The world’s biggest mobile manufacturer Nokia and the second-biggest software company Microsoft have announced a partnership in an attempt to slow their rapidly declining share of smartphone market. Will it work?
The deal will see Nokia adopt Microsoft’s recently-launched Windows Phone 7 as the primary operating system (OS) on its smartphones.
This is something of a landmark for the Finnish company which, since the 1980s, has refused to use anything other than its own software.
What’s all the fuss about smartphones?
But why should you care? After all, it’s not like there’s a shortage of smartphones on the high street. New devices are announced almost every week. They all look pretty similar and all seem to do the same thing.
Well, I think we should care, because what’s happening in the smartphone market today is about much more than just phones.
In two years’ time most people in the developed world will own a smartphone. Worldwide sales of the devices jumped by 89% between 2009 and 2010, and earlier this week it was announced that smartphone sales outstripped PC sales for the first time. Whether you like it or not, regular phones are on their way out.
We’re buying into an ecosystem
More importantly, when you buy a smartphone you’re not just buying a device to make phone calls. You’re buying a store where you download applications and games and content delivery services where you download books, music and films.
You’re pushed into using your OS vendor’s preferred internet services, like email and search, and soon you’ll be locked into your vendor’s preferred payment systems that may change the way we shop on the high street.
To use the corporate jargon, you’re buying into an ‘ecosystem’.
This is big business indeed, and it’s why we shouldn’t let the same thing happen to smartphones today as what happened to PCs back in the 90s.
World dominance from the 90s to today
We still live with the legacy of Microsoft’s virtual monopoly of the PC OS market. Windows’ dominance gave consumers a raw deal on numerous fronts, and culminated in Microsoft being indicted by the EU for anti-competitive behaviour.
But it’s not Microsoft’s dominance we have to worry about this time. It’s Google’s.
Google’s smartphone strategy against Apple, with its Android OS, is very similar to Microsoft’s strategy with Windows in the 90s. Both Google and Microsoft attacked Apple by allowing third party hardware manufacturers to use their operating systems (Microsoft charged a license fee for Windows, whereas Google goes further and gives Android away for free), undercutting Apple’s premium products.
This strategy worked back then and it seems to be working now. According to one research firm, Android is now the world’s dominant smartphone OS. An astonishing feat for an OS that launched barely two years ago.
Obviously there are differences, but given Google’s already privileged position as the de-facto gatekeeper of the internet, the stakes are even higher.
Nokia and Microsoft’s partnership may end up having little bearing on all this, but it is welcome competition in an industry that’s going to have an increasingly large impact on everything from the way we use the internet, to how we shop.
And that’s exactly why you should care about smartphone operating systems.