Smart software for 'dumb' phones

John C. Tanner
16 Jun 2009

Another year, another iPhone. Last week Apple launched its follow-up in the iPhone line-up, the unimaginatively named iPhone 3G S.

As you’ve no doubt heard, the hardware is not radically different from previous iPhones – 7.2-megabit HSPA support, faster processing and a autofocus camera – in other words, things the “proper” handset sector sorted out some time ago. In that sense, the iPhone 3G S highlights the fact that, touchscreens aside, Apple still seems a bit behind the times when it comes to handset hardware.

But that arguably doesn’t matter, since the real star of the Apple show is the software. Even before its release, iPhone OS 3.0 had already won accolades for supporting things like cut-and-paste and video/voice recording, but a more notable feature is its support for over-the-air firmware upgrades.

Ovum analyst Tony Cripps was duly impressed, noting that while OTA updates are old news in the mobile sector, it’s actually hard for cellcos to do it across a huge range of devices. Apple, by contrast, only has one hardware platform, and has the ability to modify and improve handset software more or less the same way its laptops do when connected to the internet. By no coincidence, Google’s latest version of Android (1.5, a.k.a. “Cupcake”) also supports OTA upgrades. So, incidentally, does Nokia’s 5800 handset and select RIM devices (albeit only if you plug them into a PC).

All of which goes to show just how important software is becoming to the smartphone business. And we haven’t even mentioned the apps yet.

Take the Palm Pre, which hit the shelves just a few days before the iPhone 3G S to initially positive reviews (apart from the overheating problem), but a chief criticism was the meager apps se¬lection in Palm’s app store.

Admittedly it’s an unfair gripe, since most new app stores have started off with a small inventory. But the point is that customer expectations have already changed. If you’re goina to launch a smartphone in 2009, you’d better have a decent app-store ecosystem sitting behind it.

Interestingly, some cellcos are starting to think the same thing, and are launching their own app stores. The motivation is understandable – branding, customer loyalty and yes, a 30% cut of revenues (or 50%, if you’re China Mobile).

A cellco-owned app store may seem redundant from a user point-of-view, but only if your smartphone OS is already served by one. Cellco-operated app stores can target the users who don’t yet have a smartphone – in other words, the majority of them. While smartphones are hyped as a hot growth market in the next five years, they’ll still only account for less than a third of handsets shipped in 2014, by most analyst accounts.

Not to be discounted is Sun Microsystems’ newly launched Java app store, which has the potential to take the concept cross-platform and extend it well beyond the smartphone paradigm, according to Rethink Research. That leaves a pretty large segment of “dumb-phone” users for cellcos to tap between now and then.

In theory, anyway. The reality could be much different. As Nokia recently discovered the hard way with its Ovi Store, building an app store isn’t as easy as it sounds.

Also, there’s a fine line between a cellco-branded app store and a reupholstered walled-garden portal, the latter of which is the model that app stores are supposed to be rendering obsolete. Cellcos looking at the app store model would do well to understand the difference.

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