Mobile Movement

The mighty fall, upstarts rise, and nothing is guaranteed.

Comscore published their periodic post of positioning between portable platform providers (tell me when you get sick of my constant alliteration … it won’t stop me, but I do like the feedback).  Of interest are instances where major players are advancing, retreating, or showing signs of stagnation.  In Comscore’s latest totable techno tout sheet we see:

RIM:        42.1% rising slowly (+1.3)
Apple:      25.4% stagnant (-0.1)
Microsoft:  15.1% falling fast (-4.0)
Google:     9.0% and rising fast (+5.2)
Palm:       5.4% and sinking (-1.8)

Most noteworthy and yet most predictable is Microsoft’s plummeting while everyone else is either growing or staying steady.  Microsoft’s mobile operating system has been derided, insulted, defamed and dismissed by many, for sound reasons.  Unlike competing platforms, one routinely needs to buy a new handset whenever Microsoft releases a new OS (I say this with my tongue buried deeply into my cheek given that I carried a Windows Mobile 4 phone for seven years, much to the chagrin of my carrier).  A friend of mine who works for Microsoft complains he has to reboot his smartphone hourly.  Rumors have it that Windows Mobile 7 will fix all that … just the way Vista fixed XP security issues and with the same smooth migration path available from XP to Windows 7 desktop.

Google’s rise up the ranks is also predictable given market dynamics.  A certain sector of every technology market wants portability, not wishing to be tied to any vendor.  With Microsoft unable to provide stability, features or upgrades, with RIM being perfectly proprietary and with Apple … well, being Apple and iPhones being the center of a walled garden that rivals Eden … the Android OS was an obvious choice for free range geeks.  Given that Android 2.x is well crafted, that Google added some excellent back-end features, that HTC seems to adore the OS, and that Verizon promoted Droids to death, Google’s rising fortunes are to be expected.  My prediction is that they will continue this pace for a least a few more years, perhaps to a market dominance point.

Most interesting from a market dynamics perspective are RIM and Apple.  Being the big dog and specializing mainly in email junkie codependence, RIM has less growth opportunity than the other vendors.  Yes, they remain competitive, but the core of their market advantage — being perpetually plugged into email pipelines — is not well protected.  All smartphones can do email, and people who do not need spam pushed down into their handsets at all hours do not need Crackberrys.  Thus, the market share upside for RIM is capped given their current whole product strategy.

Apple, however, is oddly immobile.  For all the iHype, iPhones are now stuck.  A unique and perverse set of market forces are at play, conspiring to keep iPhones at their current position.  First, the anti-lock-in crowd wouldn’t own an iPhone even if Steve Jobs was included as a toy prize (if his personal fortune was part of the deal, there might be room for negotiation).  As other vendors provide similar or even superior features, iPhone cachet will fade.  Take the Nokia 5800 Navigator for example, which is arguably a better utilitarian handset for a fraction of the price.  Unless you are an app addict, the iPhone offers no stellar competitive advantage.  Finally, the financials of iPhones, and most higher-end handsets, are driving the unlocked market, which is oddly where Android is well positioned.  It is no wonder that Apple is slightly declining in market share and will stay sluggish until they launch across all major carriers.

Let’s not bother discussing Palm … it is too painful.

Since we do discuss strategy at Marketing Memos, what we are witnessing here are some common strategic marketing moves and mistakes by the various parties.

Trends: One trend in the smartphone market is toward unlocking handsets.  It is an inevitable trend that will affect handset makers and carriers alike (get ready to abandon mandatory data plans AT&T and Verizon — those days are numbered).  When there is a trend you can either ride the trend, fight it, or pray that you maintain your market share.  Apple and RIM are fighting it, Google is riding it, and Microsoft has bigger problems.  One point for Google.

Saturation: Though we are not their yet, the smart phone market (at least in North America) is rapidly saturating.  Chasm theory tell us that within a couple of years, only late adopters and laggards will be left.  Selling to slowpokes (all other things being equal) requires dropping prices or finding mass market plus-one features others overlooked.  Again, Google is altering the landscape by basically giving away the OS, and having it developed with Open Source efficiencies.  This starts the downward price spiral and makes retailing unlocked handsets even more practical.  Two points for Google.

Faddism: All fads die, and if one doesn’t, then it is not a fad (kinda like food and nookie — they never go out of style).  Handsets provide utility, be it playing games, watching videos or posting onto Facebook.  I hear you can even make telephone calls with some handsets.  Once all features desired by all major market segments are available on all mobile OSes, we will achieve a commodity state in handsets.  There is now a horse race to see who can capture the greatest lasting mindshare of the most market segments.  Apple has the fanboys, RIM has road warriors, Microsoft has lost, and Google own the technoids though their eyes are set upon the broad consumer market.  Since Google will make their money tangently via advertising, since their app market will help to create the whole product, and since they are driving down the retail price of unlocked handsets, I would wager that Google will quickly surpass Apple in total market share.  Three points for Google.

Sure, there are some wildcards to play.  Nokia bought Navteq and now bundles GPS software and maps on their phones, reducing you gizmo collection by one.  For all the jokes, the latest Symbian OS works well, the tactile feedback screen it more usable by broader audience, and Ovi Maps is an interesting value add.  Google requires you buy wireless data to use GPS.  Nokia says you can ignore data because the maps are built in.

The marketing lesson is that markets change, and you must always beware of change agents with different business plans than you have.  Apple, RIM and Microsoft want to make money on software and hardware.  Google wants to make money by owning the experiences of everybody and feeding their advertising engine as a byproduct. This eliminates their software profit motive and thus creates a direct threat to the three top competitors.

If you see a familiar but desperate looking face on a street corner giving away handsets, be sure to say hello to Balmer for me.


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