market leader and market innovator. However, it will have to be very careful in this instance, as the mobile operators are its major customers. These telcos subsidise the mobile phones and it is crucial for the mobile vendors to be included in the mobile packages promoted by the operators. This requires them to play the same tune as the operators, and that means closed systems, proprietary standards and ways to lock in and lock up customers.
Nokia has launched its own ‘open phone’, similar to the iPhone and the proposed Google Phone, which very clearly promotes open access to the Internet. But the mobile vendors have been careful to limit this promise to the high end of the market, where some of the operators are offering Internet access to their high-paying customers.
In order to position itself in the extremely lucrative personal wireless broadband devices market Nokia has been using advertising slogans such as: “Open to Anything” and “Unlock your Potential”. This is clearly not quite as threatening to the mobile operators, but demonstrates that it also wants a share of the new market.
It will be very interesting to see how the mobile handset vendors will handle this new development of open networks and open systems. It is clear that the future will be driven by these open handsets and if they don’t act swiftly the Internet media companies will take the lead in this market away from the mobile operators.
In this analysis I have focused on Nokia, but of course the same applies to the others –Motorola, Sony Ericsson, Samsung, etc.
Closed systems are in operation in all mobile markets, but perhaps most conspicuously in Japan, Korea and the USA. The European GSM market offers a few more openings, but GSM can equally be locked up – as in Australia, for example, where local roaming is not possible at all (the operators make that service available to overseas visitors only – they don’t care about their own local customers).
With Apple and Google now setting the rules unlocking will be the major development and it will be the mobile operators and their vendors who will pay the price for a decade-long tyranny of closed proprietary mobile phone systems.
Paul Budde
