Thursday, August 25, 2011

The mobile landscape is changing rapidly, but not through innovation

The last month and especially the last week, have been eventful for the world of mobile devices. The hot topic today is Steve Job's resignation as CEO of Apple, but several other top business stories have been foreshadowing the shape of things to come.

The big shocker was HPs decision to move out from its Web OS (tablets and smartphones) business - just 16 short months after purchasing Palm and just a few months after launching the HP Touch Pad, Veer and Pre 2 smartphones. WebOS received a lot of positive feedback from the tech community - a rare occurrence in a world ruled and defined by iOS and Android. But sales did not inspire confidence : until HP discounted the TouchPad to prices starting at $99 two days later. HP did not wait or persevere but inexplicably decided to give up. And what's more, the company has also announced that it will move out of the personal PC business. Horace Dideu beautifully analyses the demise of HP in this post on Asymco.

Then there was the announcement that Google would buy Motorola's mobility division for $12.5 billion. Motorola's 17,000 strong patent portfolio was clearly a big motivator for Google's biggest acquisition yet, but the purchase also raises questions about whether Google would gain unfair competitive advantage over other Android handset manufacturers after staying neutral all these years.

And the tech publications are regularly reporting on the woes of RIM, once the smartphone leader, now a struggling contender increasingly losing its glamor to high end Android and Apple products. It has been regularly rumored that competitors like Microsoft were planning to buy RIM, while shareholders and the press have been critical of top management at the company and their ineffective response to competitive pressure. Even if RIM does not decide to sell out, their  announcement that the next generation of QNX BlackBerry phones would support Android apps, speaks volumes about their outlook.

Nokia's marriage to Microsoft earlier this year and the jettisoning of the MeeGo and Symbian platforms has drawn lots of coverage (mostly critical) in the tech press.

Put together, all these pieces of news point to an obvious but important conclusion - not only is the mobile landscape changing, it is changing at a pace that is frighteningly fast. And it is not innovation that is setting the pace - it is corporate decisions to ditch products and software that were created over years, with huge R &D investments. Consolidation, acquisition, mergers are the order of the day, as companies play safe, put revenue and bottomline first.The pace of failure of long standing innovations is faster than ever before, and I wonder if companies are also giving up faster than they used to.

Web OS was unveiled by Palm in 2009, before the company was acquired by HP. It took just a few months after launch of the first Web OS products in 2011 for HP  to decide to jettison the entire project.

For Nokia, one could argue that innovation had become an overkill over the years, with a bloated budget that ate into bottomlines. Horace Dideu points out that Nokia spent 10.2% of its budget on R&D in 2010, while Apple spent just 2.2%. Bloomberg reported that Nokia's R&D budget was $4 billion in 2010, higher than Samsung, Motorola or RIM. Small wonder that Eelop lost little time in transitioning to Microsoft's Windows Phone platform that would cut down on associated development costs and improve profitability. It is a different matter that the move gave short shrift to Symbian and the work-in-progress MeeGo platform.

Being in the phone business for years, both Motorola and RIM also hold considerable R&D expertise (as well as hard patents) which they have invested heavily in over the years. While Motorola has sold out, RIM does not seem to be leveraging its next gen QNX platform or its BB OS effectively.

In short, many promising mobile platforms, developed by former industry leaders, have gotten killed off in the last few months, or are in their death throes. Maybe they were guilty of spending too much time and money, not taking enough risk, not having enough of vision, offering too little, too late. But the disturbing fact remains that in a still nascent and rapidly growing smartphone market, there remain almost no alternatives to Android, iOS and Microsoft. And failure is making news more consistently than innovation.

It is still possible that an entirely new entrant may come in out of the wild, but this will obviously take more time. It would have been easier for alternative platforms to evolve on the basis of what already existed, than for someone to create something out of scratch.

It's not that I don't welcome change, or believe that its necessary for the old to shift to make way for the new. But such rapid change comes at a cost. I don't see any of the smaller players being willing to invest in R&D for a new platform when there is so much possibility that it could become a costly mistake.

And we as customers will be the ultimate ones to suffer from a lack of competitive stimulus in the market. Does the mobile phone OS market have to go the way of the PC market (only 3 major alternatives between Windows, OS X and Linux?) Not necessarily. There is a much bigger audience base for mobiles which could easily accommodate more platforms.

With the uncertainty over Apple's future after Steve Job's resignation, the mess of lawsuits that Android handsets are attracting and Microsoft's glacially slow pace of movement, we desperately need a fresh injection of vision, passion and excitement in mobile innovation. I just wonder who wants to, or will, provide it!