Fight for smartphone supremacy hots up

Mobile handsets will go the way of the PC, with a small number of platforms dominating the market, says an analyst report.

The world of smartphones is condensing around fewer platforms, raising the spectre of PC-style commoditisation in the wireless world, according to an analyst report.

"Of the various platforms that have emerged in this space, including proprietary operating systems, ABI believes that only a couple will reign," according to Kenil Vora, an analyst with Allied Business Intelligence and author of the report.

Nokia and Microsoft are slugging it out to become the de facto standard in high-end handsets, and the industry is watching closely.

"This battle will intensify over time as Microsoft vigilantly tries to have OEM deals and Nokia tries to convince other OEMs to use its Series 60 platform, along with Symbian OS," said Vora.

The worldwide wireless operating systems and middleware (such as Java and Brew) industry is likely to grow to more than $785m (£491.61m) in 2008, at a compound average annual growth (CAAG) rate of 45 per cent from 2002 through 2008, according to the report. Meantime, global smartphone shipments are expected to rise in the next five years at a CAAG rate of 105 per cent.

The Nokia-supported Symbian operating system will continue to be used by equipment makers providing handsets to individuals, whereas Microsoft's mobile platform for smartphones will be preferred by enterprise users, said Vora.

"Microsoft has long enjoyed its successful reputation in the enterprise software market, and this will carry over to the use of smartphones by businesses," he said.

Commoditisation, which happened in the PC market when Windows and Intel became dominant, made hardware - and the hardware maker - interchangeable.

"While standardised handset operating systems come with many cost benefits to the handset OEMs, their biggest fear remains the monopolising of the OS, making the handset supplier irrelevant - much like the PC industry. The wireless handset OEMs...are slowly adjusting to the idea of using a standardised handset operating system," he said.

Recently, other analysts have observed that Intel, Microsoft, Motorola and Texas Instruments have worked with each other, and separately, to provide manufacturers with reference designs for PDA phones. With these designs, makers in Taiwan and China can create handsets by mixing and matching chips, echoing the steps taken on the road to PC commoditisation.

Furthermore, these reference designs are being used by Taiwanese IT equipment makers such as Quanta, HTC, Mitac and Benq to make PDA phones, according to recent reports.

When products become commodities, sellers have to invent differences through brand and image marketing, appealing to buyers' desire for status and aesthetics. Observers point to the creation of Nokia's high-end Vertu brand and Siemen's new fashion-conscious Xelibri line as examples of wringing perceived value from the mill of technology sameness.