dw2-0

Beyond smartphones

Smartphones constitute a huge market place. Bear in mind, not just the enormous number of smartphones sold each year, but also the fact that manufacturers earn considerably larger profits, for each smartphone sold, than they do for ordinary phones. Plausibly, although smartphones account for only around 10-15% by units of the 1B+ total annual market of all mobile phones, they provide upwards of 20-25% of the sales revenues for all mobile phones - and perhaps more than 40% of the profits. What's more, users of smartphones typically run up significantly larger monthly usage bills than users of other kinds of mobile phones.

For this reason, the 1996 strategic decision by Psion Software to focus future development of the EPOC32 software system on smartphones turns out to have been marvellously prescient. I'm proud to have been part of that strategic review. The easy decision at the time would have been to continue to focus on the category of devices where EPOC software had historically flourished (in both its 16-bit and 32-bit variants) - in smart handheld organisers, known as "palmtops" or "PDAs". But the decision was taken to target a market that did not exist at the time, and which was expected in due course to dwarf the PDA market. This sowed the seeds for the corporate transformation, 18 months later, of Psion Software into Symbian.

As is often the case with market transformations, the new device category took longer to materialise than had been anticipated. But eventually smartphone sales exceeded all our expectations. It's as computing pioneer Joseph Licklider, stated back in 1965:


"People tend to overestimate what can be done in one year and to underestimate what can be done in five or ten years."
However, the concept of palmtop computing devices has not gone away. It keeps re-emerging, with new names, such as subnotebooks, UMPCs (Ultra Mobile Personal Computers), and MIDs (Mobile Internet Devices), or in new variants such as PNDs (Personal Navigation Devices) or Kindle-like mobile e-book readers. On the LinkedIn forums discussing the forthcoming 2008 Symbian Smartphone Show, Malik Kamal Saadi of Informa raises the following question:

What OSs will be addressing Mobile-Internet-Devices and UMPCs?

Operators and vendors are now looking to extend their opportunities beyond the traditional mobile handsets market by adding new device categories to their portfolios: MIDs and UMPCs. Silicon suppliers such as Qualcomm, Intel, and TI see these devices as the next big convergent device segment. However it is not clear yet which OS type will be more suitable for this type of devices: ARM based (e.g. Symbian, mobile Linux such Android, maemo, etc)? or X86 based (e.g. light version of Microsoft Windows, or Apple MAC)?

Symbian is more suitable for mobile phones but I was wondering if , with Symbian Foundation, this OS could be upgraded to address the MID and UMPC market?
For simplicity, for now, I'll use the term "MID" to cover all of these emerging categories of smart handheld devices which major on functionality other than phone communications (in other words, they aren't smartphones). As I see it, the question of MIDs breaks down into three:


After many previous false starts, are there reasons for us to take MIDs seriously as a device category in the foreseeable future?

Even if the market for MIDs grows in absolute terms, will it be significant enough to warrant distracting resources onto that market, away from other growth areas that might be even more significant?

What operating system is the likely winner in the MID space?
1. The history of false starts with MIDs
The ill-fated Palm Foleo (which was cancelled before it came to market) and Sony mylo are but two of many examples of devices in this same general space:
Announced with a lot of fanfare
Pitched as finding an exciting new "sweet spot" in between laptop computers and smartphones
But failing to live up to the vision - achieving at best lack-lustre market success.
As another example, it's no secret that Nokia's maemo-powered Internet Tablet devices, although providing a great learning experience for working with open source, make only a limited contribution to Nokia's overall revenues.
However, I see the delays with market success of MIDs as being temporary - akin, in fact, to the delays before the eventual market success of smartphones:
The declining cost of key items of hardware, which has led to smartphones becoming ever more affordable, will likewise move many types of MIDs inside the budget range of larger and larger pools of potential purchasers;

Some specific technical and ergonomic problems needed to be solved, before the appeal of a device can extend beyond the early technology enthusiasts; these include better screens (for mobile e-book readers), improved GPS fix technology, and better mobile internet browsing;

Just as smartphones grow in numbers as a result of increased word-of-mouth recommendations by users of these devices, various MIDs will benefit from similar crescendos of user endorsement;

An industry that is dedicated to the creation and marketing of these devices takes some time to come into being and establish itself (in the analysis of Bhaskar Chakravorti, this takes roughly twice as long to happen, as you might expect from just looking at Moore's Law technology curves) ; but virtuous cycle effects do eventually emerge.
I have one other reason for believing in the commercial future of MIDs - particulary those which are PDAs. I've personally derived great utility from the Psion Series 5mx that I've been using virtually every waking hour for the last nine years. The device supplements my memory, keeps track of my appointments, gathers my thoughts and ideas, marshalls my to-do items, and much, much more. There's no doubt in my mind that there are many other people who would, similarly, benefit from the highly useful PIM (personal information management) capabilities of such devices:
A proportion of users will be satisfied by the PIM capabilities of a single multi-purpose smartphone device. These users will just carry one smart mobile device.

But a significant proportion of users will prefer to carry a separate PDA-like device, in addition to a smartphone. They'll value the additional benefits from a device with a larger screen and larger keyboard.
2. Other directions beyond smartphones
MIDs are one potential direction of market expansion beyond existing smartphones. But they're not the only one. Indeed, there are two other directions which have consistently held higher importance in Symbian's thinking:
The drive towards mass-market smartphones - in which smartphone technology is used inside ordinary-looking phones used by larger and larger numbers of consumers;
The drive towards super-smartphones - in which additional computing powers, new peripherals and sensors, and other hardware and software enhancements combine to provide new experiences and services for sophisticated and demanding users at the always-fluid yet lucrative top end of the market.
It would have been a major strategic error for Symbian to lose focus on either of these two growth areas. What merit an additional 10-20 million units of sales of PDA-like devices, if this diversion of attention caused us to miss the chance of the next 200-500 million units of smartphones?
On the other hand, these markets (MIDs and smartphones) are not separate. They've had elements in common in the past, and they're becoming increasingly connected. An important meaning of the word "convergence" that is (rightly) oft-applied to the smart mobile device industry, is that the technology and solutions applicable to one type of smart mobile device will increasingly be applicable to all other types of smart mobile device. There's less need for highly optimised distinct solutions: Moore's Law and faster network speeds mean there's less need to worry over every jot and tittle of hardware and network capacity. Even though various devices look quite different from each other and are operated differently by users, the underlying hardware and software can be similar.
In other words, it can be argued that the days when hardware and software had to be uniquely tailored to each different mobile device category are receding. If that's true, then benefits of scale, in developing the same technology solution for different kinds of smart mobile devices (both smartphones and MIDs), may outweigh the advantages of having the best solution for each different device. And if that is true, we can expect the same mobile operating system to take the lead in all these different areas. So Symbian can no longer stand aside from the general MID category.
Happily, the creation of the Symbian Foundation come at exactly the right time, changing industry dynamics to make it much more likely that Symbian platform software will be adopted, not just in standard smartphones, mass-market smartphones, and super-smartphones, but also in various kinds of MID. What Symbian itself could not do, the newly enlarged and newly empowered Symbian ecosystem will take in its stride.
3. Picking the winning operating system for MIDs
In selecting the software system for their devices (MIDs, smartphones, or otherwise), manufacturers generally have four kinds of criteria in mind:
Technology factors: which software delivers superior performance, battery life, security, low defect count, improved user experience, etc?
Commercial factors: which software results in low total cost of development, manufacture, deployment, and maintenance; and which provides good opportunities for value-adding differentiation?
Political factors: which software is least likely to have its evolution controlled by corporations or organisations that fail to share common goals with the manufacturer?
Reliability factors: which software is likely to be delivered on schedule and to pre-agreed quality levels, in fulfilment of a multi-year evolutionary roadmap of changes?
An operating system will need to score well on all four counts, before it is adopted for any large ("bet the farm") projects in commercially mature companies.
The planned creation of the independent Symbian Foundation, with royalty-free licensing of the Symbian platform software, increases the attractiveness of this software to manufacturers considering MIDs:
The commercial and contractual barriers of entry will be lowered
If a manufacturer finds a need to change some part of the software system, to address a specific niche device need, that will be much easier than before, given the open access to the source code
The improved openness will attract a larger ecosystem than before, which will in turn be able to assist with the development and customisation of MID-specific distributions of Symbian platform software.
These changes allow the various technical merits and reliability merits of Symbian software to shine through more clearly, freed from any cloud of uncertainty over commercial or political questions:
These technical merits include long battery life, platform security, networking bearer mobility, real-time services, and support for multiple different models of application development;
The reliability merits include an admirable track record of shipping software on time.
Both these sorts of merits count for a great deal, even in a world where the hardware and network capabilities have increased substantially from just several years ago. That applies for MIDs as well as for smartphones. Indeed, these increases in hardware and network capacity bring more stress and strain onto the software, and make it all the more important that the software is fully fit for purpose. For all these reasons, I believe that Symbian can be the winning operating system for MIDs, as well as for smartphones.

Posted by David Wood at 10:39 AM
Labels: MIDs, Psion, Symbian Foundation

2 comments:
Dean Bubley said...
Hi David

I'm doing quite a lot of work looking at MIDs and netbooks at the moment.

I think they're interesting, likely to grow - but are being a bit over-hyped.

This is partly related to the technology, but more to the friction in business models & value chain of "mobile computing devices" versus "phones/smartphones".

In particular, I think that most mobile operators are poorly-suited to becoming channels for what is essentially now an IT product, rather than a telecoms product. Fixed subscriptions, application-level control, intrusive "security" mechanisms like SIM-locking, continual upsell attempts and poor technical support are not likely to encourage customers.

For the MID market to be more than a niche business, there needs to be a thriving (and probably dominant) non-operator channel to market, and the OS and hardware designs need to reflect this.

For example, the connection manager needs to be able to help the user choose between different network providers, ideally without the need for separate physical SIMs.

There also needs to be recognition and support for "divergence" in the MID OS - the working assumption must be that the typical owner will have at least one phone, at least one PC, and probably a fixed-broadband connection as well as mobile. There needs to be a strong & useable way to manage this "multiplicity", rather than wishful thinking that the MID *replaces* either smartphone or PC.

Would be good to chat about this at a convenient point.

Regards

Dean Bubley
September 29, 2008 9:30 AM
David Wood said...
Hi Dean,

I'm sure you're right: the chances of breakthrough success with MIDs will increase, if someone comes up with an innovative new business model, rather than just develops some new combination of hardware and software.

It's like the way that runaway iPod success was driven by the new iTunes music distribution business, as well as by the intrinsic features of the iPod device.

"the connection manager needs to be able to help the user choose between different network providers, ideally without the need for separate physical SIMs"

I think that the connection manager plumbing in Symbian's FreeWay will go some way towards providing this flexibility. However, your idea about being able to choose between different local GSM networks, without having multiple SIMs, is an interesting new twist.