Mobiles’ Market changes: Who wins and who loses?

As the futurist Naisbitt said in 1994, the functional differences between phone, television and personal computer are disappearing. Now we use the personal computer as a television or as a phone, the mobile phone as a personal computer to send emails, share pictures and check our preferred social network sites in any place at any time, and the new TVs are starting to go in that direction as well.

The mobile industry has gained market and substituted other forms of communication becoming a key player in the sector of communications. It has experienced a constant growth since 2004 -except for 2009 because of the recession- and it is forecasted to continue with this trend in the following years. Growth comes with opportunities and because of those, the game in the mobile market battle has suffered several changes in the last years. The rules have changed and it has evolved from a simple business model with few players to a whole ecosystem with several players.

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Mobile’s Market before 2006

Originally the game was only between service providers (carriers), phones manufacturers and customers. The phones manufacturers agreed which models to offer with each specific carrier and the customer chose its carrier depending on the cost of calls, sms, etc. The carrier was the principal player because the customer would choose a phone only from those offered by it and the decision would depend only on the costs and offers of the carrier core services.

Figure 1: Mobile Business Model before 2006

In 2002, the Treo of Palm started integrating a personal organiser (PDA) with a phone. Palm was the first famous mobile platform with many independent developers programming applications for the device. A Palm owner could find applications for almost everything to have fun, personal organisation, etc. This was a “specialists” market populated by technology enthusiast who would take the challenge of connecting the phone to the computer and experiment with it. It may been too early for the market, and together with that, Palm did not evolve rapidly enough to maintain its powerful position. In 2008 they lost the battle against other brands.

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Mobile’s Market between 2006 and 2009

In 2006, the iPhone’s launch started changing the mobile market in big scale. The consumers’ desire for the iPhone grew importantly, taking away the importance of the carrier because of the brand, design, but most importantly, because of the applications that were available for this platform. The large number of applications allowed the consumers to convert their phone into almost anything else. The consumers would go to wherever the iPhone was, starting to change the rules of the game.

Figure 2: New Mobile Business Model between 2006 and 2009

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Mobile’s Market after 2009

Google arrived into the market as a new player in 2007 with the announcement of their operating system Android. They launched the first version in 2009 targeting the most important competitive advantages of the iPhone: Applications, content, and the use of the mobile as an effective gate to reach the customer’s attention. Android stared as an open source platform in which any person could develop and offer their applications without strong restrictions. Going further, any mobile manufacturer was invited to use the  Android Operating System, opening the battle to many companies whose expertise was the hardware and not the software.

The success of this strategy and the competition between these two big players (Apple & Google) made the offer of applications and the hardware options grow exponentially. This made the consumers the big winners as they received a huge offer of services and innovation for reasonable prices.

Figure 3: Mobile Business Model after 2009

Applications Offer, Operating System and Hardware Manufacturers became the big players. Now consumers looking for a Smartphone choose the OS that give them a better offer of options, the hardware that better fit their needs and just go to any operator that could offer the chosen device.

Symbian (Nokia), Blackberry OS (RIM) and Windows Mobile (Microsoft) are other Operating Systems present in the ecosystem, who have important presence in the market today and have potential outside their focus or niche market. However, for one reason or other, they have been followers in the Smartphones’ market and did not have the same influence in these changes as the other actors.

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What to learn from it?

New game has new rules and each change of power will bring different winners or losers because there is no such thing as a permanent status.  The behaviour of the consumers is different than what it used to be and will never be a constant, which is a huge threat for current winners and a huge opportunity for current losers (or new players). The only sure thought here is that those who try to keep doing things the same way will most probably end losing sooner or later. No matter how many locks or advantages we think we have, we have to keep moving.

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