CTIA SPECIAL EDITION – APRIL 2, 2008

Look out, Adobe. Nokia teams with Silverlight to warm up richer applications..

Microsoft has announced imminent plans to introduce its Silverlight runtime to the estimated 150 million devices running Nokia’s S60 on Symbian OS in the second quarter of 2008. Silverlight, which launched last September, is a cross-browser multimedia player similar to Adobe’s Flash player. It runs on Windows, Mac and in the future Linux.

“Our goal is to create a completely homogenous platform across all implementations so that an application developed for the desktop will run on a mobile phone with the only changes required being the user interface (UI) to accommodate potential differences in screen resolution,” says Brian Goldfarb, group product manager of Microsoft’s Developer Division.

This is the first step in enabling its estimated 4 million .Net developers to write mobile applications. The first mobile Silverlight implementation focuses on streaming media applications and is on par with Flash Lite.

“This gives further credibility to Microsoft and raises the game in terms of being cross-platform,” says Bola Rotibi, an Ovum analyst. “For Nokia, it demonstrates that it is interested in opening up rich applications for mobile devices.”

Sebastian Nystrom, director of Technology Strategy, at Nokia says, “There are a number of technologies that Website developers want to use. We believe that Silverlight will have appeal to these developers and will grow in importance, and we want to support all of the technologies.”

Adobe currently has a leg up, with existing Flash Lite support for about 500 million mobile phones, and an estimated 2 million developers using its tools. Adobe expects it to ship on over 1 billion phones by 2010.

This compares with Sun’s installed base of 2.1 billion Java-enabled mobile devices and 6 million Java developers. However, Sun has not released any statistics on Java FX, its mobile media technology, which is still in its early stages.

Also Adobe recently announced plans to port Flash Lite to the Windows Mobile operating system running on an estimated 11 million phones, which is expected to grow to 20 million in 2008. Anup Muraka, director of technical marketing for Mobile and Devices at Adobe notes, “Microsoft and Adobe will compete on some fronts and work together on others to provide a richer environment for Windows Mobile devices.”

“This is not a battle as such,” says Ovum’s Rotibi. “It is really about leveraging your development community to allow them to build applications that cross a number of different platforms, whether that be for desktop or mobile applications.”

FUTURE OF MOBILE APP DEVELOPMENT
The first implementation of Silverlight and Flash Lite 3 are only the first step in mobile applications development. “One of the issues with Silverlight 1.0 and Flash Lite 3 is they are more aimed at media,” notes Jeffrey Hammond, a Forrester Research analyst. “They don’t contain the full programming frameworks you see with the full Flash or Silverlight 2.0 experience.”

The real opportunity is for Microsoft to get the full Silverlight 2.0 mobile compatibility because that will let developers create full-blown .Net applications in the mobile space. At the same time, Adobe Air support will provide the same kind of rich capabilities for developers to use Adobe’s more sophisticated Flex platform. Both companies have announced plans to enable these richer applications.

But developers are not going to be able to just port over existing Web applications into these mobile environments, notes Rotibi. They will have to rethink the applications for smaller screen sizes, more constrained memory and ergonomic factors resulting from the lack of mouse and full-blown keyboards.

DISINTERMEDIATION OR NEW REVENUES?
One of the key challenges new technologies such as Flash Lite and Silverlight bring to carriers are threats to existing revenue streams from the walled-garden approach of selling additional services like selling music and advertising. Hammond notes, “The carriers are doing a pretty good job of keeping control of the native applications. But if your browser supports rich media, it might be difficult to police the use of new services. Once you build that neutral pipe, it is difficult to watch that pipe without irritating the customer.”

Digital Rights Management (DRM) technology is expected to play some role in protecting revenue streams. “DRM will be a feature of Silverlight 2,” Goldfarb says. “Microsoft’s DRM technologies are already widely deployed in mobile handsets from Nokia, Motorola, Samsung, Sony Ericsson, LG and others as well as with mobile operators such as Verizon, AT&T, T-Mobile, Vodafone, Telefonica and NTT DoCoMo. Additionally Nokia’s Ovi Music Service, Napster and Rhapsody are all based on Microsoft’s DRM technologies.”

The two main targets of the enhanced user experience are expected to be higher ad revenues and higher average revenue per user (ARPU) rates, notes Julie Ask, a JupiterResearch analyst, who forecasts a $2.9 billion market for mobile advertising in 2011. She says that a lack of a compelling user experience is inhibiting the use of mobile data services. But this could change with better applications delivered via tools like Silverlight and Flash Lite.

A JupiterResearch Report on Mobile Internet notes that NTT DoCoMo was able to convert 8.4 million (out of 40 million total) low ARPU subscribers to the i-mode data service within 18 months after introducing a Flash cast service. The service delivers information into mobile Flash-based widgets that automatically download new updates. These subscribers now drive an incremental $3.25 per month to the operator.

“Everyone is in the business of making money, and the question is, what is the best way of making money. We at Nokia believe it is making sure consumers have the best choices,” Nystrom says. “People tend to go where the best service is, and maybe someone else can help offer these. We are seeing that most carriers are realizing they are good offering some services and not so good at offering others. In the end, keeping your customers is good business.”