Analyst: Smartphone OS Market Won’t Be a Monopoly Play
Will Google’s Android OS do to the smartphone industry what Microsoft’s Windows OS did to the PC industry? Is the smartphone market a winner-take-all one? According to two much-discussed reports by Piper Jaffray and Gartner that see Android aggressively gobbling up market share in the next five years, it is.
But Needham analyst Charlie Wolf says that’s impossible, because the smartphone market lacks the necessary conditions for a winner-take-all outcome. For one thing, the smartphone market doesn’t yet have a so-called killer app, a modern-day Lotus 1-2-3 that would tip it toward a single platform. For another, there’s little applications lock-in. Most smartphone apps have very little learning curve and are far too inexpensive to tie their users to any one platform. There is no Microsoft Office or Adobe Creative Suite whose high price almost guarantees loyalty to the platform on which they run. Finally, wireless carriers oppose a winner-take-all outcome because it would diminish their control of the market and currently they are pretty much the smartphone’s sole distribution channel.
So if the smartphone market isn’t going to evolve into a winner-take-all situation with Android the winner, how will it evolve?
“We believe that Google?’s land grab strategy should enable Android to end up with a 40%+ share and that the iPhone?’s share could reach 25% as Apple (AAPL) signs up additional carriers,” says Wolf. “Nokia?’s (NOK) share is likely to fall from 39% currently to 20%, although over time it could fall even further. BlackBerry?’s share should also fall to around 10% while Windows Mobile share should remain around 5%. The wildcard in our forecast is Windows Mobile. If the launch of Windows Phone 7 is successful, the platform?’s share of the smartphone market could climb far higher. Most of the gains would likely come at the expense of Android, since Google (GOOG) and Microsoft (MSFT) are competing for the attention of the same smartphone manufacturers?—most notably HTC, Samsung, LG and Motorola (MOT).”