It's official. Windows Phone reaches RC Cola status during Q2 2013. Congrats to Microsoft and partners.

From Wikipedia: The rule of three as put forward by Sheth and Sisodia in 2002 and states that in a mature market, there will normally be three major competitors and several others, who only succeed if they are able to operate in a niche market.

KEY MOBILE TRENDS: RC Cola Status, Platforms & ecosystems, Rule of Three.


Coke, Pepsi, RC Cola. Xbox, PlayStation, Wii. GM, Ford, Chrysler (domestic). Gold, silver, bronze. Friends, Romans, Countrymen. The good, the bad, the ugly. Yes, three is the magic number. So now please stop, look and listen. The smartphone market has reached an important milestone this past quarter.

About one month back, in a blog entry I predicted that BlackBerry would soon "Sega-fy" itself: the company would likely abandon the hardware market altogether and concentrate on providing secure enterprise messaging. BlackBerry would become a software and services company like Sega. No more BlackBerry QWERTY devices. And no more BlackBerry OS.

For the past few years I've been writing that Microsoft would establish Windows Phone as the third ecosystem in smartphone platforms and settle to around 5% market share. For Microsoft, there is too much at stake for it to fail. And unfortunately for BlackBerry, Microsoft has too cash flow to fight the tape.

This is not to say that Microsoft and partners have succeeded in their original goals. Microsoft never intended Windows Phone to be the RC Cola of the platform market. The smaller, third player which feeds on the crumbs. But this is how things developing, and Microsoft must learn to live with less.

According to IDC, 79% of smartphone shipped during Q2 2013 were Android-based, followed by iOS which had 13%. Windows Phone took 3.7%, up from 3.1% a year earlier. Windows Phone outgrew the market, giving it some nice forward momentum against BlackBerry, which dropped to under 3%. The smartphone market has matured quickly, and BlackBerry has fallen below the critical mass required to be a vendor worthy of consumers', developers', and operators' consideration.

Windows Phone has reached RC Cola status (the third brand name in the U.S. cola market). This is the real thing now. But decide for yourself: can other smartphone platforms still come up with a formula for success?

Q3 2013 smartphone platform market shares. Source: IDC.

Chrome begins to shine. Google's Chromebook is the one star in a shrinking PC market. And it highlights major shifts ahead.

PCMAG STORY:
Chromebook Sales Growth Bucks PC Market's Downward Trend >>

MAJOR TRENDS: Cloud, HTML5, low-cost, commoditization, business-model changes

Back in February, I wrote about the next potential screen of death for Microsoft: Google's Chromebook. ("Is MS about to be Wanged?" Feb 25, 2013). At a price of $249, the Samsung-made Chromebook is an extremely capable, super sleek, cloud-centric laptop. It's solid and secure, low-maintenance and high-value. Set it and forget it. But now it's getting tough to ignore.

According to research firm NPD, Chromebooks dominated the low-cost segment of the U.S. laptop market during the half of 2013 with as much as 25% share. And according to Gartner, Chromebooks accounted for almost 5% of all U.S. laptop sales, up from around 1% — 2% in 2012. Considering that Samsung's low-cost Chromebook has been Amazon.com's top-selling laptop since December 2012, none of this is surprising. Americans are really learning that remote is the new local, and that thick-n-chunky, virus-friendly operating systems are a hindrance rather than a requirement to get things done.

But now as the Chromebook is going global, significant changes can begin to alter the entire market for PCs and really provide a boost to cloud-based ecosystems. Starting back in April of this year, Google began selling Chromebooks in 10 other countries. Chrome OS might soon reach escape velocity and become a platform worthy of a lot more respect from developers who'll accelerate the shift of their focus to web-based technologies such as HTML5.

Big changes are coming to the PC industry and Microsoft executives have certainly received the wake-up call: last week Steve Ballmer announced a corporate restructuring around "Software & Services." What's amazing about this new & improved Microsoft is the amazing parallels to the new & improved Nokia in 2006 when company executives promulgated its new organization focusing the future of the company on a P&L center called "Software & Services" to effectively compete against the GYM players (Google, Microsoft, Yahoo!).

During the coming years we will certainly see many more major company adjustments, some of them late and desperate last-minute attempts to acclimate to the on-going cross-industry shifts which are underway. Some platforms will be abandoned, some new ones will be adopted, smart players will make successful business-model transitions, and some big names will fade fast. Chrome OS is one of the lights at the end of the tunnel.

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

PRESS RELEASE >>
NEWS >>

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.

Google's $249 Chromebook. Is this the new screen of death for Microsoft? Is MS about to be Wanged?

I've had the opportunity to use Google's made-by-Samsung $249 Chromebook for a week now. It's sleek and it's neat. It's instant on, instant off, and it's in demand. As one of the best-selling laptops, it's time to wonder if Google isn't on its way to establish Chrome OS as the Android of PC world.

If such a shift seems unlikely given Windows' two-decade legacy, please take a peek at the next generation of white-collar workers. They are trained in the ways of Google Docs, think net before local, and have no loyalty to the platforms of their parents. Chrome OS could really be the next generation for the next generation.

Being in the center of such industry shifts is never fun. For most such unfortunate companies, it's a deer-in-the-headlights moment. Just ask the talented employees at Wang Laboratories. Wang who? Wang was hot property in its day making dedicated word processors and minicomputers competing against companies such as IBM and DEC (who?). But as the adoption of personal computers squeezed their markets, the company found itself in a painful downward spiral.

I remember well the formation of the Open Handset Alliance and the introduction of Android. It all started so innocently. But even the journey to a billion units starts with a single device. Google's Chrome OS is here to stay and we will soon begin to see it take some real market share. As we slowly march towards an HTML5 world, Chromebooks and Chromeboxes could be just what the doctor ordered.

And for Microsoft? Well, the future of Microsoft's Windows is looking cloudy.

Is this Microsoft's new screen of death?


A Wang dedicated word processor.
A market shift to PCs was a process they couldn't handle.

Jolla, unveiled. Is this the Red Bull of the smartphone biz? Did one of the world's most boring industries just get an energy boost?

JOLLA HOMEPAGE >>

SLASHGEAR STORY >>

I used the analogy of the soft drink market several times now when describing the duopoly that has formed in mobile platforms. There's Coke, Pepsi, and some hopeful cola competitors. There's Android, iOS, and some hopeful platform competitors.

And then there are the Red Bulls. The companies that hit an industry from the side with something different, something fresh, and something unexpected. Today we get a first look at the Sailfish OS from Jolla.

Jolla is in essence the grandchild of the Maemo OS, which was one of my favorite mobile platforms ever. (I was lucky enough to be a test user for the Maemo-based Nokia 770 tablet which was released back in 2005. The touch monoblock device provided real browsing and a smooth overall user experience.) In addition to the platform unveiling, Jolla has also announced a partnership with ST-Ericsson for optimized mobile chipset solutions for the Sailfish OS, a support in the Finnish operator DNA, and the fact that Sailfish will support Android apps.

More info from Jolla is hitting the market as of this writing. But for now, I like the little bit we see here. A UI filled with nice big clear words rather than vague icons. A UI that cuts to the chase and could be one some operators embrace.

So, is Jolla Bull? Red Bull?

De Frag. Fragmented thinking created a temporary comfort zone for Android competitors. Painful.

Cellular News Story & platform market shares >>

Android took 75% market share during Q3 2012! With fragmentation like that, who needs unity?

A few years back as Google just began kicking up its huge mobile dust storm in earnest, most Android competitors took some comfort in the fragmentation myth: that the many emerging isotopes and skins of Android would result in a broken ecosystem and developer & consumer pain. So when IDC announced the other day that Android's share of global smartphone shipments reached 75% during Q3 2012, I began to wonder what went wrong with that fragmented way of thinking. Where did it come from?

The current market stats are amazing: there were 136 million Android-based smartphones shipped during Q3 according to IDC, five times as many iOS-based smartphones. Those two platforms now have an oligopoly with 90% market share, leaving the others to fight for the market crumbs. How did it come to this?

The contradictory notion that Android's sudden white hot success would turn into its undoing reeked of sour grapes. Android's wide market adoption was a painful lesson for the market incumbents to watch. Google, a virtual mobile newcomer, was being taken very, very seriously. By operators. By vendors. By developers. And by consumers.

Smartphone portfolios were suddenly filled with Android-based devices, and Google's apps store quickly filled with high quality apps and services.

And then came talk of potential binary breaks as Google amazed with version updates at an inhuman pace. Some industry executives chimed in. There were too many OS builds on the market at the same time. Too many form factors. Too many APIs, too many tweaks, too many options, and too much customization. Supposedly the belief was that all this would be Android's Achilles' heel.

But for the most part, in the end, this fragmented thinking did a lot more harm to the competition. It enabled the creation of artificial comfort zones and supported the on-going denial of real-world trajectories. Industry executives from several non-Android adopter companies pointed to Google's market dynamics as being self destructive. Thick PowerPoint stacks were creating trying to prove this theory. All a waste of energy.

Exaggerating or inventing competitors' weaknesses is an effective --but expensive-- method of rationalizing. Rather than looking in the mirror, it's tempting to spend energy in trying to prove the competition is wrong than prove yourself right. It's a matter of creating the proper mental attitude. And aptitude.

Binary breaks? A million tiny pieces? Android managed to keep itself together.

Cola wars. With 15% of the market up for grabs, who will be the RC Cola of smartphone platforms?

Coke + Pepsi: 75%.
Android + iOS: 85%.

When a classic duopoly is formed, outsiders are left to fight for the table scraps: the market-segment leftovers that the two major players have likely decided to ignore.

Serious challengers usually revert to the classic think-different campaign, trying to convince potential customers not to simply follow the flock: why be like everyone else when you have this opportunity to be unique. To show the world you can make up your own mind. You don't just go with the flow, you decide, you know.

The irony of most of these be-your-own-person campaigns is that they are all so similar, often using the same assembly-line metaphor rather than highlighting truly useful and differentiating features. (Check out some of the commercials at the bottom of this entry.)

When it comes to smartphone platforms, the two dominant market leaders are in place, and it seems unlikely they will be unseated anytime soon. So now the fight is now on to be the Royal Crown Cola of the market. And if you've never heard of RC Cola, point made.

Coca Cola and Pepsi have a combined market share of 75% of the global carbonated beverage business. Cadbury, the producer of think-different brands such as RC Cola and Dr. Pepper, comes in a distant third with around 16% of the market, with many small, local brands taking the rest.

When it comes to smartphone platforms, there is no Cadbury equivalent yet: no clear bronze-place finisher. Might it turn out to be Microsoft's Windows Phone, HP-supported (Open) webOS, RIM's BB10, Tizen, Boot to Gecko, something unknown from Amazon or Baidu, or none of the above?

Mind share and thus market share are especially difficult to change in this business due to the intense and increasing stickiness of platforms. And as smartphone penetration rates surpass 50% in many markets, the window of opportunity is slowly closing for most challengers.

So it's no longer time to think different; it's time to think better. Better features. Better usability. Better localization. Better apps and better maps. Better innovation. Better wow. And you had better start moving: it's the real thing now. Decide for yourself. Enjoy.

Drink different:


Think different:


Think different:


Think different:


Drink different:

Do long-term business-model shifts lie below the Surface? As Microsoft bypasses PC manufacturers for tablets, should Windows Phone makers be worried?

Should Nokia expect the Xbox model for the Windows Phone market?

With friends like this, who needs competitors?

Back in the year 1995, Apple began a short-lived Macintosh clone program by licensing the required ROMs, Macintosh operating system and other software to a series of ambitious hardware makers. These included Motorola, Tatung, APS, and Power Computing. When Steve Jobs rejoined Apple in 1997, he quickly ramped down this cloning program in order to pull hardware profits back in-house and maintain tight software-hardware integration.

Microsoft's unveiling of the Surface tablet earlier this week was certainly not significant from a technology point of view. However, it does have the potential to make some significant ripples across the tablet, laptop, and PC markets, and very likely, the smartphone market as well.

Microsoft's Surface is the tangent point between tablet and laptop. And between mobile platforms and PC operating systems. And between hardware and software. It is not a technology shift. It is a business model shift.

It appears that Microsoft's tablet announcement truly caught many PC makers unaware. As the once profitable laptop market is shifting towards tablets, phablets, and smartphones, companies such as Dell, HP and ASUS must feel slighted. Microsoft is playing Windows 8 close to the chest. If the company discovers advantages of tighter software-hardware integration, they can be expected to follow Apple's 40-year lead in taking control of hardware across the board.

Given the modest installed user base of Windows Phone devices, Microsoft might decide they don't have much to lose and pull a similar stunt with smartphones, taking control of hardware design at some point, using their own sales channels to push the products. This would cause a significant shock to Nokia, the vendor that went all in with Windows Phone. While the details of the agreement between Microsoft and Nokia aren't known, it can be assumed there is some sort of expiration date written in. Anyway, history has taught us that partnerships are made to be broken.

Apple continues to make life miserable for so many companies in so many ways.

Do bigger business-model shifts lie below the Surface?

Android and iOS dominate the U.S. smartphone market. Is it time for the others to panic?

NPD PR on Q3 2011 U.S. Smartphone market >>

So, Apple and Android are dominating the U.S. smartphone market with a combined share of 82% according to NPD, a firm that does sell-out research. This is almost a classic Coke-Pepsi type duopoly.

BlackBerry has now fallen to 8% from almost 50% not too many years and.

And Microsoft's Windows Phone continues to be nothing but a rounding error.

Microsoft changes WP boss. Does this indicate panic?



In a Coke-Pepsi styled smartphone platform market, who will win the battle to be Royal Crown Cola? (I realize some of you might never have heard of RC Cola.)

WebOS will go open source. So, it's to be a public stoning rather than a quick, merciful death for WebOS.

PCWorld STORY >>

This is no way for a once respected mobile platform to die. Is this cruel and all too usual? Given Palm's long and venerable history in the handheld space, doesn't WebOS deserve euthanasia rather than some sort of public flogging?

So, WebOS is going open source. It would be tempting to state that the track record for open source mobile platforms is miserable given attempts by some companies to open source their smartphone code, but one could also just as easily point to the Open Handset Alliance and Android. But Android is viciously maintained by one of the world's largest companies. I don't see HP giving the same level of support to WebOS, despite their stated plans to create WebOS devices. Second-hand open sourcing tends not to work too well.

I wish WebOS the best out there on its own: it can be a cruel world:

Is some mobile platform about to get the boot? Mozilla’s “Boot to Gecko” aims to make the web the OS of the future.

B2G webpages >>

MobileMag Story >>

It’s best to give Mozilla the respect they deserve. They took on Microsoft to change the browser biz. And now on to new things.

So, Mozilla is working on a web-based mobile platform similar in concept to Google’s Chrome OS. The general idea is to center the user experience around the browser with a strong reliance upon cloud-based services.

Even Mozilla acknowledges that the goals of the Boot to Gecko, or B2G, project are rather, well, cloudy. But Mozilla believes that there could be B2G handsets on the market already during 2012.

B2G will be coming up against some interesting competition, not so much in the other boot to browser concepts that are popping up, but in established platforms that appear to be evolving in the same direction. iOS, for example, has developed very strong ties to the web for direct updates, storage and backup, and Apple is one of the biggest supporters of HTML5 development within W3C.

Anyway, best of luck to Mozilla. The smartphone market could use a good kick to move things forward a bit. Will this be the real WebOS? Can Mozilla pull a Firefox out of the hat?

$444m. The number of the beast? With paper, Microsoft has become a profitable Android player. Has the look-alike smartphone market become boring?

Microsoft making millions milking monster OS. PCMAG STORY >>

Oh where's the innovation these days?

If I were a smartphone vendor, I'd be very concerned about long-term industry profitability. The majority of smartphone vendors are currently losing money... and that's in a booming market. Imagine how things will look when the market levels off. The smartphone market is starting to look a lot like the airline industry.

According to a recent Goldman Sachs report, Microsoft will make around $444 million this year from Google's Android via licensing fees for its embedded IPR. And as Microsoft continues to pursue IPR and licensing deals on top of Android, getting somewhere between $5 to $10 per pop, Android could become a billion dollar business for Microsoft. (Ironically, Android is currently more profitable for Microsoft than is Windows Phone.)

Of course, in reality, Microsoft is looking for a way to boost Windows Phone, and by working the other side of the equation to increase Android handset prices, Microsoft will have a more competitive platform on their hands. A $10 licensing fee is significant amount of money on a device with a bill of materials that is approaching sub-$100.

For years, the employees of legal and IPR departments in companies around the world have been worried about potential of "submarine" IPR attacks against Linux, with some troll waiting around for a large installed user base before rising to the surface. In the end, it was something much larger.

As the smartphone battler gets more vicious, it will take some heavy guns for any platform to succeed. The business is now as much about collecting patents as it is about innovation.

As the world awaits the next iteration of the iPhone, the truth is, we already know to expect more of the same: some nice marginal improvements, but nothing revolutionary. And competitors will match feature-for-feature in this follow-the-leader market.

Smartphone developments have gone flat.

In a league of their own. Introducing the HTML5-focused mobile OS “Tizen.”

Linux Foundation PR >>

tizen.org site >>

When it comes to mobile, it seems that Intel is always a bridesmaid, never a bride. And now, after being left at the alter, Intel is in a quick rebound OS relationship. But this is something a little different.

Intel is breathing new life into MeeGo with the formation of “Tizen,” a platform being described as a next-generation Linux-based mobile platform. Tizen will bring together the experience and remaining energy from MeeGo (which itself was intended to be the best of Intel's Moblin and Nokia's Maemo platforms) with LiMo. Like MeeGo, Tizen will be hosted by The Linux Foundation. This time Intel has partnered with Samsung as the key handset vendor. Samsung's involvement isn't strange: I've always said Samsung never met a mobile platform they didn't like.

The twist here is the intention to skip directly to an HTML5-biased mobile platform, an evolved form of life where mobility meets the cloud.

Imad Sousou, director of the Intel's Open Source Technology Center, wrote in a blog post: "We believe the future belongs to HTML5-based applications, outside of a relatively small percentage of apps, and we are firmly convinced that our investment needs to shift toward HTML5. Shifting to HTML5 doesn't just mean slapping a Web runtime on an existing Linux, even one aimed at mobile, as MeeGo has been."

The Tizen website claims that the OS will be developed for television sets, tablets, and netwbooks as well as smartphones. So here's the problem: this all sounds so familiar. Tizen is coming from a dubious pedigree with a rocky track record.

To their credit, Intel is forming a respectable league of Linux. Teamed with the power of MeeGo, the blood of Moblin, the speed of LiMo, the strength of The Linux Foundation, and the determination of Samsung, will Intel be able to get itself out of this one in time? Can Tizen leapfrog other platforms in a single bound? Stay tuned. But note, history isn't on their side. Let the battle begin.

Intel forms a league of Linux:



http://www.youtube.com/watch?v=p81_kAFdyr8

Who will be the third man? The Windows Phone enigma. Well, it looks like Microsoft is about to become the new Harry Lime.

Is the "rule of three" about to take effect in the dark, shadowy underworld of the smartphone platform market? It looks that way. So, here's the mystery question: who will be that third man? The answer is quite clear now.

From experience I tend to completely dismiss most analyst forecasts, especially when it comes to predicting smartphone platform market shares. If you take a look back to some forecasts made only two years ago by some major mobile industry analysts, none predicted Android or Linux would take 50%, most predicted Symbian would be in the lead going into 2014 and beyond, and Microsoft's miserable Windows Mobile was expected to inch its way up to become a top-two contender.

In other words, most forecasts have been completely useless, and some have been so far off that taking them even slightly seriously could have been harmful to your business's health. I do appreciate that making predictions, especially about the future, is very risky.

Those analysts who had forecast that Windows Mobile would be a top-spot contender now have some explaining to do as Microsoft's total smartphone platform share has reached record low after record low during the past few quarters. This week BGR blog wrote about an NPD Group study which offered some hope to Microsoft. NPD, which does consumer research, points to what I would call casual interest in Windows Phone from future users. According to the American consumers NPD contacted for the study, 44% said they would consider a Windows Phone device for next smartphone.

As the smartphone platform market concentrates around the balance of three major players ("the rule of three"), it's clear that iOS and Android will make the podium. But who will take the bronze? Windows Phone is looking like the favorite. WP has a solid user experience, an expanding ecosystem, and the backing of the world's most stubborn company. Throw in the fact that most of the world's largest handset vendors including Nokia, Samsung, LG, and HTC are in the Windows Phone business, it would be a shocker if WP flops in the long run.

While things are looking grim for other mobile operating systems to be anything other than a niche player down the road such as Bada, BlackBerry, QNX, MeeGo, and WebOS, things still aren't so black and white, it's never wise to dismiss any competitive force.

But provided Microsoft plays their cards right, by hook or by crook, it's soon time to welcome Windows Phone to the adults' table at the platform party. It's time for WP to coming out of hiding. It's time to welcome the third man.

A classic mystery. Who will be the third man in the smartphone market?
Is Windows Phone about to come out of the shadows? Very likely.

http://www.youtube.com/watch?v=ZNUrv6Yxxc8