Will BlackBerry, Nokia or Amazon Replace Apple or Google?
With Apple stumbling and Google and Samsung possibly on the outs, there may be an opening in the mobile market for an underdog to make a big move. BlackBerry may have the best shot with its strength among businesses in emerging markets, but Nokia is gaining some traction, and Microsoft has deep pockets. Then there's Amazon, which could corner the phablet market. It's anyone's game.
05/20/13 5:00 AM PT
Apple and Google are currently at the top of the mobile device heap, but both companies are vulnerable at the moment. Apple has lost its iconic CEO and appears to be chasing Samsung, and you can't lead by following. Samsung is the dominant player on Android, but Google and Samsung are having relationship problems at the moment. Both have been quietly expressing dissatisfaction with the other.
No other vendor -- except possibly LG or Lenovo -- appears truly ready to replace Samsung should it abandon the platform, but with efforts like Knox, Samsung is increasingly stepping away from the Google Android user experience. Positioning to take the place of either Apple or Google/Samsung should one slip are a) the firm that used to dominate phones, Nokia, backed by Microsoft; b) the firm that used to dominate smartphones, BlackBerry; and c) the most powerful online retailer in the world, Amazon.
I'm going to focus on the strengths and weaknesses that each of these challengers has in aiming for the No. 2 spot and assess how likely any one of them is to replace Apple or Google. I'll close with my product of the week, which is a new phone by BlackBerry, the Q5.
Current Market Share
Android is well ahead of the pack, based on the latest IDC numbers, but it is estimated that around half of the products running it aren't under Google's control, representing multiple forks in the Android code base.
Still even if you cut Android's 75 percent share in half, at 37.5 percent you'd still be more than twice Apple's, which has fallen to 17.3 percent. However, that 37.5 percent is mostly Samsung. Windows Phone passed BlackBerry -- slightly -- for a distant No. 3, and this is virtually all Nokia, but effectively the two platforms are now tied.
The Case for BlackBerry
I spent last week at BlackBerry Live, and I think BlackBerry has the best shot at getting back to its former glory and market leadership for three reasons: 1) It owns its platform -- it doesn't have to partner to succeed; 2) it is focused on business, a segment that the other platform leaders have until recently ignored; and 3) in world where malware is increasing massively for mobile devices, it is the only vendor with a platform designed to be secure from the start.
On the other hand, it lags the other players in terms of available resources -- and in a fight like this, resources are very important.
The other interesting advantage that BlackBerry has is that in emerging markets, it is comparatively strong against Apple, the other fully integrated vendor. This was made clear to me at BlackBerry Live, where representatives from those markets dominated. That's largely because BYOD isn't happening in those regions, as employees simply can't afford to buy their own devices. For the most part, where companies still buy, BlackBerry still rules.
I looked at the U.S. Department of Defense, for instance, and while it is conducting trials with Android, iOS, and BlackBerry, the numbers are telling, with around 10K Android, around 40K Apple, and around 500K BlackBerry devices. Where business dominates, BlackBerry rules -- and given an increased focus on security and business, I give BlackBerry the edge.
The Nokia/Windows Combo
Windows Phone is faster moving at the moment, however, based on the IDC numbers. Nokia is winning design awards, has rolled out an aggressive TV campaign targeting both Apple and Samsung, and has a number of desirable features -- like the best camera on a smartphone and inductive charging on some of its lines.
It gets financial backing from Microsoft, which still has a financial reserve rivaled only by Apple and Google -- and Apple will be eliminating most of its financial reserve this year to placate pissed-off shareholders. Finally, it is focused on the consumer segment, which is where the segment growth has been coming from since the iPhone launched.
Microsoft has proven to be a mixed blessing in this effort. Nokia's momentum was damaged by rumors that Microsoft had lost faith and was developing its own phone. Nokia has had to constantly reaffirm its commitment to Microsoft.
Windows Phone as a brand appears to have negative implications for most buyers, who connect the name to the Windows 8 desktop platform, which is having teething problems. These drawbacks appear to more than offset the resource advantage Nokia/Microsoft should have and reflect on an ongoing problem with most Microsoft partnerships, which apparently are not going as well as they once did.
Amazon: The Wild Card
Amazon forked Android for the Kindle Fire. Its rumored phone will, on paper, have the advantages of most of the Android apps but be vertically integrated like Apple and BlackBerry. Amazon has been building up its cloud services and could offer a phone connected to them that could approach the business value proposition of BlackBerry. With its movie and music services, it could challenge the consumer advantage of Apple.
Current rumors suggest Amazon will be approaching the latter opportunity first and lead with a value-priced phone with a 3D-capable screen. Amazon has showcased that it can do well on tablets -- arguably outperforming both Apple and Google in the 7-inch category but clearly lagging both Apple and Samsung in the more capable 10-inch class. This suggests that when it comes to phablets -- smartphones with 5.5-inch or larger screens -- Amazon could dominate this class, and the market could shift toward it. That's a lot of "ifs," though.
Amazon is untested with carriers, and its best move -- given its heavy cloud services capabilities -- would be an MVNO approach: buying and selling connectivity services wholesale, thus underpricing similar products sold directly through the major carriers. While Apple demonstrated that it was possible to enter the phone market and do well against the entrenched vendors, Samsung in particular has showcased that it isn't that easy anymore. Amazon will likely have a much bigger fight than Apple did as a result.
Wrapping Up: BlackBerry Has the Edge
This is a market that is clearly in flux. Apple's CEO appears to be anticipating his own departure, and a replacement could either make things better or much worse. Given history, the smart money is on the latter.
Samsung and Google could kiss and make up, and the fact that Google used Samsung's troubled S4 at its I/O conference could indicate that these two either have done so or soon will.
As for the contenders, Microsoft could either bring out its own phones, repeating the Zune mistake and crippling Nokia, or it could put more of its war chest behind Nokia's effort, better ensuring its success. A major security problem could easily cause corporations to ban Android and shift back to a BlackBerry-only model, or BlackBerry could be acquired -- and mergers of this scale rarely go well.
In short, while I think BlackBerry has the edge, there are a lot of balls in the air here, and it is still almost anyone's game. Even a new player like Amazon could end up cornering the U.S. market. The only thing certain is that it will be an exciting year.
Product of the Week: BlackBerry Q5
BlackBerry has three sustaining advantages: 1) It is the only firm that does keyboards well; 2) it is still the favorite when businesses buy the phones; and 3) businesses buy the phones in emerging markets. All three of these advantages are showcased in the Q5, which is basically a reduced-cost version of the Q10.
It has the same features and same battery life. It has an LED rather than AMOLED screen, and a plastic case instead of black stainless steel and carbon fiber. This makes this new phone ideal for business buyers in emerging markets -- BlackBerry's strongest segment.
In addition, Alicia Keys pointed out that 56 percent of BlackBerry customers are women, and this product comes in colors and appears to have a more female-focused form, suggesting she has had some impact on the design. Keys is tightly focused on helping BlackBerry better understand the needs of its female-dominant customer base.
I'm a big fan of the Q10, and I've been carrying it for a bit. There really is nothing like a keyboard phone if you are doing email or trying to get work done, and I still favor it over a screen phone for productivity.
BlackBerry has created a phone that targets and strengthens its strongest and most loyal customer segment at a time when most phone makers don't seem to really know who their major customers are. Though it is not available in the U.S., from a standpoint of customer targeting, the Q5 is one of the most intelligent smartphones I've seen from anyone in some time, so it is my product of the week.