Anyone But Google
Carriers are understandably unhappy with today’s mobile platform duopoly. Apple and Google generate demand for data services, and carriers can’t live without them (as T-Mobile USA admitted about Apple late last year). However, Apple extracts enormous subsidies, mandates high minimum orders, has complete control over the customer experience, and maintains its own direct billing relationship with the subscriber. In some ways, Google is worse, as it competes directly with carriers. Google bids on spectrum, owns fiber in the U.S., runs a broadband network (currently limited to a single U.S. city), and has this annoying habit of offering services for free that carriers like to charge for. Carriers have long been searching for alternative operating systems that give them more control over the user experience. MeeGo, Maemo, and LiMo have all been promoted by various carriers in the past, and the latest carrier OS hopes center around Tizen, Mozilla’s Firefox, Jolla’s Sailfish, and Canonical’s Ubuntu.
Mozilla and the Tizen Association recently held press conferences that included realistic commitments from hardware vendors and carriers – 17 carriers backing Firefox, if I read the press release correctly. It certainly looks like Tizen and Firefox phones will actually reach the market, but once they do, why will consumers buy them?
“Open” Is Not a Reason a Consumer Buys Anything
None of these devices are all that innovative, none have apps or service ecosystems that are remotely competitive with Apple or Google today, and the vendors kept talking about how “open” they are as if that’s a feature that matters to anyone. Openness does resonate with carriers looking for alternatives to Google and Apple, and I understand why OEMs are building these phones – because carriers say that they’ll sell them. However, the opportunity costs for doing, say, Firefox, instead of trying to deliver a better Android product, are extremely high. And I have yet to see a compelling reason why consumers will give up the Android or iOS ecosystems and buy one of these phones.
Tizen and Jolla basically ignore the question – their presentations have focused on carriers and distributors. Canonical’s execs told me that consumers and enterprises want a system that can span phones to desktops. Do they? And even if they do, since when has Ubuntu been successful on the desktop? Mozilla came closest to describing an actual consumer value proposition, claiming that Firefox smartphones will offer a better user experience than the lowest priced Android 2.3 phones. I’m skeptical. The Firefox mobile user interface is certainly simple enough, resembling a first generation iPhone with a single centered home button and a grid of icons for apps. However, even if consumers prefer a UI without home pages and widgets, Android still has a richer selection of localized apps than Firefox. Google’s services are also a draw, although those are often omitted on low cost Chinese phones. Of course, the whole question of how well Firefox compares to a $100 Android phone in China may be moot: many of the operators signed on to sell Firefox phones are targeting prepaid markets in Europe, where the entry point is slightly higher.
Where Do Google, Microsoft, BlackBerry, and Samsung Fit In?
Google’s launch of the Chromebook Pixel proves that there’s a big faction at the company that views web standards, not native apps, as the future of computing. If Mozilla does have success with Firefox, I would expect to see a ChromeOS phone. Actually, I expect to see a ChromeOS phone regardless.
The focus on Firefox and Tizen seems to indicate that carriers have given up somewhat on Microsoft. Windows Phone has not been terribly successful so far, and Microsoft does not offer operators full control over the services that are eroding their margins. Still, in terms of leverage against Google and Apple, Microsoft is certainly a better bet than any of the alternatives. Microsoft has a real OS in the market today and hardware from Nokia, HTC, ZTE, and Samsung at multiple price points. Microsoft also has the resources and the strategic imperative to keep pouring money into Windows phones and tablets no matter how well (or poorly) they do. Microsoft is a computing software company. Computing is going mobile. Microsoft needs to become a mobile computing company.
Carriers are supporting BlackBerry, at least for now, by helping the company launch the Z10 in over 100 markets. However, few expect it to grow into a real counterweight to Google or Apple, and if the Z10 does not perform well after its initial launch, carrier support will disappear entirely.
Samsung is the largest and most profitable Android vendor, and yet it is also one of the biggest backers of Tizen. Clearly this means [insert hysterical argument here]. The truth is simple: Samsung has always hedged its OS bets. Samsung’s smartphone strategy has always been to bet on every horse (e.g., Symbian, Palm, LiMo, and Windows Phone), and enter its own horse in the race as well (Bada and now TouchWiz). However, when it saw success with Android, it doubled down in that area. For most of Samsung’s competitors, investing in alternate OSs comes with high opportunity costs – allocating time, talent, and management attention to an unproven OS means falling farther behind Samsung in Android. Samsung can afford to follow blind OS alleys just to see if they lead anywhere.
Still, most of Samsung’s device profits come from Android, and Google’s native apps and services add tremendous value to Samsung’s hardware. It would be foolish for Samsung to make any big changes in strategy unless Google forces its hand. Samsung is not foolish. Then again, Google is not entirely predictable – with Motorola, the Nexus program, and the Play Store, Google competes directly with its licensees and carrier partners. Hence the need for Samsung to have a Plan B. Samsung certainly could move away from Android, or create its own Android flavor (the approach taken by Amazon, Barnes & Noble, and many Chinese vendors). However, Samsung mostly wants to use the threat of alternatives to negotiate better mobile ad revenue share with Google, and to keep Google’s Motorola division in check.