Tuesday, April 17, 2012

Thoughts on mobile platforms and ecosystems

I wrote in the RIMM analysis that the mobile platform battle among iOS, Android, Windows Phone and BB10 is a battle on courting application developers. The platform with the most number of applications wins. I'd like to explore this topic a bit further in this post. This won't be a rigorous dissertation or anything like that. This is just a collection of random thoughts loosely related to the competition.
Key points:
  • Mobile platforms are not as sticky as PC platforms.
  • Nokia can win back market shares by just being different. 
  • The importance of the battle indicates HTML5 is still immature and may never be. Google's dual-bet -- Chrome OS and Android -- is a hedge for exactly this reason. 
  • It is also a battle on distribution channels for digital contents

Stickiness

The history of PC gives us a good point of reference of the competition dynamics. However, I would argue that mobile platforms are not as sticky as PC platforms for the following reasons:
  • Mobile apps is a couple of magnitudes cheaper than PC apps. The switching cost in pure monetary term is much lower. Not to mention a lot of the mobile "apps" are just games which have limited lifespan. (Do you still play Angry Birds? Do you still use Excel?)
  • The primary users of mobile phones are consumers while business users make up a significant portion of the PC market. Businesses want consistency and resist changes. Consumers are more easily influenced by fad and fashion.
  • Related to the 2nd point, mobile phones are more intimate personal items. They are a bit like watches. People want their phones to be an extension of their personality, their public persona.

Can Nokia come back?

Because of this, I think there is a fair chance Nokia can gain back its status as a key player in the mobile market. What Nokia has to do is just to be different -- different finish, different OS and different user interface.

Being different is a fashion statement. It's personal. It's cool.

Actually, Nokia's marketing department is on the same page with me.

(Well, but that doesn't mean Nokia will be a good investment though.)

Google's hedging strategy

In the ideal world, everything should just be cloud-based. Everthing should be implemented in HTML5, the latest and greatest web standard. Then, there will be no point to have a platform war. An HTML5-based app that works on iOS phone will work just fine on Android phone or any other phone.

However, it is not the case at the moment. This indicates HTML5 is still not mature enough. It is Ray Ozzie's observation that Google's dual-bet approach -- Chrome OS and Android -- is a hedging strategy for exactly this reason.

And if history is a guide, when a dorminant player emerges, it will have every incentive to cling onto its proprietary platform (i.e. the mobile OS platoform) and undermine the standard (i.e. HTML5). That means there is very high chance HTML5 will never become what it can become in the mobile space.

Digital contents 

But the prize of the battle is not the licensing revenues of the platform itself. The prize is the control of the distribution channel of digital contents. Amazon "gives away" Kindle in order to have a channel to send you books, videos and music. Google gives away Android in order to have a channel to send you advertisements (and potentially all sorts of stuff).

(Disclosure: Long RIMM, MSFT.)

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