Already the number of mobile phones world-wide is greater than the number of
desktop computers. Pundits claim that the market for mobile devices will
continue to expand, and will become the big revenue earner in the next few
years.Devices are becoming more complex. Gone are the days when a mobile phone was
used just to talk to someone else, now it's likely to be used for text
messaging ( SMS ), surfing the internet or to be some hybrid phone plus
personal, digital organiser combination.
The Japanese have lead the way with their i-Phone technology, offering
live video, gaming, betting, live music and MP3 playback. Europe is coming up
quickly on their heals, but the USA lags far behind in the technology stakes.
This is perhaps why the European manufacturers of mobile phones have been so
optimistic about their future; with Nokia,
Ericsson and
Philips seeing a chance to actually lead
the way in America rather than trailing incoming leading-edge technology.
The scope for opportunities is massive; the choice of products which can be
made 'must haves' for today's technologically aware is staggering - from
traditional handsets, WAP capable phones, so-called
'smart phones' and 'communicators', a wide variety of Mobile Information
Devices ( MID's ), Wireless Information Devices ( WID's ) plus a number of
Personal Digital Assistants ( PDA's ) which can have wireless capabilities
bolted on - even digital cameras and MP3 playback.
Technologies such as Infra-Red ( IrDA ) and Bluetooth are becoming all
pervasive, as are the 'over the airwaves' technologies such as GPRS, WCDMA,
2.5G and 3G.
If we are to believe the pundits, then the future of the mobile
telecommunications business is very bright indeed.
However, all is not as we had been led to believe just a few months ago.
Whilst UK mobile service providers reported record increases in customer
numbers for the Christmas period, other reports from the phone industry itself
are less than enthusiastic; ambitious predictions are being trimmed back, profit
warnings are being issued, share prices are dropping and there appears to be
increasing doubts about the technology delivering what it promised.
The first signs that something was amiss, was the UK auction of the 3G licences
which made obscenely massive amounts of money for the Treasury but has taken
huge wads of cash from those wanting the licences.
When British Telecom start making noises about its
financial situation, it must be asked how badly the expenditure has affected the
less established players ?
When it is obviously a goal of the new licence holders
to recoup this money from its customers, it has to also be asked, how they are
going to convince their punters to move to more expensive ( or as the industry
would prefer us to call it, "value added" ) services ?
Where is the Killer Application which is going to make us throw our old
phones in the bin and move to new ones, and make us do this every time there's a
new technology rolled out ?
When phone ownership reaches saturation point, there are very few ways to make
money other than by way of adding extra services, hoping users will move with
the technology or relying on people replacing phones as old ones wear out.
Do people really want to surf the web or watch some low resolution video on a
one inch square screen ?
It would seem that the phone industry itself has overcome its euphoric vision of
a brave new phone-enabled world and vast riches, and has reigned in its
optimism a little. Most manufacturers are now predicting sales ( although still
significant ) to be lower than expected in the near future.
Both Motorola and Ericsson have closed down
in-house, phone manufacturing divisions and have announced their intent
to re-focus on core business. Share prices have tumbled, and this is on top of
an atrociously bad performing NASDAQ over the last year.
Of central importance to the future of the industry is the technology, both the
way the phones interact with the service providers, and what makes the phones
'tick' inside.
A variety of technologies which link phones to their base stations are in the
pipeline; GPRS, WCDMA, 2.5G and 3G. The one thing they all promise is high
speed connections for downloading non-voice data. Coupled with 'always on'
instant connectivity this looks promising for the consumer, but the utopian
dream has not arrived if we look at the results so far.
WAP technology has not been the overwhelming success it was meant to be, with
many users finding it difficult to use, and content providers having difficulty
making their content appear on the array of devices which do support WAP.
The British Telecom roll-out of GPRS never delivered the data rates promised,
and due to changes in the GPRS standard, means that phones will have to be
recalled and upgraded.
Upgrading is one fear that users always have. If the phone is not designed to
be upgraded, then you are stuck with what you bought, even if it doesn't work
or technology moves on. Of course, making phones upgradable, with Flash Memory
and other technology makes them a lot more expensive than traditional designs,
and the users don't want to spend extra money on them.
What's inside a phone which needs to be upgraded is where the other great
battle looms.
The 'operating system' inside the phone is what handles the user's key presses,
puts messages and images on the display and provides the 'applications' which
are built into the phone. For a simple, traditional phone, the choice of
operating system may be pretty much irrelevant, but when the phones become
more complex, offering WAP and Web browsing, email, address books, word
processing, games and all manner of other things, the choice is important.
There are four major players in this arena; Palm, Microsoft, Symbian and Linux.
Palm and the Palm based Handspring Visor have dominated the PDA market, having
seized over 80% of the world market. They are a formidable force but do not,
according to some technologists, have a solid operating system suitable for
the wireless market. Their advantage is that the users love its simplistic
and easy to use interface.
Microsoft has attempted to move into the PDA market with its Windows CE
offering, which on its third reincarnation has actually started to attract some
interest, and has the advantages of user familiarity ( being the dominate PC
operating system supplier ), the resources of Microsoft to push it along and
the incredible marketing machine which they have. The detractors argue that
it's still a clunky operating system, has large power requirements and is none
too stable. On the other hand, it can now be found in Compaq and other PDA's
and is promising to appear within mobile phones shortly.
Although the mobile phone companies seem to be supporting Symbian, it appears
that Microsoft have been able to capture the attentions of the smaller handset
manufacturers, and we could easily see some small upstart battling successfully
against the dominant players with Microsoft's backing.
Symbian consider themselves a serious competitor to both Palm and Microsoft,
despite being a relatively new company, and having little market share at the
moment. Evolving from the UK company Psion, who joined with the big five
mobile phone manufacturers to create it, it has the potential to see its
software embedded in most of the phones produced. Symbian's goals are much
less ambitious, and realistic, expecting to become highly successful without
having to get anywhere near 100% domination.
The future for Symbian seems a little unclear, despite its EPOC operating
system appearing in the Ericsson R380 and the recently announced Nokia 9210,
Psion have been going through particularly rough times. With a Symbian
flotation originally touted to be on the cards in 2001, Psion has always been
looked at as a measure of the Symbian brand value.
With Psion's share price having crashed from a 14 GBP high to under 1 GBP
over a year, worrying murmurs have been heard. The announcement that
Motorola have pulled out of a joint development with Psion ( leading to project
cancellations and job cuts ) hasn't helped,
nor have rumours that Palm are to take over Psion. The phone manufacturers
have declared their intention to stick with Symbian and proclaim great
faith in its offering, but this must be set against the fact that they are at
least talking to other operating system suppliers.
Psion seem less than confident about the future of the mobile market, the
future for smart-phones and the future of Symbian itself. The recent
declaration of 'challenging times ahead', could easily be read as a euphamistic
echo of genuine worries from the top of the company.
Symbian is perceived as a solid European company, which matches well with
Europe being at the forefront of wireless technology. However, neither it, nor
Psion, have had much historical success in the States.
Draining tens of millions of dollars from its shareholders each year, without
showing much return on that investment, EPOC may be as much a wildcard as is
Linux.
Linux, the favourite operating system of 'Geeks' and of anti-Microsoft World
Domination Scenarists is a free 'open' operating system which has found
a variety of uses from large-scale servers, desktop machines and right down to
embedded appliances. It is arguably suitable for use in PDA's and other such
mobile devices and phones, and has been demonstrated running on a number of
commercial devices intended to run some other operating system.
Linux has come a long way over the last decade, moving from a somewhat archaic
command line operating system ala MS-DOS to a system which some say is easily
comparable to Windows. Its ability to be used in an incredibly small memory
foot-print, plus the fact that it is royalty free, should make it an attractive
proposition for manufacturers; why pay royalties for a commercial offering when
you can get an equally capable operating system for free ?
The arguments against Linux - it's written by amateurs, supported by amateurs
and isn't a corporate product - have been battled out in the desktop market,
but could well surface again. The advantages - a large developer base, free
source code and a sturdiness that has been well proven over the years - may
swing in its favour.
Which operating system dominates, or perhaps more correctly, gets enough
market share to remain viable remains to be seen. In truth, it is likely that
all will succeed in the short term, with the final outcome being based upon
what it is the user wants and which can actually deliver the technology the
manufacturers need.
The battle raging, does not however make the current mobile market look any
more stable though.
My personal opinion is that the final outcome will be phones running Linux with
a Palm-style User Interface ( UI ) bolted on top. The combination of a free,
easily updated and tailored operating system, coupled with a User Interface
which has already captured the hearts of users must be a combination hard to
resist.
It has the advantage of low development cost, minimal royalty payments and a
familiarity which users will easily accept.
Microsoft will use its corporate standing, and blind determination, to remain
in the running, and prevent itself losing face. Symbian may secure a niche
market, especially amongst manufacturers who are adverse to joining with
Microsoft and want to offer a variety of phone products. The need to recoup the
heavy investment made in Symbian will surely keep it alive in some quarters for
some time.
The Japanese are starting to cast an eye over the European markets and, should
they step in to compete, a whole new competition will commence.
Given the uncertainty over which technology will prove to be as successful as
promised and the uncertain outcome in the operating systems war, I would be
very wary of backing anything as a 'sure success' at the moment.
The mobile industry has expanded extremely rapidly and has had high expectations
for the future, but is now showing signs of pessimism which weren't there
before.
On top of this, there still remains fears about the safety of mobile phones,
both in terms of their use and the effects that transmitter aerials have.
Whilst there has been no confirmed scientific evidence that either are hazardous
to health, there is plenty of annecdotal evidence to suggest there is a risk.
Many claim that mobile phones can cause tumours and German scientists believe
they have proven that their use can cause eye cancer.
The industry, and many governments, have been quick to point out that there is
no conclusive proof of any dangers; which of course is entirely different to
saying that is proven that they do not have any effect. The British Government
has stated that mobile phone usage by teenagers should be limited, acknowledging
that there is at least the possibility of danger.
Kent County Council has banned the erection of phone masts on the land which
it owns, reflecting the concerns and reservations of those it represents.
In America, a court action, reminiscent of the legal battle against tobacco
manufacturers, has been started against sixteen mobile phone makers alleging
that they knowingly manufactured and sold devices which are injurous to health.
If such a case goes against the manufacturers, they will be looking at massive
compensation claims which could devestate the industry and destroy customer
confidence.
These are exciting, but also worrying, times for mobile phone manufacturers and
I would not like to bet on who the winners and losers will be.
