Smartphones War Rings Loud and Dear
Oo Gin Lee - Straits Times Indonesia | August 24, 2011
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While television viewers await the coming HBO television series Game Of Thrones on medieval politicking, consumers in fact have another game in town to watch: the Game of Phones.
The latest season kicked off with Google's announcement last week that it is making a bid for Motorola's cellphone division, Motorola Mobility, for a whopping US$12.5 billion (S$15.1 billion).
Those who have followed the battle for supremacy of the personal computer (PC) may think they have seen it all before.
But they would be wrong.
In the battle for PCs, Microsoft's Windows dominated the landscape for over 20 years. In contrast, the battle for smartphones - think touchscreen phones that can go online - is barely three years old, but already new players are entering the fray and causing major upsets.
Tech giants such as Apple, Google, Microsoft, Nokia and Samsung are now pulling out all the stops to fight for market share.
The current war dates back to 2007 when Apple launched the first iPhone. Before that, touchscreen phones were ugly and needed a stylus. The iPhone turned touchscreens into sleek, finger-swiping good, easy to use phones. Apple also pioneered the concept of a centralised online store that lets users discover and download applications directly to their smartphones over the mobile Internet.
In 2007, the smartphone leaders globally were Nokia and Research In Motion's (RIM) Blackberry, followed by Microsoft's Windows Mobile. The latter did not make its own phones but its mobile operating system (OS) powered devices made by phone makers like Samsung, Sony Ericsson, HTC and LG.
Apple's iPhone changed everything as it went from zero to hero. By the end of 2007, Apple was in second place for smartphones in the United States with a 28 per cent share. Everyone demanded a finger-swiping touchscreen phone - but the other phone makers did not have one to offer.
Enter Google. It offered its Android touchscreen mobile operating system for free to all phone makers. Within a year, major phone makers Samsung, Sony Ericsson, HTC, Motorola and LG threw their lot behind Android. They still make smartphones powered by Windows' OS, but they are launching a lot more Android-enabled phones.
Today, Google is the new smartphone king, having dethroned Nokia at the end of last year. According to research firm Gartner, Google's Android mobile OS had a 43.4 per cent market share of all smartphones sold globally between April and June this year.
Nokia's Symbian is second with 22.1 per cent followed by Apple's iOS (18.2 per cent). Microsoft's Windows phone OS has been reduced to a paltry 1.6 per cent.
Despite still being in second place, Nokia has given up on its Symbian OS and announced early this year that it would make Windows Phone its primary platform for its smartphones. For Nokia to embrace its once-bitter enemy is almost unthinkable, but a necessary evil in the game for survival, as Symbian phones have fallen too far behind Android.
But Google sits on a shaky throne.
The Android alliance has come under heavy siege. Samsung, HTC and Motorola are all embroiled in patent lawsuits with Apple across the globe.
Larry Page, chief executive of Google, accuses Apple and Microsoft of banding together to make it more expensive for phone makers to choose Android. Microsoft hopes to woo the phone makers back to its operating system, while Apple is keen to chip away at the dominance of Android phones.
But the battle for control of smartphones isn't just about who writes the software for the operating system. Neither is it just about who makes the best handsets. Instead, the biggest deal now is over who owns the patents and gets to collect licence fees from the phone makers.
Every smartphone launched may involve as many as 250,000 patent claims. Patent licence fees are payable for every smartphone launched. In June, Microsoft demanded Samsung pay US$15 as patent licence fees for every Android phone that Samsung sells.
According to mobile analyst Chetan Sharma, Apple and Google are not top patent owners. They rank only in the 30s for the number of mobile patents filed in the US and Europe since 1993. In contrast, Microsoft is in sixth place while Motorola is in eighth.
Last month, Apple and Microsoft led a consortium which bought about 6,000 patents from Canadian telecoms company Nortel Networks for US$4.5 billion, outbidding Google.
The tech giants are now in a patent war. Google's purchase of Motorola gives it access to Motorola's armoury of 17,000 patents. By owing more patents, Google has the muscle power to help partners like Samsung negotiate a better price from Apple and Microsoft in cross-licensing patent deals. After all, Apple and Microsoft phone allies would also have to pay Google for patent licences.
However, the purchase of Motorola could turn out to be a double-edged sword. While it is helpful on the patents front, Google's purchase of the handset maker may alienate its other Android allies who are all handset makers themselves. The other phone makers will be jealous of Google favouring Motorola, fearing the former might offer earlier access or even exclusive features to the latter, at their expense.
Page has promised to run Motorola as a separate business and keep Android as an open platform. But actions speak louder than words: Google needs to assure its partners and consumers of its commitment to keep Android a neutral platform for handset makers.
Meanwhile, Microsoft is in the wings, eager to woo any unhappy phone maker away from Google's Android into the Windows Phone OS camp. Apple, meanwhile, is growing from strength to strength.
Google is walking a fine line trying to push forward on the patents front, while keeping its Android alliance intact.
Google and its Android phones may be king for now - but the War of Smartphones is far from over.
Reprinted courtesy of Straits Times Indonesia. To subscribe to
Straits Times Indonesia and/or the Jakarta Globe call 021 2553 5055.
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