The next couple of weeks brings us the start of the next great battle in the smartphone space. The new Windows Phone arrives, on both Samsung and Nokia hardware, Apple introduces the new iPhone (perhaps the iPhone 5, perhaps they'll astonish us all with the originality of their naming convention) and of course we've got every handset maker using Google's Android desperately making revisions to dodge Apple's patents.
Give it 6 months and we'll begin to see how all these changes shake out in the marketplace, who "wins" in so far as anyone does in such a fast moving market (it's probably more accurate to say who gets ahead rather than wins).
There's an interesting point makde here about what might aid Nokia and Windows in their battle:
One thing Elop has in his ammunition bag is support from big U.S. mobile service providers who want see Windows become a third strong smartphone platform to counterbalance the market heft of Android and Apple, which charges a heavy price premium.
Top U.S. wireless providers Verizon Wireless, Sprint Nextel Corp and Deutsche Telekom's T-Mobile USA have all said they will support Windows Phone 8, and AT&T Inc said it will sell Nokia phones based on the Microsoft software.
"Everybody's liking what they see coming from Microsoft with the Windows 8 (mobile) platform from the user experience perspective and the integration perspective," said Bill Versen, a Verizon Wireless executive who works with business customers on their smartphone strategies.
The thing to remember about the smartphone market is that it is not a direct manufacturer to consumer interface. Sure, most certainly there is some of that: the selling of unlocked phones for example. Or the way in which manufacturers' branding entices the consumer. But there's another level in it as well, the service providers, the airtime folks. They can be, at one point, the definitive deciders of who gets to use what. If they simply refuse to offer a particular phone or brand to their customers then that's pretty much that for that phone or brand. It would have to be a truly different and superb offering to beat that handicap. Rarely if ever happens, but it could.
At the other end a truly desirable phone, one that has consumers clamouring for it, enables the manufacturer to charge the airtime provider a great deal for the privilege of selling it. For, as we all know, contract phones get subsidised by the airtime providers. What that subsidy is is of course a complex interaction of who has how much market power. If Apple has a great deal of power then it can (as I recall it did in the early days) charge the phone company a substantial price for the hardware while insisting that that same phone comany subsidise the price to contract customers heavily.
Which brings us to the idea of Nokia and the Windows Phone models. If these are successful (possibly defined as gaining 10% of the market or so by the end of next year) then this will reduce the market power of any one or any one group of handset makers. A tripartite OS market, with iOS, Android and Windows, would reduce the market power of any one of the three, or any handset maker within those groups. Such a fall in market power would reduce the power of any of them to insist upon large subsidies from airtime purchases into handset purchases. Thus raising the profits of the airtime providers.
Whether this does happen or not is another matter: make your own mind up on whether Windows will challenge either iOS or Android. But you can see why the airtime providers might hope that it does. And if they hope that it does then they may well take steps to aid it in doing so. Advertising budgets, placement in stores, commissions to salespeople, these can all help at the margins. As could increasing handset subsidies on one line today in order to hopefully reduce them on all later.
Again, whether they do this or not is another matter: but you can see the temptations of their doing so. And the bottom line here is that given the structure of the industry there's a more complex calculation going on than just which model or OS will the consumers like?
