Handset market: From mature to boring

08 Dec 2015

We have for a long time been expecting the handset market to become mature and boring. In this year it really happened. Android and iOS dominate the market and there is no room for other players. Can we nevertheless expect something new and exciting? And who are the losers and winners in the mobile business?

The handset market has quite well followed the historical development of the PC market, i.e. Android is the new Windows and iPhone is the new Mac. This, of course, simplifies the whole picture but tells especially about the market share and the position of operating systems. It is very hard for anyone else to break into the market. I wonder, who still believes in Sailfish and Firefox. And Tizen will most probably be for IoT and embedded systems only.

Microsoft had a good start with the new CEO Satya Nadella. It made a few interesting acquisitions and for example brought Office to Android and iOS devices too. But this year it has been more difficult to see progress. The company fired more people from the phone business, but still decided to continue with phones. Microsoft naturally wants to offer Windows for PC, tablet and mobile, but it is hard to have the business case for handsets. Now they launched the first “PC phone” that can be used with a larger external screen too. The reviews and user experiences haven’t been too good: software bugs, nothing special for high price and issues in the user experience. So, it’s more for old Nokia and Windows hardcore fans, not to win market share. And although Microsoft is especially a software company, it has only one app in the global top 10 list, Skype.

The Android device market has become more fragmented. Especially Chinese manufacturers have won market share and it has been a tough year for Samsung. A fact is that phones are so similar that the hardware brand doesn’t matter too much to users. And it is really like the old PC Windows market; most manufacturers don’t even try to offer anything too unique. And those who have tried, have tried to offer tailored software without real software competence and it has caused more issues than value.

Almost the only interesting new device in the market is the Blackberry Priv. It is the first Android phone from Blackberry. The physical keyboard and Blackberry’s traditional email solution makes it more unique than other Android phones. But is it enough for Blackberry? It comes very late, when Blackberry first failed with many things with its own operating system and also lost a lot of its loyal users during that time. Its hope is especially finance and corporate people who have used Blackberry and like the keyboard. But to save Blackberry’s device business the company will need much higher sales figures.

Google is a winner in mobile if we think the market share of Android and also how several of its apps are in the top 10 globally. This helps it to collect a lot of data that has value in its core business. But Google has also work to do to monetize its mobile business better. Google is still very dependent on its traditional advertising revenue and although it is doing a lot of other things too, it has work to do to get significant new revenue sources.

Although Facebook is not in the mobile device or operating system business, it is worthwhile to mention that Facebook is one winner in mobile business. Over the years there have been a lot of rumors about Facebook handsets and they also tried their ‘skin’ on operating systems. These things haven’t really happened, probably better so, but its mobile app is the most used mobile app in the world and they have really got mobile advertising and ad revenue stream to work. In that way Facebook is one of top mobile companies in the world.

We can summarize 2015 by saying, nothing surprising and earlier trends continued and made even clearer who and what dominates the market. Based on this we can also say that we cannot expect anything really new in 2016. The questions are more details like, does Microsoft continue with phones, what will be new in iPhone 7, is Blackberry back in business or out, how Google develops its mobile revenue, and does any Android manufacturer bring something really unique to the market.

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