SMARTPHONES FEATURE
the floor—it’s very difficult for the players that were not part of the first wave of innovation to explain to customers why they should pay a premium for their brands.” Given that Apple alone can claim to have
truly owned the current innovation cycle from the outset, all of the other vendors fall into the second wave and are battling one another for stability in the market. Those that are success- ful—Samsung chief among them—are forced to navigate the obstacles placed in their path by Apple’s aggressive legal strategy. The problem is compounded by what some handset sector executives have identified as the beginnings of a shift in loyalty away from handset brand in the high end towards the OS. “The growth of Android has demonstrated that customers value the operating system,” says Telefónica’s Simon Lee-Smith. “Increasingly people are coming in and asking for an Android device, rather than a Samsung or Sony Ericsson.” As handset brands have historically held
greater sway than operator brands, vendors and operators are bound together by the shared threat from the platform players like Apple, Google and—if it is successful with its revamped Windows Phone offering—Microsoft. For Microsoft, being perpetually late to the party could finally be construed as a positive, at least in terms of the reception it’s now get- ting from operators. None of the carriers feel safe with a smartphone platform duopoly that Accenture’s Dan Adams categorises as “Apple at the top and Android at the bottom.” Peter Becker-Pennrich says that this du-
opoly “feels uncomfortable”. Like all opera- tors, he bends a knee to Apple, saying: “It’s no wonder they are the most valuable tech company in the world right now, because they have the best content, delivered through the best processes.” And his take on Android is also positive. While iOS “makes it difficult for us to push our services and differentiation agenda,” he says, Android scores highly for operators on issues like commercial flexibility and the ability to pre-embed and deeply root carrier software into the OS. “The only problem,” he says, “is that if
Google had a bad day and changed all of its policies, there would be relatively little that the industry could do about it. That’s where a lot of the discomfort is coming from, and we need more competition in that space.” Once upon a time carriers would have looked
towards Blackberry vendor Research in Motion for the third platform, but those days are long, and perhaps irretrievably, gone. When Orange’s
Patrick Remy says, “having only two ecosystems would be something that we’d be concerned about—having a third is important to us and our customers,” he offers a damning assessment of RIM by not even considering it as a prospect. Microsoft’s bid to exploit this need for a third ecosystem, and to drive quality technical and strategic execution, will surely be one of the great device sector narratives of the next twelve months. And it is not only Microsoft’s fortunes that this narrative will chart; Nokia, too, is fully exposed to whatever difficulty or reward lies in store for Windows Phone. The launch of Nokia’s Lumia 800 was ar-
guably the biggest product story to emerge from the handset sector in 2011, and with good reason. Once arch-rivals in the handset space, Nokia and Microsoft now depend on one another for success in what is, for both of them, the latest (and possibly last) of several costly and involved rolls of the smartphone dice. Both of them talk of the importance of growing the WP ecosystem, with the participa- tion of other vendors key to its success. But for the time being Nokia and Windows Phone are essentially one and the same. Microsoft’s other vendor partners, which
have shifted en masse to Android during Windows’ time in the wilderness, will not rush back to Redmond until they’ve seen how Nokia performs—not least because the exact nature of the relationship between Microsoft and Nokia, and in particular the level of favouritism the Finnish vendor will be shown as part of it, is not being communicated. So when Nokia’s UK and Ireland MD Conor Pearce says “we’re trying to build a third ecosystem, to bring balance to the market” and “we’re proud to be doing the first real Windows Phone,” he is positioning Nokia, as well as Windows, as the answer to carriers’ concerns over the platform duopoly. And few people seem willing to write the partnership off. “The market is open for Mi- crosoft and Nokia to have a really good play here,” says Accenture’s Dan Adams. “Microsoft have never really cracked the handset market but never bet against them in a consumer play. Just ask Sony Playstation if the Microsoft brand is cool enough to sell to consumers. And one thing that can be guaranteed is that Microsoft will be able to create a good development community.” The marketing push that Nokia is putting behind the Lumia 800 is immense and, if the phone falls short of expectation, it won’t be for lack of consumer awareness. Taking its lead from Apple, the Finnish vendor is »
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Nokia Lumia 800
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