Wednesday, June 12, 2013

Will the Fox-Fox partnership disrupt? Mozilla+Foxconn could change the market, but partnership success is spotty at best.


Mozilla Firefox OS pages >>

KEY MOBILE TRENDS: HTML5, commoditization, Foxconn.

Last week manufacturing powerhouse Foxconn confirmed plans to support Mozilla's Firefox OS with a series of white-labeled devices. If the announced intentions are followed through, this has the potential to impact the handset market in several ways, disrupting both the feature phone and smartphone players.

To begin with, Firefox OS could establish HTML5 as a legitimate mobile ecosystem alternative and slowly dilute native development environments from the bottom up. This won't be easy given the entrenchment that iOS and Android now enjoy. And new ecosystems are notoriously difficult to get going. But HTML5 has the power of the next web behind it, and Apple and Google are largest contributors to the standardization work.

The initial impact of Firefox OS would be felt in developing markets in South America and Eastern Europe, where Mozilla execs believe the platform has the best chances of growing a user base. Firefox OS-based devices are expected to reach significantly lower price points compared to current smartphones on the market. Retail prices of Firefox OS devices should come in below $100, and possibly sub $50 as some point given the smaller hardware profile.

At such low price points, feature phone vendors will need prepare for a consumer expectation shift. If Firefox OS is designed with the future in mind, most current feature phone platforms are descendants of 20th century technology. Vendors such as Samsung and Nokia will need to evaluate Firefox OS. Already Alcatel TCL, ZTE, LG, Huawei, and Sony have announced some interest in the platform. Dismissing Firefox OS could be like snubbing Android in its early days.

But now the Foxconn partnership should be a wake-up call to the industry. While Foxconn will not be selling their own labeled devices, their support should lower the barriers to entry for all vendors great and small to bring Firefox OS devices to market with a rather immediate effect on the feature phone market and lower-end smartphone segment. A trickle-up could put more pressure on smartphone vendors' mid-price ranges and hit ASPs and margins across the industry.

However, it should be made clear that historically, such mega mobile partnerships have a very mixed track record of success. I think back to 1999 when Nokia and Palm, two of the biggest industry names at the time, announced a partnership to create the mobile platform of the future. But despite lots of travel between California and Helsinki, there was nothing to show for the initial market excitement beyond an a press release. And Mozilla's is not the only new platform looking to establish itself. Fresh open-source mobile operating systems from Ubuntu, Intel (Tizen), and Jolla, among others, are appearing on the market.

Nonetheless, history is always on the side of change. Mozilla has shaken up the market before and chipped its way forward against Microsoft's Internet Explorer. History could repeat itself.

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