Who is battling for what?
Mobile Platforms and Application Stores
IDATE just published the first edition of its report “Mobile Platforms & Application Stores”, which indicates that the market of mobile applications will reach 6.9 billion EUR in 2013. The concept of mobile application stores, together with the platform or operating system they run on, has quickly become a pivotal talking point when discussing the current and future mobile landscape. This report provides an in-depth analysis of the types of players involved (device manufacturers, Internet giants, developers and telcos), and their respective strategies and what is at stake for them in this market.
“For the mobile handset manufacturers and the Internet giants, the battle of the fittest is underway, to settle who becomes the dominant smartphone OS, not the largest application store provider. Nokia currently leads, by a significant margin, with RIM, Google and Apple the chasing pack”, comments Soichi Nakajima, senior consultant at IDATE. “Out of these three, only Google is currently in a position to really challenge the dominance of Nokia. Apple is targeting the high-end market, rather than battling for total dominance.”
The real battle is to become the dominant OS
Why is the OS battle so important?
Whilst there are currently at least 10 differing OSs, in the mid- to long term all smartphones will choose from a select few operating systems only, due to mergers and acquisitions between OS vendors. These OSs are not interoperable, meaning that there is a high lock-in effect once a user decides which OS to use. Further, without control of the OS, there is no full control of the application store which runs on top of the OS.
Consider, then, that the smartphone market is currently in its growth phase; it is expected that many of the current ‘standard’ phones will migrate to smartphones over the coming years.
Adding up these two projections means that if a given player can become the dominant OS, then it will be that player’s OS that is deployed as the standard for much of the smartphones to come; potentially billions of smartphones, no matter who the device manufacturer, will be using that given player’s OS, together with all of the revenues associated with that OS.
Nokia leads, and Android (not Apple or RIM) is the main challenger
As of Q2 2010, Nokia (Symbian) led the shares of the smartphone OS market with 41.9%, followed by RIM, Google and Apple with 18.5%, 17.9% and 13.4% respectively. This is, though, only part of the picture. As explained above, current ‘standard’ phones are expected to be replaced by smartphones, and this is where the real opportunity lies, with billions of handsets in prospect. Thus one must look at the current market shares of all phones, and see which OS the vendors support, to get an idea of the potential migration ratio of each smartphone OS.
It is obvious that Nokia is best placed, since they already have 33% share of all phones, and all new smartphones will of course support their own Symbian (or forthcoming MeeGo).
The challenging OS is Android; it has many supporters, including many big players, opening the potential for the Android OS being used when the supporters migrate to smartphones.
On the other hand, RIM and Apple have only themselves to rely on, severely reducing the potential in terms of scale and reach of smartphones employing their OS.