03 Jan 2011
We expect smartphones to come to dominate the device market over the next five years. Market share leadership will, in turn, be driven by the success of the individual ecosystems. We believe that market support exists only for a limited number of ecosystems. Consumers will not adopt new closed ecosystems when compared with the choice of the leading ecosystem, Apple (which happens to be closed) or an open ecosystem. We expect RIM and HP Palm to fail to bring new customers to their solutions, or even to maintain their current market share. With regard to new open ecosystem entrants such as MeeGo and Windows Phone 7, we believe that the key to their success will be the creation of holistic ecosystems involving deep media and application libraries, consumer and enterprise product tie-ins, and integrated cloud services. Although this is a difficult challenge for both companies, Microsoft appears to be much better equipped for this task than Nokia.
Tablets are another new element of the smartphone revolution, and it is still unclear whether this is a completely new product segment or rather a replacement of some of the laptop market. Regardless, Apple has again shown with its iPad that there is a tremendous opportunity for vendors who are able to create innovative and compelling products. Tablets also help to bolster the ecosystems for which they are designed by providing another channel for application sales – one that commands higher prices than the handheld channel.
The changes in the device industry since the introduction of the iPhone have been striking and it is difficult in the midst of such disruption to predict an outcome. 2010 has been a year during which the players have appeared to solidify and publicize their strategic plans. However, we expect many aspects of the industry to be in flux throughout 2011, setting the stage for dramatic changes.
Top five trends in 2011:
- Pads will proliferate and diversify
The mobile device market will continue to see increased competition among WebPhones, partially masking the emergence of a more capable and diversified field of tablets/pads and ‘transformer’ devices that covers the span between notebooks and smartphones. This trend will be driven by the growing functionality of combined devices and services; more powerful performance yet longer battery life combined with the thirst for higher bandwidth applications will enable market growth.
- Emergence of multiple device attachment
Although it has been part of the justification for HSPA/HSPA+ and LTE evolution, market awareness of multiple device usage is lagging. Most consumers think of wireless in terms of one device per user., but this will start to change in 2011 as the focus shifts from the dominance of WebPhones to the multiple device market environment.
- The friction between LTE/HSPA and Wimax will fade
Due to convergence of devices and networks and operators’ focus on delivering competitive services, media and industry focus will be less on the debate between the two technology camps and more on the delivery of profitable common attributes of broadband and multi-service IP environments.
- Android will continue to gain ground on Apple
Google-led Android and sister effort Chrome OS and app stores will gain market share and recognition to end the year more as equals. Android/Chrome will largely overcome an image problem: while Android devices now outnumber the iPhone and applications have swelled, Apple starts the year with the impression it remains the clear market innovator – this will have changed by year’s end.
- Growth outside of North America and Europe will become more profound
While the focus on LTE developments in the US and Japan will capture many headlines, the influence of populous regions outside of developed markets will shift the balance of industry influence. Indian operators’ decisions will come down on the side of LTE rather than Wimax, and further defections are likely. China and India will shape up as innovators in low cost WebPhones and tablets and the applications that help drive them.