Analyst Opinion - The one thing you typically get when you follow the news coming from the big mobile industry conference currently being held in Barcelona is that the time to buy a new phone is late in the second half of this year. Most of the stuff folks are excitedly talking about will actually be available around that time. Of course, that is also when the second shoe drops and you realize much of the really cool stuff will be hitting Europe or Asia first. Thank goodness for folks like Apple and Palm who tend to favor the U.S. otherwise I'd likely be in terminal phone envy.





What I think is interesting is that the smart phone market, which has many similarities to the original PC market, is following a similar path, but with some interesting differences. Some of the players are the same in that you have Microsoft with their renamed Windows Mobile platform going up against the Apple only iPhone, but you have Palm emulating Apple, and Google emulating Microsoft as well. You also have Nokia who appears to be trying a blend of the two models using an OS they own, but are licensing it out for others to use. Unfortunately, in my opinion, Nokia's latest expensive phone really sucks.



Let's talk about some of this stuff this week.





Best News out of Show



For me, the best news coming out of the show had nothing to do with any of the core players, but with something that has annoyed me from the first day I ever owned a cell phone. And that is the inability for phone firms to agree on hardware interfaces; particularly for chargers. Well 3 Group, AT&T, KTF, LG, Mobilkom Austria, Motorola, Nokia, Orange, Qualcomm, Samsung, Sony, Ericsson, Telecom Italia, Telefonica, Telenor, Telstra, T-Mobile, and Vodafone all agreed to a common standard based on the USB interface and enforced by 2012 (I would've hoped for yesterday).



The fact that the majority of these folks are carriers incredibly interested in standardizing so they can keep inventory costs down would indicate that we may actually make progress on this one, and that the folks who aren't on this list (hello Apple) will be forced to comply in order to meet carrier requirements.



It would be wonderful to just have one charger that worked with all phones. [Editor's note: Many TG Daily readers have already suggested there exists a standard, namely the micro-USB port which allows for in-car charging on a conventional jack.]





RIM, Apple and Palm vs. Microsoft and Google (with Nokia Hedging)



Back in the early days of the PC there were three big hardware centric companies -- including Apple, Commodore, and Atari. Commodore (who actually led the market in terms of market share during the 80s) and the original Atari didn't make it, and Apple almost went under about a decade ago. There were two platform companies, IBM and Microsoft, but Microsoft took the vastly larger IBM out at the knees and we ultimately ended up with Apple's hardware centric position and Microsoft's software centric position.



With Cell phones we are back to exploring this same argument again, but the field has changed. Microsoft is the largest player, and yet they appear to be more in IBM's old roll. Google is relatively stronger today than Microsoft was in the late 80s, and both Apple and RIM are considered the companies to beat. Nokia, who remains the largest cell phone company, is playing to a different drummer and represents a wild card. The most exciting phone so far in 2009 is the Palm Pre, and Palm used to be where Apple is now, creating the PDA market as Apple created the current-gen smartphone market.



It's as if this were part of a series of experiments where certain variables are changed to see what result is better than what initially occurred. For the developer this is a confusing mess because each platform now has its own application store and, should the market follow applications like they did on the PC, it will come down to whomever gets most of the compelling ones (and here Apple has an impressive lead).



One big difference today is that modern compiler technologies are far more advanced, as are operating systems. Strong limitations don't exist today in modern software as they did a decade or more ago in PC spaces and antique software.


CONTINUED ON NEXT PAGE:  Calling the Race, Apple, Google, Microsoft, RIM, Nokia, Wrapping Up...

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Calling the Race



Apple: This is still the only company that can get people to line up around stores. They have a massive lead in applications and out-market firms several times their size. In addition, they have their own stores which are both numerous and very successful making them very difficult to beat. On the other hand they have a limited line and their key pitchman, Steve Jobs, is on the bench for the moment. Still we know little about the iPhone 3.0 due mid-year and it could cement their lead. Apple also has a ton of cash on hand and could weather a storm (or three).



Google: Moving towards their second generation phone they are only second to Apple in terms of an Application Store-like offering. Their initial phone was well received even though it was more of a hardware software beta test. Capable of multi-touch (but deciding to turn it off to avoid problems with Apple), their platform is one of the most similar to the iPhone and they already have cut deals with a variety of vendors.



Microsoft: With the most resources and strongest back end applications, you would think Microsoft would own this segment. However they have been unable to resource this effort at competitive level and while they've announced their Windows Mobile 6.5 offering the timing (late 2009), it was when most had expected Apple's competitive 7.0 offering to show up. Microsoft has announced an application store, and one of their strengths is collecting and managing lots of developers, but they have been very slow out of the gate and have yet to bring to market anything that is truly competitive. The best phones currently using this platform are from Palm, HTC, and HP -- two of which are either investing in their own platform now (Palm) or hedging with Google (HTC). Microsoft has yet to bring their "A" game to this segment, and other partners (Motorola) are hedging with Google as a result.



RIM: They have loyalty that rivals Apple, and are the most successful of the phone vendors selling to corporations and government. They have a broader line than Apple's and their products have improved significantly to embrace more attractive designs. They lag both Google and Apple in applications and, like Apple, have difficultly scaling up because they are only one company and one of the smallest in this segment.



PALM: Made up largely of ex-Apple folks, Palm really wants to slam dunk Apple, and that desire has led to an impressive offering in the Palm Pre. Considered the best product announced at CES -- and this across all classes -- this phone has the biggest chance of schooling iPhone on how it should be done. However, Palm has yet to enter the market and, as a result, they don't have much in the way of applications. They also gave Apple and others a huge heads up with this announcement, and we have yet to see the third generation iPhone which could counter many of the Palm Pre's advantages. In the meantime, Palm continues to market Windows Mobile phones as a hedge.



Nokia: The largest phone centric company currently on the planet, they have a very broad line and their sales capability is considered market leading. They are taking the unique path of both building phones and licensing out the related OS platform (Symbian) -- which has historically not worked out particularly well. They lag even RIM with applications, and seem to have a hard time building compelling next generation phones. Unless something changes, I think they are the most likely to be the next Commodore and a market casualty.





Wrapping Up



In 2009, I think the real battle is between Google and Apple. Both are bringing their "A" game and both are using models that have worked in the past. Microsoft looks better in 2010 for the segment being fought over. Smartphones probably won't stabilize until 2015 or so, giving Microsoft some time, but not an unlimited amount of it.



RIM and Palm need to gain scale fast to play with at major league levels, and whether either truly contends for market leadership will depend on how much third party support they can garner. Between the two, Palm has the better phone but RIM has the stronger economic and sales advantage. Finally, I think, we are seeing the end of the road nearing for Nokia. They are trying something that has never worked, (folks don't like to license platforms from competitors), and their execution leaves a lot to be desired.





Rob Enderle is one of the last Inquiry Analysts. Inquiry Analysts are paid to stay up to date on current events and identify trends and either explain the trends or make suggestions, tactical and strategic, on how to best take advantage of them. Currently he provides his services to most of the major technology and media companies.



The opinions expressed in this commentary are solely those of the writer.