Seven smartphone predictions

Jouko Ahvenainen/Grow VC Group
01 Oct 2013

Apple launched two new phones, including a ‘cheaper’ one. Microsoft acquired Nokia’s phone business. Apple has lost market share to Android, and Microsoft with Nokia have had really poor results. Microsoft seems to be doomed with their existing strategy. Newcomers can surprise if they are able to build the right alliances. Android will be #1.

The response to the iPhone 5C and 5S has not been overly enthusiastic. Many people see 5C as too expensive and 5S as not offering too much new innovation or features. It looks like Apple doesn’t look to acquire more market share and volume, but focuses on margins and profits and wants to keep its market share in places like China. Apple’s App Store is still the most important marketplace for developers and app firms to make money. And the iPad is doing well in its own category.

The Microsoft – Nokia cooperation failed (see my prediction from July: Nokia needs an endgame for rebirth). It is hard to see that Microsoft’s phone business will be a success, at least in the near future. They have no carrier relationships or logistics, and wanted to get those from Nokia, but Nokia has also lost them during the last 3 years and we don’t know how Microsoft will be able to adopt that competence. Microsoft has been too slow with its own software, which could mean other vendors are now even less interested in creating WP phones. Nokia and Microsoft talked many times about ‘the ecosystem war’. Microsoft is now weak in that war and typically it doesn’t make sense to declare a war if you are weak. Maybe Microsoft should think about other strategies, like partnerships and offering software and enterprise solutions to any ecosystem.

Newcomers, Firefox, Tizen and Sailfish (Jolla), have been slower than many experts expected. Many parties, including carriers, would like to see a third ecosystem. It is hard to see how they can break into the market until some carriers start to provide strong support for them. Android is really taking the low cost phone segment, which makes it hard for Firefox to succeed there. Tizen has had support from carriers, especially in Asia, but we are now in a wait and see mode. Carriers have no track record of building an ecosystem themselves.

Jolla has very ambitious plans with Sailfish. It really plans to make a top-level phone with innovation in the user experience too. It is hard for a small company to build logistics, distribution channels and a new ecosystem. It helps that Jolla’s phone can also run Android apps. Either way, the third ecosystem should offer something totally new to users. Based on my own experience with different platforms and devices, I feel Jolla and Sailfish is the strongest candidate to offer something new. But it cannot do it alone; its hope is that other parties start to support and utilize its Sailfish platform.

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