Handset makers must partner with third-party software developers to succeed

As wireless data networks and services become more mature, mobile handset manufacturers are integrating more multimedia functions –not only in the phone hardware, but also in application software and in sophisticated operating systems (OSs) for phones.

Manufacturers are aware of the high R&D costs involved in developing proprietary software, so sourcing an OS from a third-party developer seems like a no-brainer. However, the user interface of mobile phones increasingly is being seen as a means to control the industry and to set user expectations. OS license structures that add additional costs also make manufacturers reluctant to adopt available software platforms.

Before 2008, the only open mobile handset OSs available from third parties were the Palm OS, Symbian, Windows Mobile the RIM OS and different flavors of Linux.

Previously there were two major Linux backers: LiMo Foundation (Linux Mobile Foundation) and the LiPS Forum (Linux Phone Standard Forum). These two backers joined forces in late June 2008. The organizations share the goal of delivering an OS platform that reduces development costs and time to market. With this platform in place, handset manufacturers and software developers can focus more on delivering a differentiated user experience that spans beyond hardware.

GOOGLE’S ANDROID
In late 2007, Google formed the Open Handset Alliance (OHA) and introduced the Android mobile OS packaged with middleware and key applications. Android is based on Linux, but application software will be executed in Dalvik, a Java-based virtual machine. To encourage the participation of third-party application developers and to promote innovative ideas, Google initiated the Android Developer Challenge, with monetary prizes for winners.

Although Google hasn’t made any public announcement on how it will monetize this free platform, the consensus is that the company will make money by bringing its advertising business model to the wireless world. Google would want every mobile device equipped with a browser to adopt the platform.

NOKIA BOOSTS SYMBIAN OS
Nokia used to be the largest stakeholder in Symbian, but European Union (EU) regulations ensured it could not gain a control stake and gain a monopoly in mobile handset OSs. However, No.-1 handset maker Nokia has found a way to get around the EU regulations, and its use of Symbian has made the OS the most widely adopted in the wireless industry. Nokia announced plans to buy the rest of Symbian’s stock and turn the company into a nonprofit organization: the Symbian Foundation, which will offer the OS free to mobile handset makers.

There now are three major platforms built on the Symbian OS:

• S60 – Supplied by Nokia. Nokia, Panasonic, Samsung, Lenovo and LG are licensees.
• UIQ – Developed by Sony Ericsson. Sony Ericsson, Motorola, BenQ and Arima are licensees.
• Mobile Oriented Applications Platform for Symbian (MOAP S) – Developed by NTT DoCoMo. Fujitsu, Mitsubishi, Sharp and Sony Ericsson are licensees.

The Symbian Foundation will unite all Symbian-based platforms and provide one unified platform with a single user iInterface (UI) framework. The first release is expected in 2009 based on a royalty-free license agreement.

Like Google’s Android, major players in the mobile phone ecosystem already have committed to the Symbian Foundation, including operators, application developers, semiconductor providers, handset manufacturers and network equipment makers.

WINDOWS MOBILE HITS LICENSE TARGET
Microsoft’s Windows Mobile is more widely accepted in North America than in other regions. However, with the huge market share of Windows Mobile’s major licensee – contract manufacturer and branded handset seller HTC Corporation of Taiwan – the platform is starting to gain traction outside of its home territory.

Microsoft intends to position Windows Mobile as the OS for high-end handsets and will strive to set the standard for user interfaces in the industry. Windows Mobile recently hit its target of 20 million new licenses for fiscal-year 2008, which ended in June.

The highly anticipated Windows Mobile 7.0 is expected to focus on touch interfaces, motion gestures, visual presentation and more intuitive functions, which will command a great deal of attention from phone OEMs. 

MOVING TO HIGHER GROUND
All of the OS platform providers are targeting the fastest-growing segment of the mobile handset market: mid- to high-end phones that are capable of handling data traffic and applications. Such handsets are more focused on multimedia than other types of phones.

These phones stress hardware capabilities, e-mail and document reading, but also concentrate on look and feel, with more optimized graphics and intuitive operation and management. In terms of air-interface standards, these platforms range from high-end 3G devices to mid-to-high-end EDGE devices. 

NEW OS DYNAMICS
Although the majority of the OS solutions will be free, without a complete software stack offering, mobile phone manufacturers still must put extensive effort into application integration and the licensing of different application software.

This will change industry dynamics.

The demand for data-intensive applications in mobile devices is forcing manufacturers to re-examine their stay-in-control strategy. To win the high-level OS battle, software platform providers will need cooperation and support from each node in the value chain.

Total cost and time to market remain the two chief considerations for phone manufacturers. However, platform providers also need support from third-party application developers, whose products can help OEMs to differentiate their handsets and to become industry leaders.

Teng is an analyst, wireless communications for the market research firm iSuppli