The mobile handsets business is looking increasingly like the PC industry, as the focus shifts from ‘boxes’ to software and platforms. This shift is increasingly bringing industry giants Nokia and Microsoft into conflict, in a battle that could prove dangerous for the industry. If mobile standards become fragmented, the uptake of new technology is likely to suffer.
The conflict between Nokia and Microsoft shows no signs of abating.
Margins in mobile phone manufacture are plummeting, as competition grows. Even Nokia, which has traditionally managed to achieve the highest margins in the industry and is currently the only mobile phone manufacturer making a profit, is seeing margins fall.
This is driving companies to move away from simply producing ‘boxes’. For a start, many are outsourcing production – Ericsson last year, for example, outsourced all its mobile phone manufacturing to Flextronics.
Established players are also moving into chipset technology, operating systems and software: Ericsson and Motorola license their chipsets, while Nokia has released tools for third party manufacturers to develop on its platform. Microsoft has teamed up with Intel in the hope of repeating its PC success. Most recently, RIM has announced plans to open up Blackberry.
Both Nokia and Microsoft are addressing the OS space – Microsoft has its Pocket PC 2002, and Nokia is firmly behind Symbian – making conflict inevitable. Nokia has so far been most aggressive in defending its territory, taking a front seat in establishing the Open Mobile Architecture (OMA) initiative.
While OMA is dedicated to an open mobile software and services market, Microsoft has not been invited to join. The group claimed it was for mobile phone manufacturers and operators, but HP, IBM, Oracle and Sun have now joined, bringing this into question.
The conflict between Nokia and Microsoft may prove bloody. Worse, it could seriously hinder the progression of the industry. Although competition is traditionally good for consumers, a set of common standards is still more important in the mobile industry, where ‘proprietary-ness’ in network, platform, messaging, hardware and software standards has long been a thorn in the side.
The relative development of mobile technology in Europe and the US is testament to this. The EU standardized on GSM technology early on, but many different standards are still used concurrently in the US. This has handicapped the US market – not an outcome the industry would want to repeat with data-device proliferation, given its cash troubles.