Droid May Compromise Android's Long Term Success

Next year will be a pivotal year for the Android platform. Between 50 and 75 new Android phones are expected to be announced at the Mobile World Congress in February and version 2.0 also has some exciting new features. While the platform is gaining traction, some troubling developments are posing real risks to the long term success of Google Android. These risks are exemplified in the aggressively promoted Motorola Droid phone. The Droid OS is an enhanced version of Android, which leads the platform down the fragmentation path. Also, the device launched on the Verizon network includes a Google navigation application that puts Google in direct competition with developers…..developers they are trying to attract to their platform.

Fragmentation is not new to the mobile software industry and has kept many a mobile executive up at night. Google has taken steps to manage fragmentation but market forces are driving vendors like Motorola to enhance the platform to differentiate their products. Motorola has wrapped their entire strategy around their Android handsets and will make sure these products are well differentiated from other Android based phones. Further more, the OHA licensing terms do not require Motorola to contribute their IP back to the association, opening the door for multiple distinct Android operating systems battling for market share.

Along with the Droid launch, Google announced "Google Maps Navigation," a turn by turn navigation application which the company is offering free of charge. Turn by turn navigation applications have been some of the most successful in the mobile application market. TeleNav's announced IPO filing on Monday just shows how successful these 3^rd party developers have been. Google seems to want in and has launched a free application that is a direct competitor to existing navigation developers. The folks at Networks in Motion are particularly upset by the Google Maps Navigation launch on the Verizon network. NIM is the software developer behind Verizon's successful VZ Navigator application which it gets $9.99 a month for; of course Verizon gets its share. In an interview last week, Steve Andler of NIM points out the difficult position the new Google app puts developers in and how they are jeopardizing the growth of the Android ecosystem. Steve correctly points out that if developers create a very successful application on the Android platform, Google is in the position to build competitive functionality into the core of the Android platform and give it away for free. This makes it very risky for developers to create innovative applications on a platform whose core code is controlled by a company that can and will destroy partners' business models. And, more importantly, VC looking for the 10X return will not invest in applications built on Android.

Over the years, Research in Motion has been very deliberate not to compete with developers within their ecosystem. By only incorporating commoditized functionality into its platform, RIM is not providing cutting edge applications that compete with their partners. This strategy reduces the risk to developers and provides economic incentive for them to create robust and advanced applications that help sell BlackBerry devices. Google is not in the device business but the advertising business and has not pursued the same strategy. Google Maps Navigation seems to be a very innovative application that will present stiff competition to mobile navigation developers.

It is quite interesting that TeleNav has announced an IPO filling as its market is threatened by such disruptive forces. The company does have an Android version of its application, putting them in direct competition with one of their platform providers. I am not sure I would want to be the investment banker selling that story.

UI's of the future - Mixed reality...sooner than you think!

Technology enthusiasts have followed mixed reality technology for years but the more relaxed technologists will soon become aware of the technology as it moves into the main stream. What makes mixed reality so interesting is its potential to rewrite the rules of how we interact with mobile computers and the world around us.

For those non tech enthusiasts, augmented reality and augmented virtuality are the two technologies that comprise mixed reality, which integrates the real world with the virtual world. Augmented reality layers data on top of real-time images, similar to a heads up display in a fighter pilot's helmet or the first down line superimposed on our TV during a Sunday afternoon football game(that's American football for the international crowd). Augmented virtuality is the ability for users to interact with a virtual environment using hand gestures. The Nintendo Wii is a good example.

Mixed reality may be more fit for sci-fi movies than today's cell phone market but the potential is very compelling. Imagine using real hand gestures to manipulate virtual data projected onto the real world. It might look like the "SixthSense" project from MIT labs.

Four technology and industry trends are converging to make breakthrough user interfaces more plausible:

1) Advancements in low level software on chip-sets is allowing visual inputs to be processed much closer to the hardware, improving performance.

2) Video cameras on phones have seen tremendous penetration and are becoming standard features. Ubiquitous video cameras provide inputs for mixed reality applications.

3) Accelerometers, compasses, and GPS radios are also becoming more standard on smartphones providing support for hand gestures and situational awareness.

4) Pico projectors, or miniature projectors, are beginning to be integrated into phones allowing users to project virtual data onto the real world.

The growing popularity and advancements in Adobe Flash may make Flash the software platform that fosters innovation. Flash on mobile devices provides an open source cross device platform that provides a foundation for developers to create visually intensive applications. Flash 10.1 also has features to allow accelerometer inputs providing data for more dynamic applications. Also, Adobe's announced partnerships with Nvidea and Qualcomm will get flash decoding accelerated directly on the chip-set, another development that will lead to improved performance and more compelling experiences.

While the building blocks seem to be coming together to create an innovative environment, the real breakthroughs will come from creative developers who will invent useful applications and compelling users experiences.

Verizon Joins the Enterprise Party

Interesting news from Verizon yesterday regarding the announcement of their mobility management solution aimed at the enterprise. I am not sure this is a huge surprise as AT&T and Sprint Nextel have been offering mobile IT services to the enterprise for years. What is surprising is that it took Verizon so long to enter the market.

The explanation is in the segmentation. Large enterprises have not been the sweet spot for Verizon who has chosen to focus more on the consumer market. What I think this announcement signals is that the demand for mobile applications has migrated into the small and medium sized business segment. Smart phones are now everywhere including in the hands of small and medium size firms trying to compete with the big guys. Demand from SMB's must have hit the tipping point presenting a money making opportunity for Verizon. The selling costs associated with small deals has always been a barrier to entering the SMB market and the economics presumably have change enough for Verizon to partake.

What will be interesting is to see who Verizon chooses to partner with for applications management (as of yet they have not announced a partner for this portion of the service). Verizon did have a relationship with Dexterra, who had supported Vodafone's (one Verizon Wireless's parents) enterprise application service. Dexterra has since been sold to Antenna which has been supporting AT&T's enterprise services business. Pyxis Mobile also is tied to AT&T with an exclusivity agreement. Regardless, Verizon will have to build a team with industry expertise to support the business.

OneApp - No threat now... but indicates continued change in strategy

Microsoft's announced launch of their OneApp platform Monday will hardly make any competitors nervous in the short term but the long term implications may be more threatening. The OneApp platform is essentially a widget platform designed for feature phones that Microsoft will be marketing in developing countries.

At the core of Microsoft's OneApp strategy is the platforms ability to offload much of the computing power to the cloud. This will require some coordination with carriers to optimize the data transfer to provide a compelling experience. Microsoft does not have a history of working with carriers who are striving to maintain control of the UI and their branding. These competing forces and lack of experience will likely cause problems for Microsoft. Perhaps the Microsoft brand is stronger than carriers' in developing countries and can provide Microsoft some leverage at second tier carriers. Needless to say, announcing that you did a deal with a company that you own a 12% stake in is less than impressive.

Microsoft will also see stiff competition from vendors like Nokia, Opera, Myriad (the combined Esmertech, PurpleLabs, and Openwave device business) and Qualcomm who have much more experience in the mobile widget and mobile internet market. The fact that Microsoft has built a Java ME based platform is also puzzling after many Java based widget platforms have failed, including Widsets which Nokia essentially killed this spring. Vendors that have the experience, are moving toward web based execution environments to avoid fragmentation issues, leverage emerging web standards, and allow users to access widgets from the home screen.

While Microsoft will not be a force in the mobile widget market anytime soon, the OneApp announcement and the recent alliance with Nokia signals that the Microsoft ship is turning. This is another example of Microsoft shifting strategy by de-emphasizing the OS and focus on areas to add value higher in the stack. The focus on developing countries is also very interested given that Microsoft my be the only company with the resources and global brand to reach the economies of scale to make money in emerging markets....of course the other company able to do this would be Nokia.

Implications of the Nokia Microsoft alliance

If you didn't think the mobile operating system business was dead, this week's announcement of a new alliance between Nokia and Microsoft makes it clear by signaling the death throws of the mobile OS market. Windows Mobile is essentially the only stand alone high level mobile OS that charges a license for its software and is loosing miserably in the smart phone market. The numbers from the second quarter of 2009 reveals the smart phone market growing 27% with Widows Mobile shipments down 6%.

It is hard to compete in a market where your competition is giving their software away for free. Clearly, the ability to add value in the software stack is not in the operating system but higher up in the stack and in the network.

The one competitive advantage that might have justified the Windows Mobile license fee was the tight integration and compatibility with Microsoft desktop operating system and Office applications. With Microsoft building applications for the Symbian platform, that advantage is being transferred to Nokia.

While this move by Microsoft was unavoidable, the decision to partner with Nokia, a once intense competitor, is a smart move. As part of the announcement, Nokia will renew its Active Sync license and ship Microsoft applications on the Symbian platform. Presumably this comes with a attractive licensing arrangement for Microsoft.

What does Nokia get? A position in the mobile enterprise market, a market they abruptly exited last October.

To focus on the news that Word, Excel, PowerPoint, etc. will be shipping on Nokia devices would be missing the big picture. No one really builds spread sheets on their smartphones, and editing documents on mobile devices is also relatively rare. What is compelling is the Microsoft collaboration software that will be available on Nokia devices including access to Sharepoint and Microsoft Communicator. Microsoft provides the synchronization and collaboration technology that has eluded Nokia and is the foundation of the Microsoft's future strategy championed by Ray Ozzie. As the computing industry continues to move more computing to the cloud, synchronization across devices will be key.

In the short term, both companies working together will provide tough competition for RIM in the enterprise market but the long term implications of the partnership may have more impact on the wider marketplace. One long term benefit for Microsoft is the avenue Nokia provides to access emerging markets. Nokia has seen strong growth in developing markets where PC's are often too expensive for most consumers and small business people. Should the alliance between the two companies blossom, new Microsoft customers first experience with Microsoft software may be on a Nokia phone.

The collaboration of the two of the largest technology companies and most loved Global brands may make this weeks announcement a pivotal point in the evolution of the industry.

Second half of 2009 will be big for mobile widgets

The second half of this year should be marked by a number of carrier deals that includes mobile widgets. Mobile widget are small portable pieces of code or applications that provide bite sized pieces of information or functionality.

I think three factors will make 2009 an important year for widget platform vendors.

1) The success of the Palm Pre and its operating system, which is based on widget like technology, will put pressure on handset vendors to respond.

2) Carriers have had plenty of time to evaluate solutions and formulate their strategies and will move into implementing solutions.

3) Standards are being consolidated, reducing fragmentation risk and uncertainty.

In an interview last week Jon von Tetzchner, the CEO of Opera, said a large browsing deal with a US carrier is imminent providing further evidence that the market is about to pop. Although he did not specifically mention widgets, Opera's widget solution is powered by the browser so it is highly possible that the deal may include widgets. Jon also indicated that the solution would be white labeled which is similar to the widget deal that Opera completed with Vodafone last year. Once Opera closes this deal competitors will undoubtedly follow suit.

Pulsar threatens Microsoft and Apple and should help drive growth

This week Eclipse announced its Pulsar initiative which is a plan for a unified environment for developers to streamline application development for RIM, Motorola, Nokia and Sony Ericsson devices. The idea is to allow developers already skilled in using Eclipse to more easily develop mobile applications. Pulsar will also make it easier to build one application for multiple devices, although it is not a write once run anywhere technology.

This is a very smart strategic move for the participating vendors for a few reasons:
1) It minimizes one of Windows Mobile's primary advantages
2) It helps defend against the iPhone, especially in the enterprise space
3) A common development environment will help drive economies of scale for developers and fuel growth.

One of Microsoft's fundamental advantages in the mobile space, and throughout the software industry for that matter, is the multitude of Microsoft trained developers. This fact has helped to drive sales of Windows Mobile devices. Windows developers skilled in using Visual Studio do not need to learn a whole new development environment to develop apps for Windows Mobile. More skilled developers and apps drives the adoption of software platforms. While Eclipse does not have the same amount of penetration in the mobile market as Visual Studio, which is the most commonly used environment, the launch of Pulsar will threaten the dominance of Visual Studio and Windows Mobile.

The unbelievable success of the iPhone is having significant impact in all strategic decisions in the mobility space and the announcement of the Pulsar initiative is no different. The iPhone is seriously threatening RIM's bread and butter, the enterprise market. By participating in the Pulser initiative RIM and other participating device vendors will give developers and enterprises more flexibility, reducing vendor lock in and making it easier for enterprises to chose their devices. The ability of enterprises to leverage Eclipse trained developers for mobile apps also puts Apple at a disadvantage to participants of the Pulsar initiative.

This flexibility is also important for application vendors in the enterprise market. Applications are often specialized and reaching economies of scale by developing one application for one device is hindering the growth of the segment. More productive developers targeting multiple devices will lead to better economics for mobile application vendors. Better economies and common tools will help drive growth for the entire industry.

Good Technology - The redheaded step child

On Tuesday Motorola announced that it will be selling its Good Technology unit to Visto. Although not predicted, this news is not a complete shock. While Good had some scalability problems that put the platform at a disadvantage, what I think ultimately lead to the failure of the Good platform is Motorola's inability to support it with a strong integrated enterprise offering. Good became the redheaded step child of Motorola's enterprise business.

Motorola made two significant acquisition in the enterprise mobility space over the past few years, Symbol and Good. The Symbol deal was $3.9 billion compared to the Good deal valued at just $400 million. The Symbol deal was not only much bigger the company was a better fit as Symbol is predominantly a device company, unlike Good. I think the Good deal was overshadowed by Symbol.

Part of the rational for the Good acquisition was to compete with RIM. Unfortunately, Motorola's continued failure to provide compelling devices that could compete with RIM put Good at a competitive disadvantage.

Without a quality consumer grade smart phone to help drive demand for the Good e-mail platform, Good was forced to piggy back on and try to integrate with Symbols application platform. The Symbol platform never really experienced much success given that Symbol is really a device company and the platform was rather expensive. By addressing Symbols market, Good technology was also out of its element selling to blue collar and gray collar customer's where e-mail may not be the primary application and devices operate in a less connected environment.

Now that Good Technology has found a new home with Visto, hopefully what is left of the company will be happy. Visto is a wireless e-mail firm with limited exposure to the enterprise market. The acquisition of Good should help them bolster their offerings in this market.

What have we learned:
1) In tough times companies will focus on core competencies. Motorola focuses on devices while Visto does e-mail. We should see more of this refocusing.
2) RIM owns the enterprise e-mail market. IT people love RIM. Both Motorola and Nokia have figured this out. I think that the only way to beet RIM in the enterprise is through the consumer. Visto may have a shot at this but it will be tough.
3) To be successful in mobile software you need a robust and integrated ecosystem.

Introduction

Welcome to the Software and Mobile Ecosystem Blog. In my postings I will be commenting on strategic issues in the mobile and wireless market and hope to provide a unique perspective based on my experience selling mobile software and researching the market. While I will be focusing on mobile software I also follow, and will write blogs on, the multitude of interconnecting technologies that impact the success of vendors in the mobile software space. Enjoy, and please feel free to comment and provide feedback.