The key to how the iPhone would fundamentally affect the mobile industry was always going to be how it forced innovation at the incumbent players. The latest example is Nokia's bold step to buy its partners out of their shares of Symbian, make it free for developers to develop on, and free to handset makers to put on their devices (http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/06/25/ccnokia125.xml).
It seems Nokia has recognised just how it is that Apple managed to do so much better a job at building a mobile phone than businesses who'd been in the game for decades.
In our view, the key to the iPhone's amazing (we will soon forget just what a leap forward it represented) design, usability and functionality is Steve Jobs' insistence on having the development of device, operating system and software, in one place.
If you consider the businesses a user has to go through to get to a piece of mobile content, you end up with a mobile ecosystem where standards could hardly exist.
This journey mirrors our experience on PCs but the difference is that competition in each of these elements has led to a complete lack of standards at any point. As most understand, Microsoft's dominance of desktop operating systems has been absolutely fundamental to the success of personal computers and everything that emerged as a result, including the web.
In mobile, the lack of a 'standard' in any part of the ecosystem means, most significantly, that handsets look completely different from each other – even those sold by the same manufacturer - and operating systems are utterly incompatible. This has hampered the overall usability of mobile phones for advanced content and services in many ways, not least the development of applications. One developer is famous for revealing that, for one mobile service his company built (a game around the new Transformers film), it had to build 25,000 different versions.
Apple cut through all this and it appears Nokia has recognised that if it stands any hope of competing, it too needs to fully integrate the conception, planning and development of handset with operating system. The point is further demonstrated by the problems Android is having in getting off the ground (http://online.wsj.com/article/SB121418837707895947.html). With so many stakeholders on the project, things are bound to get pulled in different directions – it will be hard not to produce a product that isn't built by committee. A Google owned and produced 'G-Phone' could well have proven a better strategy.
Nokia is by far the largest player in handset sales and Symbian is, by an even greater margin, the largest player in smartphone operating systems (http://en.wikipedia.org/wiki/Smartphone). Together they stand a strong chance of protecting – and potentially growing - their share.
Strong challenges remain. How will its former handset partners in Symbian react. Will they continue to take its rival's OS for their devices? (This explains why Nokia is making Symbian free to other manufacturers.) Will the resulting improvements to Nokia phones be enough to supersede the iPhone, and whatever Android is able to deliver? Meanwhile, how will the operators – the current gatekeepers of the mobile sector – react? They are already upset about Nokia's plans to become a mobile player (http://www.theregister.co.uk/2007/09/03/nokia_portal_analysis/). Further strides across the value chain will have them studying the implications hard.
When people ask whether 2008 is the year of the mobile, you first have to ask what the hell they mean. But then you might say yes. Thanks to the iPhone, 2008 is year dot in terms of the mobile phone becoming a viable media channel. Nokia's new [£200m] investment acts as further evidence to underline that view.
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