Microsoft Poised To Dominate Mobile Phone OS Market

A demand for more robust mobile phone operating systems will increaseMicrosoft’s presence in the market at the expense of existing players,according to a report released yesterday by ABI Research of Oyster Bay, NewYork.

Branding will play a key role in Microsoft’s market grab in the mobile OSrealm, maintained ABI analyst Brian Pellegrini.

“If you ask people with smart phones which operating system they have,people with operating systems like Symbian, or proprietary systemsgenerally, won’t know it, but they generally know if they have Microsoft,”he told TechNewsWorld.

Bargain Basement Licensing

He noted that the mobile operating system market is so small compared toMicrosoft’s other markets that the software colossus can build share withbargain basement licensing at very low cost to its mammoth bottom line.

“The amount of money that’s involved in the handset operating business is sosmall that it’s really nothing to Microsoft,” he asserted. “So they’recharging almost zero licensing fees per handset.

“The idea behind that,” he continued, “is that they can make the money backby selling applications they create directly to consumers.”

That model contrasts with the current leader in the market, Symbian, whichis only in the OS business and doesn’t produce applications, he said. Attempts by TechNewsWorld to obtain comment from Symbian on the report were unavailing.

However, an advantage operating systems like Symbian and Linux have in themobile market is that they allow developers to work in an open sourceenvironment, Pellegrini contended. “That makes it easier for developers,” hesaid. “Microsoft is totally closed source, and they pretty much dictate themethods of application development that designers can use.”

Compete With Developers

“And Microsoft is probably going to be developing a lot of applicationsnatively so developers will be facing a large amount of competition directlyfrom Microsoft,” he added.

Microsoft, though, played down that competition. “With its Windows Mobile software, Microsoft is committed to enablingpartner success, providing a consistent and familiar platform for developersto build upon and delivering a great software experience to provideincreased business value to key industry players and exciting experiences toend users,” a spokesperson, who asked not to be identified by name, toldTechNewsWorld via e-mail.

The mobile market will be tough to crack for any vendor who eschews openstandards, averred Eric Chu, director J2ME business and marketing for SunMicrosystems in Santa Clara, California.

Ridiculous Amounts of Cash

“There is a strong desire in the industry — both by the carriers and thedevice manufacturers — to make sure they drive mobile data services usingopen standards,” he told TechNewsWorld. “From our perspective, we think itwould be a challenge for any company to come in with a proprietary solutionand get any traction.”

But that might not be the case with Microsoft. “They’re a threat ineverything they do,” said Jonathan N. Schreiber, CEO of Xingtone, a handsetsoftware maker in Los Angeles. “They have a ridiculous amount of cash in thebank.”

“As phones become more of extension of the PC, consumers will want to buythings that they’re comfortable with,” he noted. “If Microsoft can offer anexperience… [similar to] what you’re used to on a computer, itseems to make sense that they will be a significant force.”

Old Nemesis Linux

Just as Microsoft couldn’t ignore computer gaming, it can’t ignore thehandset market, he contended. “Microsoft can’t give up on this space,” hesaid. “They’re going to do what they have to do push their ability in thismarket.”

Asked if Microsoft will have to compete in the mobile OS market with its oldnemesis Linux, Pellegrini noted, “Linux’s biggest chance is in China. Giventhe socialist government there, it gives them a lot of power over how thingsare set up. And it’s cheap. But it isn’t on the radar screen so much yet.”

As for Microsoft, it appears to have adopted a wait-and-see attitude towardLinux’s fortunes in the mobile arena. “With the incredible level ofinnovation occurring in the mobile space, comes an incredible level ofcompetition and choice — which is good for the industry,” the companyspokesperson said. “Time will tell whether Linux will gain traction in thismarket.”

Standard OS Wanted

Most mobile phones in the market today have operating systems designed bytheir manufacturers, but that will change as more robust capabilities arebuilt into handsets. Greater handset sophistication will drive the markettoward third-party OS makers, Pellegrini maintained.

Consumer demand for greater interoperability between phones will alsocontribute toward adoption of third-party operating systems.

“Users want to be able to send pictures and instant messages to one anotherand not have any nonsense to put up with,” Pellegrini said. “For that tohappen effectively, you need a standard operating system.”

Proprietary operating systems will continue to dominate the market, headded. “For the foreseeable future, proprietary systems will be in the majority oftotal handsets,” Pellegrini said. “Standardized systems will sit primarily in thesmart phone and PDA space. For the most part proprietary systems will handlethe cheaper phones.”

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