[Where's Google's Android going? Guest blogger Ben Hookway uncovers the race for low cost Android taking place behind the scenes of the mobile industry, and how this may change the face of Android as we know it]

Low cost Android devices have been forming a large part of R&D activity for some time now. Behind the scenes of the mobile industry all major players – including semiconductor vendors, software vendors, software services companies, ODMs, OEMs, and network operators – are putting considerable resources into rolling out low cost Android phones. It’s a silent revolution in the making that, once set in motion, should see Android shipments lift off from the single-digit millions.

So how low is ‘low cost’? Reports of $75-$110 reference designs are emerging from Asia; these are fully featured touchscreen devices, albeit with an EDGE (2.75G), rather than a 3G baseband chipset.

Why the interest in low cost Android? Low cost means volume which in turn means market share, and a consistent platform for the provision of services. There are multiple parties with a compelling interest in having a low cost Android device.

Semiconductor companies are under pressure to better address the market for  Android platforms. Qualcomm is the overwhelming leader in 3G chipsets for Android phones in Western markets. Their competition such as ST Ericsson, Broadcom and Infineon are responding and a low cost Android niche may be a way for them to break into the current Qualcomm dominance.

The majority of handset manufacturers are investing heavily in Android. With so much effort going into a single platform, there is an inevitable pressure to be able to scale that platform on as wide a range of phones as possible. While the lion’s share of press coverage is on ‘smartphones’, the mass volume still is in lower end devices.

Network operators are already developing and deploying ‘operator packs’ comprising of specific operator applications and service enablers, designed to run on Android devices. Longer term, Android may end up affording operators the standardised  platform for devices they have been craving for years; a standard platform they can consistently deploy their own ‘pack’ on. That’s assuming operators can gain access to low cost, mid-range Android devices on which they can deploy standard operator packs on and therefore extend the operator experience to the mainstream consumers.  Moreover, with subsidies widely practiced in the mobile industry, it is in the best interest of the operators to reduce the cost of Android phones.

Read the rest of this entry »

[Calling all developers: VisionMobile launches the most ambitious developer research to date. We also take the opportunity to look back at our past developer research to present some of the most interesting findings]

We ‘ve recently launched what is probably the most ambitious mobile developer research to date – benchmarking the developer experience across 400+ developers, all 8 major platforms (iPhone, Android, Symbian, Java ME, RIM, Windows Mobile, Flash Lite and mobile web) and the entire developer journey.

The project has been sponsored by Telefonica so that the research findings can be made freely available and widely publicized.

The most ambitious mobile developer research to date
Our research will take a closer look at developer needs and expectations by examining all aspects of the development life cycle, from design to delivery. More specifically, we’ll be looking at platform selection, platform features & application design, code development, tools &debugging, developer support, go-to-market and application marketing – as well as covering hot topics like open source and the future of network operators.

We ‘ve spent a long time in planning, peer reviewing and logistics of the research. Our methodology includes 200 one-on-one developer interviews over the phone in addition to an online survey and an in-depth hands-on platform benchmarks; we ‘ve designed this three-pronged methodology to combine quality, consistency and depth of analysis in what is the most ambitious mobile developer research to date.

Calling all developers
Are you a mobile developer? Register at visionmobile.com/developers to participate in our research via 30 minute one-on-one interviews.

We ‘re giving away a free MWC pass, a 500 EUR Amazon voucher and 20 wallcharts of the Mobile Industry Atlas which will be drawn out to participants. But do hurry, as the free MWC pass is only valid until Friday 5 February.

We have been excited in launching this project, as we believe this research will become a seminal point of reference for developer research, and provide new insights into every aspect of mobile application development. Plus – thanks to the generous sponsorship of Telefonica, the results will be freely available and widely disseminated in Q2 as part of the report Developer Economics 2010 and Beyond.

Cross-platform insights from our earlier survey
In view of our latest research, we’d like to share some noteworthy findings from our earlier developer research project.

Our research carried out during the first 8 months of 2008 included an online survey; we polled over 350 mobile developers across 60 countries and 5 platforms: S60, Android, Java, Windows and Linux.

We ‘ll share a small subset of 6 questions out of 40+ we polled during that survey – in what will probably be a small appetizer prior to the main course, i.e. our Developer Economics 2010 report coming in Q2 2010.

One of the most important questions we asked was also one of the most naive ones: What is your favourite mobile OS or platform?

Quite understandably, the S60 users and professionals went for S60 or Symbian in general, Android fans went for Android and so on. However, this is only half of the story.The Java group was the least ‘faithful’ to its platform, with only 62% of respondents citing Java as their favourite platform. The highest percentage of ‘faithful’ developers were those working with Linux, with 92%.  Linux was also the most popular platform, stealing away 3% of S60 and Java users and 7% of Android and Windows users. The next graph shows preferences for platforms, based on platform selected for survey. Note that all graphs are normalized to a total of 100 developers.

What is your favourite platform?

The next logical question after the ‘what’ is the ‘why’. Why is this your favourite OS or platform?

The answer on most people’s lips was ‘ease of use’, followed by ‘rich APIs’. ‘Faster to program with’ and ‘better dev tools’ were also popular answers, while financial and self-promotion reasons were almost non-existent.

How the world has changed in just under two years; post iPhone App Store, monetization and addressable market are much higher up in the agenda of mobile application developers.

Why do you prefer this platform or OS?

The most important factor in selecting an OS or platform was ‘feature-rich APIs’, while the least important was ‘responsive and accessible technical support’. It’s worth noting that Android developers seem to go for rich APIs, having the highest percentage, but complain about the lack of documentation (esp. in those early days of Android).

Most important factors in an OS or platform

In terms of the IDE, the vast majority of respondents believed theirs was lacking in terms of the UI editor for apps – which was particularly painful for Android and Java at that time. A well-integrated toolchain was another major pain point in the IDE for most developers.

What does the IDE lack?

It’s love or hate time! We’ll start with what developers love in their platforms. ‘Easy to use the APIs’ was the most popular answer, followed closely by ‘access to all APIs’. Linux and Android users were particularly impressed with access to all APIs, a sentiment not at all shared by their S60 colleagues. Windows users mostly went for ‘productivity due to the tools and environment’, while Java users preferred the ease of use of the APIs.

What do developers love about their platform?

What do developers hate about their platform? Well, most of them seemed peeved with the difficulties they faced in reaching the market; a reason that is mostly relevant to the way the market is set up (or was setup – in the pre- iPhone App Store era), rather than a fault in the platform. The main inherent fault most people found was the disparity between emulator and device performance, a view shared by all platform users except Android. Android users were also pleased with the production cost of the apps, as well as the support their platform offered. Unsurprisingly, less than half of the developers found something bad to say about their platform.

What do developers hate about their platform?

Of course the world of mobile development has gone through a sea of changes in the last two years. Apple introduced a single platform to target 50+ million handsets. GetJar, Apple and others paved the developer-to-consumer route to market. Google led the open source wave with the majority of the device platform published under a non-copyleft license. Adobe went back to square one introducing the Flash and Air runtimes to replace its fragmented Flash Lite installed base. And Palm left a thriving Palm OS developer community die a slow death. Mobile application development has gone through a roller-coaster history, with even more twists and turns behind the next corner.

So – stay tuned. The Developer Economics 2010 will tread new ground in understanding mobile developers, across platforms, regions and across the entire developer journey – and thanks to Telefonica’s sponsorship – we ‘ll be publishing the insights from the research far and wide.

Join in or spread the word!

- Matos

[Thought Android and iPhone are taking over the world? Think again. The device platforms map is more fragmented than ever, while the media hype distorts the commercial reality. Guest blogger, Guy Agin goes behind the Smartphone craze to redraw the landscape of mobile platforms]

The Smartphone Craze
The other day I was reading some of the usual hype-induced reports on the Smartphone revolution. Wanting to put things into perspective I pulled out some old Smartphone forecasts from 2004-2005 by the likes of IDC, Informa and Ovum.

In those pre-historic days the main Smartphone contenders were Symbian and Windows. Blackberry was still an insignificant niche, and touch screen devices were still clunky stylus based UIQ phones and iPAQs. Yet surprisingly, the average Smartphone share of shipments that was forecast for 2010 was …about 30%. So even without the Apple & Google revolution fanning the flames, many analysts believed in the mass migration to Smartphones.

Reality check: by looking at the numbers for the first three quarters of 2009, it appears that last year there have shipped no more than 170-180 million devices considered to be Open OS Smartphones. Indeed Symbian, Windows, iPhone, Blackberry, Android, WebOS, LiMO and Maemo taken all together still only constitute about 15-17% of shipments. This percentage is in fact much lower than the 2009 Smartphone share predicted a few years ago by many research companies.

Why is this interesting?  It shows that hype can cause people to overlook the simple facts.  Despite the hype, Smartphone penetration seems to be following a gradual path which will eventually, in the long run, see Smartphones dominate shipments, revenues and installed base, but Smartphones are far from being an overnight revolution. In this light, mobile operators and software providers planning device platform strategies need to look at the opportunities going forward in a balanced, realistic way and not base it on hype.

Read the rest of this entry »

[Where is the app store frenzy heading after all?  Guest blogger Francisco Kattan discusses why it’s a winner-take-all game]

2009 was the year of the app store wannabes.  Following the remarkable success of the Apple App Store, OEMs, mobile platform vendors, mobile operators, and traditional aggregators either created new app stores or repositioned their existing offerings as app stores.  There are now between 24 to 32 app stores depending on who is counting (see Distimo’s app store report and the WIP App Store Wiki for reference), and more stores are surely to follow.  However, key questions remain about how the app store landscape will emerge after the current period of hysteria subsides and the dust settles.

- Are we going to see many app stores on each handset?
- Will app malls emerge to host multiple app stores within?
- Will operator stores gain critical mass?

Andreas Constantinou wrote an excellent article that defines the app store building blocks and predicts a “dime-a-dozen” app store future.  I will build on this post, but will offer an alternative view of how the landscape will evolve.

It’s a Winner-Take-All Contest
If we were to extrapolate the current trend, we could expect a future where each handset will host many app stores.   An LG Android device on the Orange network would have the LG App Store, the Android Market, and the Orange App Shop.  The Verizon version would have the V CAST store in place of the Orange App Shop.  On top of this, you could add the Getjar multiplatform store and several specialty stores for say, games, health, and productivity apps to name just a few.  Can you imagine the mess this would create for the user experience?  Which app store do I launch? Which apps do I find on which store? Are apps duplicated on multiple stores?  Are the prices the same across stores or do I need to shop around?  Are the versions of the apps consistent across stores?

Fortunately when the dust settles consolidation will occur and one app store will command nearly all the market share on each device.  Sure there may be a couple “also rans” with a small share, but as history has shown us, these two-sided platform battles tend to result in winner-take-all contests (see definition of two-sided markets here).   We’ve seen similar battles already play out on the web with Amazon winning e-commerce, eBay winning auctions, and Google winning search.

Why winner-take-all markets happen has already been well documented.  Economists Frank and Cook documented this phenomenon with their Winner Take All Society book and Rich Skrenta wrote a nice post on the battle for search supremacy that led to Google’s reign. In two-sided markets there are two sets of users (consumers and developers in the case of app stores) and once both sets of users pick a winner, it is very hard for competitors to gain much share. To cut to the chase, the app store battle in mobile will also result in a winner-take-all contest for the following reasons:

• Low switching costs.  Given how easy it is for a consumer to switch from one app store to another, any advantage of one store, even if small, will cause more consumers to visit the better store. Why buy at the world’s second best store when the best store is only a click away?  This initial advantage could be in terms of time-to-market, quality or quantity of applications, user experience, or pricing.
• The word spreads.  Word of mouth, accelerated by social networks, will cause a snowball effect attracting more and more users to the store with the initial advantage.
• Developers vote.  As more consumers visit the winning store, more and more developers will prioritize that store for their applications offering that store an even greater advantage.
• Economies of scale.  As one store gets significantly larger, it will enjoy greater economies of scale and therefore a cost advantage over competing stores.

A positive feedback loop cements the ultimate winner.  The more consumers that visit one store, the more developers will create apps for that store, and the greater the economies of scale the winner will enjoy. This battle will play out on a device by device basis with the Apple App Store already the winner on Apple devices (to be accurate, there was no real battle in this case as Apple’s policy does not allow competing stores).  A battle will play out for say RIM devices on the Verizon network (V CAST versus App World), another one for Android devices on the Orange network, etc.  So while we are initially headed for a “dime-a-dozen” app store landscape as Andreas predicted, over time we will see significant consolidation.  And as the number handset platforms themselves consolidate (surely to happen, but this is outside the scope of this post), we’ll have even fewer stores.

The Two Exceptions that Prove the Rule

• Adult Content.  Niche stores will exist to satisfy needs that, by policy, are not met by the winning store.  Adult content stores such as MiKandi are a clear example.  Another example is Cydia, an app store for jail broken iPhones.
• Enterprise App Stores.  App stores designed for IT organizations to manage application distribution and provisioning within an enterprise have unique requirements that the consumer stores will not meet.  In addition, the low switching costs described above do not apply to enterprise stores.  Examples of Enterprise stores include Mobile Iron and Ondeego.

Think Department Store, not App Mall
Rather than app malls that host multiple stores, the winning app stores will be like department stores with applications organized by category.  Games, health, productivity, entertainment, etc. will be departments within a big store, not specialty stores within a mall.

For clarification I’m defining a “mall” from the point of view of the customer experience, as in the real world.  Customers walk into a mall and discover multiple branded stores, each with its own checkout process.  An example of an app mall is the now defunct Nokia Download. You may recall that Nokia Download (formerly called Nokia Content Discoverer) touted its “advanced shopping mall experience” when it was announced, hosting multiple stores such as Handango and Jamster (called aggregators at the time).

The mall concept does not work because it hurts the user experience for no extra value:  users end up clicking on unknown store brands adding an extra layer of user interface that gets in the way of the app discovery process.  Moreover, if each store in the mall requires users to enter a form of payment the user experience suffers even more.  Although there are more reasons why Nokia Download failed, the user experience of its mall concept was an important factor and as a result Nokia is now busy copying the more successful department store model with the Ovi Store.

This does not mean that there won’t be aggregators behind the scenes.  In fact, the ingestion process could include a publisher like Symbian Horizon or a syndication service like Getjar’s.  However from a user experience point of view, it’s a department store, not a mall.  Amazon is a good model for the winning app stores.  There may be many sellers behind the scenes, but it looks much more like a department store than a mall.  There is one prominent store brand with many departments, a single shopping cart, and a single checkout process.

Will operator stores gain critical mass?
Once upon a time operators had a virtual monopoly for the distribution of mobile applications (depending on the region). Apple changed all that, of course, and the tables are now turned resulting in a developer exodus away from operators (for more on this see My Number One Wish for Operators).   To regain developer mindshare many operators are launching their own “app store style” stores, implementing many of the lessons learned from Apple, including the 70% rev share, developer set pricing, and click-through agreements.  Verizon announced V CAST, Orange has App Shop, O2 is testing Litmus, AT&T has App Center, Vodafone has 360, etc.  But will these operator stores succeed?  I think it depends on the type of device (feature phone vs. smartphone) and on the size of the operator.

Operators lose the app store battle on smartphones, but win on feature phones
Operators have a natural disadvantage to attract developers compared to the smartphone platforms because they are more fragmented.  There are dozens of operators compared to only a handful of smartphone platforms.  Developers are better off working with the small number of smartphone platforms to get worldwide distribution across all operators instead of targeting each operator separately (each with their own SDK, certification requirements, business terms, and fragmented device line-up).  To compensate for this disadvantage operators would have to add much more value with their own stores.  Carrier billing and access to network APIs are areas where operators can add value, but these capabilities are likely to also become available on the native handset stores.  Operators can also differentiate by tapping into their huge advertising budgets to market their apps, enticing developers whose apps are difficult to discover given the unlimited shelf space in the stores.

Another option for operators is to increase store switching costs for their customers by not preloading competing stores on devices they sell.  This would require customers who want to shop elsewhere to find, download, and install other stores on their own.   Verizon Wireless is a good example of an operator trying this strategy.  Verizon does not preload RIM’s App World in favor of its own (upcoming) V CAST store.  However, as operator influence over smartphone providers continues to erode (a trend surely to be accelerated as devices such as Google’s Nexus One are sold directly to consumers), this option will go away forcing operators to truly differentiate their stores, or else. We’ll see how this plays out, but operators will likely lose the app store battle on smartphones unless they find a way to significantly differentiate and do it fast before the native stores consolidate their advantage.

The battle for app stores on feature phones is quite different for two reasons:

• This category of devices is much more fragmented and operators can gain an advantage by providing a common platform across them to attract developers. This approach neutralizes the fragmentation advantage that OEMs enjoy in the smartphone category, as discussed above, and is precisely the strategy that AT&T just announced at CES: AT&T will launch Qualcomm’s BREW Mobile Platform across its mid-tier devices to attract developers for its AppCenter store
• Operators enjoy much more influence over feature phone specs and content than on smartphones.  This will enable many operators to exclusively preload their own stores on these devices essentially blocking alternative stores.

Although the smartphone category is where the growth is, there is still a very large and mostly underserved market at the high end of the feature phone category.  These devices have large displays and often full QWERTY keyboards (touch or physical), representing a large untapped market for mobile applications that operators can serve.

However only tier 1 operators are large enough to attract developers to their own stores.  Even tier 1 operators are better off getting together to form a much larger market to attract developers as we have seen with the JIL alliance or the collaboration between AT&T, Orange and America Móvil (just announced at CES).  Smaller operators will have to rely on third party stores that can aggregate applications and syndicate them across multiple operators.  A good example of an operator pursuing this strategy in North America is Sprint.  Sprint has announced that it will remove its own application offerings from its smartphone line-up and will partner with an external aggregator to launch a white label store for its feature phone line-up.  Other operators will have to follow the same approach.

What are your thoughts?  Do you buy into the winner-take-all argument?  Are we going to see app malls or department stores?  What role do you believe operator stores will play?

- Francisco

[Francisco Kattan has worked in the mobile industry for 10 years and has deep expertise across the entire ecosystem, including devices, operators, developers, and content providers.  Francisco has held leadership roles at Edify, Openwave, Adobe, and currently Alcatel Lucent where he is Senior Director, Developer Ecosystem.  You can follow Francisco via his blog, on Twitter and he can be reached at franciscok [/at/] stanfordalumni.org. This post reflects the author’s personal opinion and not necessarily that of his employer.]

* As an aside, the launch of the iPhone changed the ecosystem so dramatically that we need a new way to measure time in mobile.  Any discussion about how the mobile ecosystem works must specify Ai or Bi (After or Before the iPhone) in the same way historians use BC and AD to date events.

[In our third annual Mobile Megatrends 2010 research we look at the future of web platforms, app stores, revenue models, open source, mobile recommendations, OEM monetisation, and operator strategies]

After many months in the making, we ‘ve released our annual Mobile Megatrends 2010. It’s our third and biggest Megatrends research we ‘ve published to date featuring 64 juicy slides with detailed analysis on the future of mobile.

So what are the overarching trends of mobile in 2010? We ‘ve covered 8 core themes:

1. Vertical integration: one way street or quick detour? We present a novel way of studying the evolution of the mobile industry, from 1985 to 2010+ and the trend-setting milestones for handset OEMs and network operators. We use this tool to demonstrate how handset OEMs have evolved twice as fast as network operators and how vertical integration (as practiced by Apple, RIM, Nokia et al) is a 20-year cyclic trend, not a panacea.

2. The evolution of revenue models. We re-introduce Value Quadrants, our novel tool for mapping the evolution of revenue models, and present how revenue flows are changing in 2010 and beyond. Here we discuss upstream monetisation, productisation of systemware and completely new revenue models that are emerging such as per inventory, per reach and per activation.

3. App Stores: the long-tail future. We compare the top-5 App Stores across their key figures (installed base, downloads, applications, revenues and revenue share). More importantly, we go behind the scenes to uncover the five key ingredients of the app store recipe, and why a succesful recipe must fuse ingredients from very opposite ends of the value chain. We also review the evolution of app stores throughout 2000-2012 and place predictions on five key tenets that will determine the future of app stores; abundance, diversity, co-existence, low barriers and the dominance of retailing.

4. Web platforms: why the future of software development is still elusive. In this trend we review the evolution of the mobile web, from WAP to widgets and WebKit. We compare and contrast 3rd parties (developers) vs 2nd parties (handset OEMs and their partners) to demonstrate how the need and 2nd and 3rd parties are diametrically opposite. We then show how web platforms address very few OEM needs and therefore why the web is simply a means to an end to attracting developers, but little else.

5. In Open is the New Closed: how companies are using open source to further own agendas we update our seminal research on licenses vs governance models. We then poke under Symbian Foundation, Google Android and LiMo Foundation to show how each of these initiatives is using open source as part of a capitalist governance, rather than a socialist one that the open source moniker implies.

6. Recommendations everywhere: raising the bar for mobile services offers a state-of-the-market update on one of the most underhyped sectors in mobile: recommendation (a.k.a personalisation) solutions. The analysis goes into the many types of recommendation solutions, key suppliers for each and reviews 8 key vendors in recommendation technology: Xiam, Changing Worlds, Ericsson, Loomia, Pontis, July Systems, Olista and Choice Stream. The trend analysis concludes with an outlook on recommendation systems, including the next challenges in academic research and commercial evolution, and why we expect M&As to ensue in this sector.

7. In OEM Monetisation: products, services or distribution we present a ‘reverse engineering’ of the mobile value stack to uncover where are the remaining unique assets handset OEMs can tap into. We then present two promising strategies for OEM monetisation; inventory distribution and integrated device+UI design.

8. In the final trend Operator futures: bit-pipes or supermarkets? we discuss 7 strategies with which operators can change course away from a bit-pipe future. Based on a top-down analysis of the remaining ‘value pockets’ in the mobile value stack we present our theses on unique brand deliverables, matchmaking between consumers+brands, customer and service analytics, reach-beyond-VISA, in-the-hands experience, idle-screen monetisation and other smart-pipe strategies.

We ‘ve already presented earlier versions of our Mobile Megatrends as part of closed customer events and conferences, including as part of Rutberg’s invitation-only Wireless Influencers event in San Diego. The next presentation of the Mobile Megatrends 2010 is taking place in early February in Lund, Sweden courtesy of Cybercom. To request a on-site presentation of Mobile Megatrends please contact us.

Comments welcome as always,

- Andreas
follow me twitter: @andreascon

The VisionMobile website, and our blog in particular, has seen a lot of action in 2009: 59,000 unique visitors from 176 countries, with blog articles each reaching into 10s of thousands of views. We also made it into the Top 100 Analyst Blogs and are eagerly pushing towards the top-10!

What is it that makes the VisionMobile blog tick? Our blog motto is ‘Distilling market noise into market sense’; delivering high quality, informative and substantiated articles, with passion and attention to detail, that help clarify the competitive market landscape in telecoms.

10 most influential blog articles for 2009
For this end-of-year article, we‘ve analysed the top-10 most influential articles that appeared on the VisionMobile blog in 2009, based on the visitor views, tweets and comments. Here’s the top-10 finalists:

1. The 100 million club: some surprising facts about mobile software
The H2 2008 update to the watch list of software products with more than 100 million cumulative shipments (most viewed article with 13,500+ views, 16 tweets and 6 comments).

2. Why the LiMo Foundation needs to go back to the drawing board
A long, hard look into the LiMo Foundation and the need for re-positioning (10,000+ views, 11 tweets and 6 comments)

3. The Amazon Kindle: More revolutionary for the mobile telecoms industry than the iPhone ever was
The Kindle model – the shape of revenue models to come? (10,000+ views, 31 tweets and 8 comments)

4. Will Legacy Smartphone Platforms Keep-up with iPhone and Android?
How do Legacy Smartphone platforms fare against the much-hyped giants? (7,000+ views, 54 tweets, 22 comments)

5. Mobile App Stores: The Next Two Years
An overview of the app stores market, complete with profiles of major players and the two-year outlook for app stores (most tweeted with 91 tweets and most commented with 29 comments. 7,000+ views)

6. Mobile widgets: market review and commercial reality
The what, where, who and how of mobile widgets, complete with comparative research for 8 vendors (6,500+ views, 12 tweets, 13 comments)

7. Open is the New Closed
The divergence between open source licenses and governance models (6,300+ views, 48 tweets and 6 comments)

8.NaaS: Network as a Service, a new business model for network operators
An analysis of the emerging Network-as-a-Service market (5,900+ views, 10 tweets, 11 comments)

9. Mobile Megatrends 2009
The annual megatrends report looks at the overarching trends of mobile for 2009 (5,500+ views, 22 tweets, 8 comments)

10. Feature phones and the RTOS – the ignored 85% of the market
An important analysis on how feature phones and RTOSes comprise the vast majority of the market (5,300+ views, 24 tweets, 9 comments)

5 most influential guest articles in 2009
The VisionMobile blog is a space where industry insiders exchange views on the fast-changing mobile market and the trends that define the future direction of telecoms. This year we hosted articles by 11 industry insiders, who contributed their vast knowledge and experience in the mobile ecosystem.

The top 5 guest articles for 2009, rated in terms of views, comments and tweets, are presented below.

1. Stefan Constantinescu: The Amazon Kindle: More revolutionary for the mobile telecoms industry than the iPhone ever was
The Kindle model – the shape of revenue models to come? (10,000+ views, 31 tweets and 8 comments)

2. Michael Vakulenko: Will Legacy Smartphone Platforms Keep-up with iPhone and Android?
How do Legacy Smartphone platforms fare against the much-hyped giants? (7,000+ views, 54 tweets, 22 comments)

3. Ben Hookway: Feature phones and the RTOS – the ignored 85% of the market
An important analysis on how feature phones and RTOSes comprise the vast majority of the market (5,300+ views, 24 tweets, 9 comments)

4. Florent Stroppa: Socializing the mobile address book: market overview and trends
A detailed analysis of the market of social address book services (4,400+ views, 31 tweets, 10 comments)

5. Gabor Torok: Android and the threat of fragmentation
How much fragmentation is there in Android and how does it impact developers? (4,200+ views, 20 tweets, 3 comments)

We’d like to take this opportunity to thank all our guest bloggers for 2009: Andy V. O’ Lay, Antony Edwards, Ben Hookway, Elad Granot, Florent Stroppa, Gabor Torok, Michael Vakulenko, Raj Singh, Stefan Constantinescu, Thomas Menguy and Wouter Deelman.

We’ve already lined up several guest blog articles for 2010, and are open to more submissions. If you have an original thesis or analysis and wish to share it with our 2,000+ industry insider readers, drop us a line.

Most influential article for 2009
The Mobile App Stores: The Next Two Years article is clearly the most influential for 2009 with 91 tweets, 29 user comments and 6,923 views. The article examines the fast-emerging mobile app store market and profiles the five most prominent app stores today in terms of distribution model, installed base, downloads, applications and revenues. Also, those looking for insights will find within an analysis of the five key elements of an app store and their predicted evolution over the next two years.

Behind the blog scenes
We ‘ve embarked on several pioneering research projects in 2009; recommendation engines, mobile widgets, app stores evolution, open source economics and many more projects we can’t talk about We also hit the headlines with four products in 2009:

Mobile Industry Atlas (wallchart).The Industry Atlas (2nd edition) is a visual who’s who of the mobile industry covering more than 800 companies in 47 market sectors. Be sure to check the vastly expanded 3rd edition of the Atlas coming out early 2010, with more than 1,200 companies across 70 categories! (check out this video intro to the Atlas wallchart)

100 million club (watch list). 2009 saw the release of two updates to our ‘100 million club’, the watch list of all mobile software products that have been embedded in more than 100 million devices. Our latest report includes product shipments up to H1 2009 and market penetration figures for the 30 most successful software products, developed by 24 companies (download report here).

Mobile Megatrends 2009 (presentation). Our annual megatrends report looks at the overarching trends of mobile in 2009; 8 Centres of Gravity, Mass Consolidation in the Software Industry, Understanding Revenue Model Innovation, why Open is the New Closed, the recipes behind Application Stores, Network as a Service and Mobile Service Analytics. See also Cybercom’s upcoming seminar on Mobile Megatrends 2010, held in Malmö, Sweden, where VisionMobile’s Reseach Director, Andreas Constantinou, will be presenting our latest edition of Megatrends (view presentation here)

Active Idle Screen 2009-2011 (report). The active idle screen is the most premium real-estate on the handset for service delivery and promotion. In this report we review the solutions which offer zero-click access to services, information and promotion on the handset idle screen. We also examine the market trends and opportunities that will determine the billion-unit question: who will own the screen? (download report here)

What’s coming in 2010?
Lots of planning has gone into 2010 already; we ‘re working a reinvention of one of our existing products that is bound to pick your interest and prove an invaluable research tool. We are also embarking on a major benchmark project that will prove seminal for many future reports across the mobile ecosystem. But we ‘re getting ahead of ourselves

For now, and within this last post of 2009, we’d like to wish everyone a happy holiday season!

- Matos

[Samsung recently perplexed the mobile world with the introduction of its "new smartphone platform" bada. Most commentators have already dismissed bada as an ill-conceived concept and moved on, but does bada actually make a lot of sense? Guest blogger Antony Edwards looks at what’s driving Samsung.]

Yet another platform to target is the last thing most mobile developers need. So when Samsung announced its new bada platform earlier this month it was met first by confusion, and then ridicule as it was further revealed that bada applications must be written in C++, the SDK will only run on Windows, and there won’t actually be any bada devices for some time.

Most of the technical press have already dismissed bada simply as an ill-conceived concept. But the creation of bada, and what it signals about how the mobile industry will evolve over the next three years, is very significant; especially what it says about the changing attitudes towards Android.

The current mobile phone market of around 1 billion devices per year roughly breaks down into four price-points. At the top are the iconic devices that bring new mobile experiences to the world such as the iPhone and N95, next are the less distinctive smartphones such as the Nokia 5800 and Motorola’s Droid, then the feature phones that bring last year’s new experiences to the mass market, and at the bottom are the voice phones for people who really do just want to make a phone call and maybe send an SMS.

Samsung makes most of its profit in the smartphone segment, delivering hundreds of well-designed models for operators and regions all over the world. But these are volatile times for the smartphone segment. Android is bringing more-and-more competition into smartphones, most importantly competitors such as Acer and Dell from the PC manufacturing world who are content with gross margins far below those expected (and sorely needed!) by traditional smartphone OEMs. And at the same time as competition increases, traditional OEMs are finding it more-and-more difficult to differentiate themselves in an Android world.

The inevitable result is a decline in average sales price (ASP); Samsung’s ASP decreased 3% in Q3 2009. Similarly, HTC who focuses entirely on the smartphone segment with Android and Windows Mobile saw their ASP decrease by 4.4% between Q2 and Q3 and expect a further decrease of 5% in Q4. Motorola released their Android-based Droid device in Q3, but after the initial excitement of being the first Android 2.0 device in the market, it has now been labelled a “me too” smartphone and its price is being repeatedly reduced.

2010 has already been hailed “the year of Android” with an unprecedented line-up of Android devices coming to market from 10s of manufacturers.

So, how are manufacturers like Samsung going to stand out in this crowded landscape? Margin pressure is not only coming from consumers due to a lack of device differentiation, but also from mobile network operators who have complete visibility of Android device-creation economics and are demanding cost-based prices from the OEMs. How can OEMs retain the high margins they’ve enjoyed for so long and that their shareholders have come to expect? bada may not be the right answer, but it doesn’t seem like Android is either.

All traditional mobile phone OEMs (except Nokia) are making Android devices, and they have all increased their adoption of Android through 2009. With their bottom-lines under serious threat from the economic downturn, ever increasing operating costs, and Apple’s appropriation of 30% of the profit from the market, the low cost of device-creation promised by Google has proven very tempting.

bada is the first sign that an OEM is looking a bit further ahead and realising that while cost of device-creation may be low in an Android world, there’s also little differentiation, and that means ever lower margins. The struggle to maintain margins has always driven significant changes in the mobile phone industry from cameras, to open platforms, to integrated on-line services; and as Android puts margins under increasing threat we should expect more-and-more major changes in 2010.

Samsung are right that they had to do something. Following the footsteps of Apple, and to some extent RIM, the current answer to differentiation is “own the whole stack”, and so that’s exactly what Samsung is doing.

Will bada save Samsung’s margins? Maybe. Probably not. But the core motivation for change is correct, and from that perspective bada definitely makes sense.

- Antony

[Antony Edwards has been working in mobile since he discovered how to program his Apple Newton 12 years ago. During 7 years at Symbian in a mix of engineering and marketing roles, he worked with all the major OEMs and operators, and continues to be a keen observer of the ever-changing OEM platform strategies.]

What do you think? Can bada work? Can OEMs achieve high-margins on Android devices? Does the appearance of a Google-branded phone change your opinion of bada? Comments and feedback appreciated.

[With proprietary software such as Adobe's Flash Lite or Qualcomm's BREW having shipped on more than 500 million devices, and with the emergence of promises for successful ecosystems from giants such as Google's Android or Apple's App Store - there is a growing question about whether "proprietary" may be the way forward. "Is it indeed?", asks guest blogger Elad Granot]

I have always been an early adopter of innovative services, from cellular to VoIP and advanced messaging. But more often than not, the advanced services that I want to use are restricted to a small community that uses the same type of device or shares the same network provider. Most of my contacts are not necessarily in that group, so even if I have access to these services, I have no one else to use them with. In many cases, the reason for the lack of interoperability is that these services are based on proprietary solutions, owned by only a few vendors or service providers, and this prevents mass-market reach. Contrast this with SMS, a standard service that generates a fortune for mobile operators and is nowadays considered a basic and mandatory service (would anyone today buy or sell a mobile device that doesn’t support SMS?).

It Needs Wings to Fly

What is the magic recipe that allows a service to become so widely adopted that its market reaches an audience of millions? While I can’t prescribe a full recipe, I can identify at least three of its key ingredients. It is a mix of business vision, business models and open technical standards that creates a widely adopted offering in the communications market. Take out any one of these ingredients, and your market is technically crippled — it may be perfectly sound, but commercially it can’t fly.

• Business Vision: The first ingredient may seem pretty obvious, but not every company has a long-term vision. Not all companies can develop a long-term plan for conquering the market, non-conformist enough to try shaping the existing industry landscape or willing to invest resources for conquering the market. But even among the businesses with ambitious strategic plans, very few enjoy the execution power that can change the market. Even a compelling offering like the iPhone coming from a giant like Apple who enjoys a herd of religious followers and a glory of buzz eventually remains a niche offering, such as the (perhaps overly) hyped iPhone, which has a 4% share in the global handset market,
• Open Technical Standards: The second key factor is having a strong technical solution that offers usability, scalability, security, manageability and most importantly, interoperability. When it comes to interoperability, relying on open standards is a highly effective way to achieve mass-market support. I ‘ll discuss this factor in depth later on.
• Business Model: The third ingredient, which sometimes comes late into the mix, is business models that sufficiently reward all the players for their role within the value chain.
  If the business model is not well balanced to compensate all the parties involved, then stakeholders who don’t benefit sufficiently may become barriers to adoption.
  The mobile industry has seen the rise and fall of great initiatives that offered compelling use-cases leveraging feasible technology on paper. However, when it came to realisation, no one found the right formula to either generate or share the generated revenues from the offering. Finding the winning model could be a trial-and-error evolutionary process, in which a compelling offering starts without a proper business model or with a bad one and only gradually finds the golden path that allows it to prosper.
  The freemium-based Web 2.0 has been criticized and named “Bubble 2.0″ due to a lack of compelling business models. Some emerging market sectors, such as mobile advertising, have yet to prove that they can scale. In the case of mobile content pre-app stores, the developer only got 20-30% of revenues and most went to the middlemen. The lack of proper compensation for the developer led to poor diversity of content and therefore poor adoption. This model has therefore evolved to App Stores that offer 70% rev share to developers, which in turn gave birth to ‘there is an app for that’.

Joining Forces Makes the Difference

In this article, I’ll focus on the second factor mentioned above: the importance of technical standards to the success of a large-scale mobile service.

With proprietary elements such as Adobe’s Flash Lite and Qualcomm’s BREW embedded on more than 500 million devices each, and with the emergence of promises for successful ecosystems from giants such as Google’s Android and Apple’s App Store, there is a shift in thinking away from standards-driven technology towards services that are based on proprietary solutions.

Yet, BREW is still having a hard time penetrating non-CDMA markets. Adobe has backtracked on Flash Lite and is now trying to re-seed the mobile market with Flash (the desktop cousin of Flash Lite).

Without ignoring their signs of growth, one should keep in mind that some of these promising services were only recently born and have yet to prove their long-term success and sustainability. Moreover, success stories can be classified as rare exceptions where giants exert their mighty market-force or cash flows to steer the whole industry (e.g. ARM has built up the ARM Connected Community around its own technology; Sun Microsystems sponsored the development and adoption of Java). But how many such giants exist? The average company is far from having such forces and so the odds for dominating the market using proprietary technology are daunting, if not impossible.

By creating an open standard, on the other hand, companies can join forces with other players across the value chain to achieve the critical mass required for leading an industry.

Standards as the Meeting Point

Standards are published by various types of organizations, typically not-for-profit, which exist purely for standardization (e.g. ISO) or other associations and consortia motivated by business, engineering, governmental and similar interests (e.g. WiMax Forum, IEEE, ITU-T). Each of these entities has membership classes, IPR and other legal policies, governing rules and membership costs that must be borne by the joining members.

Depending on the organization, members could be commercial companies, research, government agencies, educational institutions, or in some cases, like the IETF, anyone interested regardless of whether he or she represents any legal entity.

The scope addressed by the organization varies. For example, while the OMA develops service enablers independent of the underlying network technology, the NFC Forum is focused on Near-Field-Communication technology, the OMTP develops mainly use-cases and requirements (as opposed to detailed specifications), and the IMTC targets the testing and deployment phase of rich media communication standards by organizing test events. Finally, there are also organizations, such as the GCF, that test and certify products for compliance with standards.

Some of the organizations are global (like the IEC), some are regional (e.g. ETSI in Europe), and some local (such as KWISF, which developed the WIPI platform in Korea).

The collaborative development of technical documents is usually done in topic-oriented Working Groups or technical committees that are chartered to discuss proposed contributions and make decisions regarding the standard. Predefined decision-making rules, such as consensus, public or secret vote vary according to the working procedures of the committee. Once completed, the resulting standard specifications are published for free or offered for purchase. Cross-organization collaboration and exchange of information between different bodies is possible through liaison relationships, which establish the legal rapport and the scope of joint work between the liaised parties.

Develop It in the Right Way

Just because the industry invents a new standard does not mean success is guaranteed. There are different ways to measure the success of communication standards: market penetration, timing, quality, interoperability, costs and affordability, deployment simplicity, ease of use, scalability, etc. So sometimes “success” of a standard is relative to the way one defines what success means. A standard could be successful in one aspect but a failure in another.

Standards have many disadvantages, perhaps too-well known, that may lead to failure. However what’s interesting is to also look at how these drawbacks can be mitigated.

Time to market. Many argue that standards take too long to hit the market and prefer to go proprietary instead of waiting years for the standard to be ratified by the industry. But it’s like comparing a monarchy to a republic. In a monarchy the king makes a decision that everyone else follows. On the contrary, in a Republic, decision making is more complicated and lengthy. A group-decision process has advantages; more alternatives are typically considered for the solution, more critics validate the selected approach and more evaluation criteria are taken into consideration. The market pays expensive development time in order to reach a solution after any debates have already been resolved. This promotes quicker adoption of the final deliverables. Nevertheless, in order to reduce the risks of losing the market, timing should be seriously considered when developing the standard. Publishing incremental version releases, limiting scope and managing priorities are useful tools to improve time to market. They also make it hard for internal opponents to attempt to delay the standard in order to give their proprietary solutions a chance to grow market share and defeat the standard in its infancy.

The lowest common denominator. Some argue that standards end up being a poor lowest-common-denominator solution, lacking sophisticated features. While this is true in some cases, successful standards are designed with extensibility in mind. Extension can be provided by proprietary differentiating offerings, and successful ones can be considered for future versions of the standard. Complexity and advanced features can (and do) exist in standards, but standards should have them only where extremely necessary. The novelist Gustave Flaubert said that “perfection is the enemy of the good”. In general, to promote their quick and wide adoption, standards should strive to follow the Keep It Simple Stupid principle wherever possible, sometimes at the expense of engineering or feature perfection.

Design by committee. To avoid challenges notoriously known as ‘design by committee‘, attention should be given to those who officially lead the work of the committee, such as those taking chairman role. Quality of leadership can be improved by internal training on how to resolve lengthy debates, overcome cross-cultural gaps and increase the amount and quality of contributions from members.

The dark side of politics is yet another challenge to manage. When self-centered agendas and exchanges of favors overcome community considerations, an internal threat is posed to the standards from within. In these cases the decision patterns start to resemble those of independent market players, who try to steer the market for their own benefit. Policies and procedures that promote transparency can help reduce this threat, but the downside of politics is inherent in any community-based institution.

Fragmentation. Fragmentation in standardization is another well known weakness of standards – consider for example CDMA vs. GSM. While competition brings survival of the fittest, it also leads to market confusion and fragmentation, which defeat the purpose of standardization. To minimize these risks it is imperative for standards organizations to liaise with each other and agree on a clear scope of work that avoids duplication and redundancy, hence eliminating the need to compete. Considering that different parties and interest groups (including competing ones) drive different standards, it would be too naive to assume that this would kill fragmentation, but it can help reduce it significantly. If all stake holders can be convinced that there is a compelling need for a single standard, and show willingness to cooperate (i.e. not block), then fragmentation due to a competing standard is not likely to happen.

Marcoms. Too often standards don’t focus in marketing; i.e. communicating with the industry about their existence, features and advantages in a language that targets decision makers who lack the engineering background. This is a challenge for many standards organizations that focus on technical work and may lack the skills and huge resources required for extensively marketing their outputs. I believe that marketing activities should not be led by standards organizations, to avoid blurring their focus on the technical work; nevertheless, they do enjoy the critical mass that can draw media and analyst attention that will drive industry interest. Therefore they should leverage it and proactively inspire their members to engage in joint marketing and education efforts. I must admit, however, that this is easier said than done.

Another challenge is one of resources. At the end of the day, the work is driven by contributions of the delegates, and they are usually employed by their companies and not by the standards organization. These companies are focused on their balance sheet, but measuring the contribution of standards activity to its bottom line is extremely hard, so unless the company’s management believes in the standardization and understands its strategic impact on their business, it may be difficult to approve budgets for this activity, especially at times of economic uncertainty.

Having been involved with standards for the last 6 years, I do not know (and believe no one does) how to predict the success or failure of an emerging standard. The same standard can succeed in one time or market and fail in another. Success is dependent on business motivations, the regulatory environment, combined with personal leadership, market demand, timing and technical maturity to name a few factors. No single player can simultaneously control all of these factors.

When It Is Ready to Go (and hopefully fly)

The single most significant element of standards that makes them so important in the telecommunication domain is interoperability, which can be proven to exist through practical testing of products implementing the standard specifications. After developing these specifications, standards organizations (e.g. ETSI) and industry associations (e.g. the IMTC) typically organize and promote test events, which help identify bugs and issues like missing or unclear parts in the spec as well as broken implementations). Vendors also use their own labs to test their products for bilateral interoperability with other standards-compliant products made by their partners, and sometimes even by competitors. For some standards there are also authorities (such as the WiFi Alliance) that run thorough tests and certify products for standards compliance.

A vendor may be able to create a marvelous state-of-the-art handset, but if there are no other vendors that can produce inter-operable network equipment, more types of inter-operable terminals, add-on features and services, etc., then the addressable market is limited and can’t scale beyond a certain point determined by the reach of the company and its partners. Interoperability defines the limits of ecosystem reach and an ecosystem is a necessity for addressing the mass market.

When explaining my work to non-techies I often point out how surrounded we are by standards on a daily basis; even a technophobe can understand the pain of fragmentation when experiencing the frustration of looking for power adapters in a different country, or when realizing that everyone around you drive on the wrong side of the road.

There is strong link between interoperability and market growth in any domain, especially in telecommunication where end point terminals and network equipment must interwork to achieve conversation; just consider the growth of SMS or the slow adoption of MMS.

In the early days of the MMS market you never knew whether the message you sent to your friend could be received by their handset, because not all handsets supported MMS. But even when both handsets support MMS, they might support different multimedia formats (e.g. mpeg4 vs. AVI). To work around these issues, operators added transcoding servers that transparently adapt the multimedia formats sent back and forth.

Lower costs and lock-in. Cost is another major factor that drives standards for the mass market. Everyone hates lock-ins to proprietary technologies, as it increases the exit cost. With standard solutions, competition increases and prices go down. Not just because of the fact that standards put a pressure to commoditize products, but also because patent issues are of less concern. Even if royalties or patents are included in the standard, these should comply with “reasonable and non-discriminatory” policies (also known as RAND) that are typically required by the bylaws of standards organizations. From service providers that buy back-end equipment, through integrators who build a system from multiple standard parts to the end-user (a consumer or enterprise), they all enjoy lower prices. If standards didn’t exist, there would be far fewer options to choose from and they would probably be more expensive – perhaps even too expensive to afford by the majority of potential customers.

Benefits for Vendors

There are also considerable internal benefits that companies can gain from embracing the standards.

Thought Leadership. Vendors can use standards to coin new concepts that promote their business agenda; for example over-the-air software update, which has been backed by standards like OMA Device Management, FUMO and SCOMO. Topics can be raised for discussion, debate and development in the standards community, where teams of major stake-holders are present. This fosters an environment where thought leadership can be demonstrated and pushed forward. If done successfully, a concept can be accepted as a standard solution, which fast-forwards the long process of convincing an industry to realize the concept and make it happen.

The PR aura. Being associated with standards often is an affordable way to build buzz, and get analyst coverage that endorses and goes side-by-side with the marketing activities of the company.

Ease the creation of ecosystem. Standards promote the creation of ecosystems. Most single-vendor companies cannot offer an end-to-end solution on their own. It is the ecosystem (including their competition) upon which these companies rely to contribute the other pieces that complement their offering to create the end-to-end solution.

“The Same – but Different”

Standards don’t exist in a vacuum. There are plenty of proprietary excellent solutions that comprise the puzzle of the ecosystem, and it is imperative that standards leave room for those to exist. These proprietary extras enhance, innovate and leverage the standard while allowing vendors to differentiate themselves. Only few companies will be able to make sustainable profit by producing just the plain-vanilla implementation of a standard. If everyone produced exactly the same solution then they could only compete by criteria like pricing and service, which would make it hard for everybody to survive. Successful standards should therefore be designed with proprietary extensibility in mind.

Mobile software, OS, UI and the like are in the focus of these business-driven industry forums that complement the work of official standards organizations. But whether an industry forum (such as the OMTP) or an established standards body (such as the OMA), or even a partnership of such organizations (such as the 3GPP) leads the unification is not important. Even when led by a single company, if it is done in a fair (including legally) and pluralistic manner and gets to the critical point where it becomes a real joint effort with large participation across the industry, then we get a similar effect.

So even if the origin begins with proprietary roots, the essence of these associations becomes similar to those of standards, and the outcome can be categorized as such. It is the endorsement of the participants that makes the standard and not merely the signature of the organization that published it.

The Symbian Foundation or the Open Handset Alliance could serve as good examples for proprietary commercial platforms being ‘donated’ to the community for joint development.

Where to standardise

Looking at the OSI model, the lower we are in the protocol stack (i.e. towards physical, media access such as IEEE’s Ethernet), the stricter role the standards play and the less room there is for differentiation. For example, physical components and radio protocols are more streamlined and offer less differentiation than the applications built on top. This is partly because the higher layers typically need to communicate with fewer peers, while further down in the stack there are more ‘hops’ to traverse, and each of them could be using different equipment. For this reason, a greater variety of vendors that handle the traffic at the lower layers. This could explain why we see much more consortia-driven initiatives at the higher layers, where standards organizations sometimes do not provide enough or any unification. Too many options are allowed and the result is fragmentation.

Bottom Line

Android, Symbian and Flash are examples of market growth that builds upon wide-scale proprietary solutions; yet these examples are glamorous exceptions of cash-rich companies and their partners in conspiracy. More commonly, community-owned standards (like those from the GSMA, IETF, etc.) are a key ingredient for the mass market adoption of a new technology.

Despite its overheads and drawbacks, the process of standardisation is critical for services to reach mass market. The higher we are in the protocol stack, the more room there is for differentiation (and fragmentation), and that is where the bulk of consortia activity is.

If you’re fairly convinced of the importance of technical standards to the success of telecom offerings and they will not be replaced by proprietary solutions, then the next question is which standards to embrace and follow, since competition is not a realm limited to companies and products – it is sometimes the fate of standard initiatives as well (e.g. the rivalry between WiMax and LTE). Perhaps this could be a topic for a future post.

- Elad

[Elad Granot, a Technology Strategist, has actively participated in several standards committees and industry consortia (e.g. within the OMA and the LiMo Foundation) for the past 6 years. Some of the standards he worked on have already been successfully deployed in the mobile communications market. He became involved with standardization at Vocaltec Communications, who led the first VoIP standards in the mid 90’s. Today Elad serves as Director of Technology Strategy at Comverse.]