MOBILE TERMINAL OS COMPETITION
Ville Lehtonen
Department of Computer Science
Helsinki University of Technology
vjlehton@cc.hut.fi
Abstract
The mobile OS competition grows more intense as
Microsoft and Linux give chase to the early movers
Symbian and Palm.
Key Words
Symbian. Most significantly on 8.10.2003 Nokia and
Psion bought Motorola’s share of Symbian, and on
9.2.2003 Nokia bought Psion’s share, leaving Nokia
with a dominant 63,3% share. Other shareholders left
are Ericsson (17,5%), Panasonic (7,9%), Samsung
(5%), Siemens (4,8%) and SonyEricsson (1,5%)
(ITViikko, 2004).
Share of Symbian
Mobile, PDA, Smart Phone, Operating Systems
1. Introduction
As mobile devices constantly improve in performance,
their operating systems have become increasingly
important. With cellular data users reaching the 100
million mark in September 2003 and being estimated to
be at over 115 million by early February 2004 (EMC,
2004), the number of people accessing internet via
mobile phones is catching up to terrestrial network
users, who number 720-740 million. In Japan over 10
times more people were using mobiles than DSL to
access the internet as early as December 2002 (Japan
govt, 2003).
Mobile devices can be split to three categories: smart
phones, PDAs and laptop computers. Laptop computers
are the least mobile of the three, and are outside the
scope of the paper, since they use the PC operating
systems.
The performance of PDAs and mobile phones has
increased significantly in the last 10 years, putting them
past the processing power PCs had when the operating
system wars were fought. While the PDA market could
be ignored by the big players, the smart phone market
has too much potential to ignore.
The purpose of this paper is to assess the current status
of the Mobile Terminal OS competition, and the likely
future trends that can be seen in the marketplace.
2. The Mobile Operating Systems
2.1 Symbian
2.1.1 History
Symbian was established in 1998 by Ericsson, Nokia,
Motorola and Psion to provide a clear standard for
operating systems in the more complicated mobile
phones that the companies saw on the horizon. Over the
last 6 years things have changed rather drastically at
Nokia
Ericsson
Panasonic
Samsung
Siemens
SonyEricsson
2.1.2 Market position
Symbian is the clear first mover in the smart phone
operating systems, and is now reaping the benefits. In
December 2003 over 1 million Symbian phones were
sold, with a total of 6,7 million phones sold in 2003
(Symbian, 2004). According to the market researcher
Gartner roughly 3 million of the 431 million mobiles
phones sold in 2002 could be defined as smart phones.
Roughly 60% of the smart phones use Symbian (ARC
Group, 2003).
2.1.3 Industry support
Symbian was originally formed by the producers of
mobile terminals, which has guaranteed a friendly
environment toward the system in the industry.
Companies licensing Symbian produce over 80% of the
mobile phones in the world. However one should
remember that Nokia alone represents almost half of
those phones, and that almost all major mobile
manufacturers produce phones for more than one
operating system. Companies listed as Symbian
supporters include the Microsoft ally Motorola and the
undecided Samsung among other less than clear
supporters.
2.1.4 Strengths and Weaknesses
Symbian’s obvious strength is its status as the first
mover in the smart phone industry. It also has the
backing of the Nokia, which alone with its 35% share of
the mobile terminal device market can guarantee a
certain degree of success. The industry is also well
aware that it’s being developed by mobile phone
producers, and as such will be optimized for them. On
the other hand, Nokia is a direct competitor for the
mobile phone producers, which the other OS owners are
not. In this sense Symbian’s neutral image is important,
though preserving it might prove difficult.
After buying a dominant portion of Symbian, Nokia lost
its status as one of the “white knights” leading the
rebellious anti-Microsoft front, and ended up being just
a competing behemoth. While such things are very
noticeable in the media, it’s certainly questionable
whether it will have an actual effect on sales. Nokia is
the 6th most valuable brand on the planet
(BusinessWeek, 2003), so it should be able to survive
its transformation from a rebel leader to a rival
behemoth and possibly even benefit form it.
A more concrete problem for Symbian (Nokia) is the
software production. While it has a great many alliances
with companies ranging from AOL to Intel, most of the
companies are also allied with its competitors.
Especially Microsoft and the unix community have
decades of experience from the software industry, and
with handheld device performance improving, their
experience comes more and more in to play.
2.2 Windows Mobile
2.2.1 History
Windows Mobile is the current name for the operating
system offered by Microsoft for mobile terminals. It is
the newest version in the Windows CE family. The
original CE 1.0 was used for handheld devices; CE 2.0
was already used for auto PCs, smart phones etc, with
2.1 adding web enabled phones, color displays and so
on.
CE 3.0 is where the name started changing and the term
Pocket PC shows up for the first time. CE 3.0 included
for example Pocket PC 2002, Pocket PC 2002 Phone
Edition and Handheld PC 2000. The current version is
CE 4.2, where the name Windows Mobile was
introduced (Chris De Herrera, 2003).
Windows mobile operating systems are being produced
for both PDAs and smart phones.
2.2.2 Market position
Microsoft is in an interesting position, trying to use the
expertise it has in the PC world to take over the mobile
terminal OS market. It has already had significant
success in the PDA market, with 47.7% of the 827
million dollars used on PDAs in the second quarter
2003 being used on PDAs using the Microsoft Pocket
PC operating system (Gartner, 2003).
In the smart phones Microsoft is an
newcomer, and the producers are not
allies, like the PC companies producing
market share was 6,6% in April 2003,
2003) but it is likely to rise.
even greater
its traditional
PDAs are. Its
(ARC Group,
2.2.3 Industry Support
Especially in mobile phones Microsoft is venturing in
unfamiliar territory, but it has been making friends fast.
In the PDA systems they have been supplying the
operating systems for Compaq/HP, which has been
gaining ground on Palm. Other supporters in the PDA
industry include for example Dell computers.
On the mobile phone side Microsoft is allied with
Motorola, which is bringing out a whole family of
products using Windows Mobile. Currently Microsoft
only lists mobiles by Motorola, Samsung, Orange and
some smaller producers in Asia, but many other major
mobile phone producers such as Philips, Fujitsu etc are
planning to produce phones using Windows Mobile.
2.2.4 Strengths and Weaknesses
Microsoft is the most successful developer of operating
systems ever, which gives its brand a significant boost
in this field. Considering it is already ranked the second
most valuable brand in the world (BusinessWeek,
2003), it hardly needs the boost. Besides Microsoft’s
brand representing good usability and decent reliability,
it has an fearsome reputation for winning, which simply
can not be ignored. So many companies have
challenged Microsoft before and lost, that few are
willing to bet against it.
Microsoft’s domination of the PC industry is hard to
ignore as well. People are used to the Windows
operating system, and the switching costs of learning a
totally new operating system are significant. Even in the
mobile environment the symbols are familiar.
Especially with more and more data being exchanged
between the PC and mobile terminals, the switching
costs become constantly higher, since the user would
have to learn how the non-Windows systems on their
mobile interact with their desktop computer running
Windows.
Windows is still a new thing for the mobile terminal
producers, and it does not have nearly as wide industry
support as Symbian has. The leading producers of both
PDAs and smart phones (Palm and Nokia) have taken a
clearly anti-Microsoft stance, which shuts Microsoft out
of a significant portion of the markets. Many other
Microsoft rivals (for example Sony) have operated in
the field for a long time, and are unlikely to support
Windows Mobile.
2.3 Palm OS
2.3.1 History
Palm Inc was one of the leading producers of PDA
hardware when the market surfaced. It ended up as the
market leader, and boosted its position by acquiring
some of its old rivals (Handspring). In October 2003
Palm Inc split off its operation in two: PalmOne as a
hardware producer and PalmSource to handle the
operating system side.
2.3.2 Market Position
Palm has a leading position in the PDA market, but
calling it dominant would be misleading, since it hasn’t
been near 50% for quite a while. The actual market is
fairly fractured with Windows Mobile and PalmSource
being the main competitors. Sony’s PDAs use Palm OS,
which means that the total market share of Palm OS
was over 44% during the third quarter of 2003 (Gartner,
2003).
the scope of the company’s ambition. Palm has aimed
to serve a relatively small segment, and is not striving
for a dominant standard like Symbian and Microsoft
are. In such a sense Palm is set up nicely with a solid
and loyal user base, which does not seem to be going
anywhere.
2.4 Linux Based Operating Systems
2.4.1 History
While there have been many companies attempting to
provide an Unix style operating system for mobile
devices, in this paper we will focus mainly on the most
successful attempt: Montavista.
Montavista is mainly a leading embedded software
company, which uses Linux for a multitude of purposes.
Based on this expertise they created an operating system
for smart phones, which is be gaining significant
support.
PDA Market Share (3rd Quarter 2003)
2.4.2 Market Position
27 %
34 %
Palm
Compaq/ HP
Sony
Dell
6%
Ot hers
10 %
They are extremely new to the market and as such don’t
really have a market position yet. Their market potential
mainly derives from their known expertise and the
highly influential allies they have. They also seem far
better positioned in the Far East than elsewhere, mostly
due to Microsoft and Symbian both having less
influence over there.
23 %
2.4.3 Industry Support
Palm is the other early starter in the smart phone
industry. Its market share was as high as 22% in April
2003 (ARC Group, 2003), but it was expected to drop
as more Symbian phones enter the market and
Microsoft starts making its presence felt.
The first mobile phone to use Montavista Linux was
produced by Motorola, and more products are coming
in the future. However most of the companies
producing Montavista phones are from Japan. These
companies include Samsung, Sony, Panasonic, NEC
and others. Motorola has allied with Microsoft after
signing up with Montavista, which might have some
negative implications on their future co-operation.
The total amount of Palm powered PDAs and smart
phones is in excess of 30 million (PalmSource, 2004).
2.4.4 Strengths and Weaknesses
2.3.3 Industry Support
In the PDA industry Palm is essentially allied with
Sony, which is the other major producer of Palm OS
PDAs. Other producers include smaller companies such
as Foundertech and GSPDA.
In the mobile industry Palm has had mobile phone
producers sign up to create phones using Palm OS.
These producers include Kyocera, GSPDA and
Samsung.
2.3.4 Strengths and Weaknesses
Compared to Microsoft and Symbian the situation
might look grim for Palm OS, but one has to remember
Linux has many of the advantages of Symbian and
Windows Mobile, but without the burdens that both of
these now have. Especially with Nokia now dominating
Symbian, Linux has become the only choice for
companies and consumers that do not want to get too
involved with the corporate behemoths of Nokia and
Microsoft. It also lacks the burden of no software
experience that Nokia has.
However Linux’ main advantage has always been its
price. This advantage does not transfer over well to the
mobile world, where Linux devices tend to be very
expensive. Linux’ second advantage has been reliability
and efficiency, which are both massively overshadowed
by usability in mobile phones.
3. Stakeholders
3.1 The Hardware Industry
The hardware market has a lot at stake in the Mobile
Terminal OS competition. Mainly it affects the
companies producing PDAs and mobile phones, but
indirectly it also affects companies ranging from Telco’
to console manufacturers.
Amazon software sales
90
80
70
60
50
40
Europe
30
USA
20
The obvious main issue for PDA and mobile phone
producers is to make sure they back the winning horse,
since network effects can be brutal on the losing OS.
This can easily be seen in almost every company
supporting multiple OSs. The exceptions to this are
Nokia and Palm, which both own the operating systems
they use, and have a vested interest in seeing them
succeed. A good example from the other end of the
spectrum is Samsung, which produces smart phones
using all of the main operating systems.
The other stakeholders are mostly related to the ongoing
OS competition in the larger context. Microsoft is trying
to get its operating system in every device that can be
used to connect to the internet, which might give it a bit
too dominant position. The network effects from having
a good position in mobiles and PCs might effect the
console competition being waged between Sony and
Microsoft. The effect of this can be seen in Sony not
supporting Microsoft in any field, to the degree that it is
the only major company other than PalmOne producing
PDAs using the Palm OS. Telco’s also must wonder
about the implications of Microsoft controlling VoIP to
a degree that surpasses their own control, considering
they are the ones that own the network.
3.2 The Software Industry
All of the mobile terminal OS producers have learned
the lesson about openness winning operating system
wars, and instead of having alternative approaches to
people producing software to their systems, all of them
are trying to sell their system to software developers to
the best of their abilities.
10
0
MacOS
MacOS /
Windows
Windows
Linux /
Windows
Linux
PDA
Top 100 titles
The chart is the average of 10 samples of top 100 sold
software products taken over the period of 4 months.
Considering the ties between Microsoft and Apple, the
Mac OS products are best grouped with the Windows,
which might appear somewhat alarming for Linux,
Palm and Symbian. Yet a great many software
producers are signing up with all the systems, with
PalmSource
boasting
20,000
software
titles
(PalmSource, 2004).
3.3 The Gaming Industry
An often underrated sector is the gaming industry.
Games are a big business that is only getting bigger, and
the success of I-Mode in Japan serves as a good
example that games are big even on the small screen of
a smart phone or a PDA.
Most of the main players have been well aware of this
for a long time now, with most of the competition
centering on Sony and Microsoft, who are competing
fiercely in the console industry. It is very hard to find a
massive online game, which is not tied to Microsoft or
Sony in one way or another. Both of the companies are
trying to make sure their products will have the best
games available on them, even if the games themselves
don’t create that much profit.
Amazon game sales
50
Despite all the openness, most companies use the
operating system they suspect they can earn most
money with. Considering the convergence of all the
different types of computing devices, it is reasonable to
assume interoperability will be important in the future.
The implication of this is that if your software is
successful on mobile devices, it might do well on PCs
and even consoles. To work it will have to be able to
run on the operating system, which gives a huge
advantage to players with large customer bases in the
other markets. Windows is the OS where money is
made in the PC industry, and making software that
might not work well with any future version of
windows might be considered an unnecessary risk.
45
40
35
30
25
Europe
20
USA
15
10
5
0
Sony
Microsoft
Nintendo
Top 100 titles
As the chart shows, the gaming community is clearly
split between 3 platforms. Sony and Microsoft have
very dominant positions, which will surely help them
with the mobile competition, but Nintendo’s 16,5% is
far from insignificant, especially with its games usually
being easier to play on smaller screens.
Palm is well aware of the situation, and has created
Nintendo emulation software (Palm, 2003), allowing
people to play Nintendo games on systems using Palm
OS. The absence of Linux and Unix games is quite
noticeable, and will severely limit their ability to grow
out of a niche role.
From the mobile OS point of view, the interesting
question is how far Nokia is willing to trust Sony to
provide games for Symbian. Sony works more closely
with Palm than with Nokia, but it is tied to Symbian
through its association with Ericsson. Sony is also very
unlikely to welcome Microsoft dominance in the mobile
OS field, and Symbian is the main competitor. Nokia
still does not seem convinced, and has started its own
gaming division. Nokia is also trying to use its
dominant market position to gain a first mover
advantage to compensate for its lack of experience, but
early moves like the N-Gage game deck have yet to be
successful.
3.4 Presence Services and Finances
There is a lot going on in the computer industry, which
will get significantly effected by the result of this OS
competition. Financially the most significant ones will
almost certainly be presence services, digital
identification and associated services.
A lot of companies have been trying to make ECommerce and even M-Commerce a reality for a long
time, and lately there has been significant progress. The
smart phones alone make a lot of things possible.
Business to business commerce is already massive on
the internet, but consumers still usually pay with
checks, credit cards, cash or bank transfers. To change
this, the credit card companies and other stakeholders in
the business have done a great deal to provide a safe
way to pay over the internet. The most significant of
these projects are Verified by Visa, Microsoft Passport
and Liberty Alliance.
Microsoft Passport provides good hints of where the
industry is going. You sign up to a service, which gives
you hotmail, an instant messenger chat handle and a lot
of other communication services, which especially with
SIP and IPv6 will become your internet persona. When
this digital identity is able to pay your bills, the
company controlling your digital identity becomes
pretty significant. There are a lot of claimants to these
digital identities ranging from banks and credit card
companies to Telco’s, software houses and mobile
phone manufacturers.
Verified by Visa was the first product to reach the
market, but it does not provide all the features that
Microsoft Passport or the Liberty Alliance could offer.
Microsoft has taken a clear interest in VoV, if for the
sole purpose of gaining Visa support for Passport. To
do this MS has started a partnership program with the
creator of VoV, Arcot Systems.
Since in the future the concept involves paying your
bills with your mobile, Microsoft needs to get in to the
mobile market and ideally the console market as well. It
lost a lot of money getting in to the console market, and
now it’s the mobile phone market’s turn.
The rest of the major players are well aware of the
process, and created a rival for MS Passport known as
the Liberty Project. It was established by a massive
alliance of companies including Nokia, AOL, American
Express, Sun Microsystems, Sony, Intel and NTT
DoCoMo.
3.5 Governments
Governments have a significant stake in the mobile OS
competition most of all because of the concept of
internet “citizenship” of the digital identity. Microsoft
acting as an intermediary for a major part of global
commerce and having the ability to essentially tax it
might create a massive uproar and result in demands for
government intervention. While Microsoft tends to end
up as the accused party in monopoly law suits, in a
winner-takes-it-all market Nokia might well face the
threat of sanctions.
4. Conclusions
The market will continue converging and the obvious
main players in the OS market will be Microsoft and
Symbian. While Symbian has a clear first mover
advantage, Nokia seems the clear underdog when it
comes to a software struggle with Microsoft. The big
question mark here is Sony, which can even the odds
significantly by siding openly with Nokia. However
Nokia is almost as significant a competitor to Sony as
Microsoft is, which makes such an alliance less likely
than it might seem. Sony has remained neutral by using
Palm OS in its PDAs and Symbian or Linux in its
mobiles.
Linux systems are likely to remain a niche product
unless they can get the prices down. Considering neither
Microsoft’s nor the Symbian partners main income
potential will be from the actual OS, the price advantage
is nearly impossible to gain.
Palm doesn’t have much more going for it than Linux
has, so it is likely to keep losing ground in the smart
phone market as the market expands beyond the first
adopters, who were the ones that could afford PDAs
earlier.
Unfortunately for Linux and Palm it will almost
certainly come down to brand and usability. Microsoft
and Nokia both have gained their market positions with
their skills in usability, and their brands are #2 and #6 in
the world.
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