Mobile Phone

In December 2009, Yahoo! gave up its search engine technology by adopting Microsoft Bing. In order to become a more formidable challenger to Google, (which Combined, Microsoft and Yahoo hold a 28 percent share of the U.S. search market, still far behind Google's 66 percent, according to comScore Inc.), Yahoo! provides its remarkable online marketing platform combing with Microsoft Bing Search technology. This alliance is now only effective in the U.S. and Canada. The international divisions will not effective until 2012 which means that Yahoo Japan Corp. still relying on Google's search technology.

3.2. Mobile Phone

When the Apple iPhone hit the mobile world, the smartphone touch screen went into mainstream. Nowadays, the mobile phone device is not only for making and receiving a call but doing more for entertaining or for social networking. Google’s ambition to enter the mobile phone market was revealed by the acquisition of Android in July 2005 in order to prosper its advertising strategy, Google Search, and other Google applications onto different devices¹⁴.

Before, the 2G (the second generation) networks were built mainly for voice services and slow data transmission, such as SMS (Short Message Service), mainly for text-based communication. The advanced step, the 2.5G, launched before entering 3G, started to provide General Packet Radio Service (GPRS), which data rate is from 56 kbit/s to 115 kbit/s, mainly used for Multimedia Messaging Service (MMS), World Wide Web access, and email. Now the mobile phone is just like a small size laptop which undoubtedly occupies a crucial part in people’s life.

14 “Google Pushes Tailored Phones To Win Lucrative Ad Market”. Wall Street Journal.

2007. http://online.wsj.com/article/SB118602176520985718.html

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Figure 20: Mobile phone market. Source: Yankee Group, 2004

The feature phone was introduced within this stage. Not like smartphone which contains more computing ability, the feature phone is famous with its multimedia function such as embedded camera. Yankee Group revealed that in 2004 the mobile phone market was occupied mainly with the feature phone; even in 2010, the feature accounted for 70% of all mobile phone sales in the United Stated; however, the smart phone market was growing in a tremendous speed. From the Nielsen Research indicates in the third quarter of 2011, more smartphones will occupied in the U.S. market than feature phones.

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Figure 21: U.S. Smartphone Penetration and Projection. Source: The Nielsen Company 2009

From 2010 ABI Research report, the top five cell phone vendors are Nokia, Samsung, LG, Sony Ericsson, and Motorola. In order to share the big pie of this mobile phone market, the mobile platform companies have sought for any chance to enter into partnership with mobile phone device vendors.

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Figure 22: Handset vendor market share 1Q 2010. Source: ABI Research

The data from Pew Research Center in 2010 indicates in the U.S. more than 50% cell phone internet users go online daily from their mobile devices. Google, Yahoo!, and Microsoft eye the big pie of online advertising through the mobile device that heats up the smartphone competition within not only the mobile application but even the smartphone OS such as Google’s Android and Microsoft Window Mobile.

Figure 23: Survey of cell phone internet users from mobile device. Source: Pew research

3.2.1. Mobile Operating System

Similar to the operating system for desktop or laptop such as Windows, Mac OS, and Linux, the mobile operating system (mobile OS) acts much simpler that mainly processes mobile multimedia formats, various inputs, and connectivity. The instances for using the mobile OS are personal digital assistants (PDAs), converged mobile devices (smartphones), and tablet computers such as Apple’s iPad and ViewSonic’s ViewPad. The boosting need for mobile devices has brought on rigorous competition between software giants just like Google, Microsoft, and Apple, along with mobile industry leaders Nokia, Research In Motion (RIM), and Palm, in order to capture the most significant market share pre-emptively. Apple drastically

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influences the mobile industry by its launch of the iPhone in 2007, and it effectively led in a new era of smartphone operating systems which focus on touch-based interaction and user experience. This touch-based interaction also inroads the whole computer industry by blurring the need of the traditional input methods such as keyboard and mouse. Starting from Win 7 launched in 2009, Microsoft add on its new features such as advances in touch and handwriting recognition. In the same year of iPhone launched Google cooperated with 79 other hardware, software, and telecom companies to establish the Open Handset Alliance that is to preempt the smartphone market with its new Android operating system.

Figure 24: Total U.S. Smartphone Market Share. Source: The Nielsen Company 2010

In 2010 the Nielsen Company revealed that the top five smartphone platform players in the U.S. are Google, RIM (BlackBerry), Apple, Microsoft, and Symbian. If counted from the worldwide smartphone market, Nokia Symbian would still be the top 1 player due to its major leading in the global handset market. Especially Google’s Android is growing at a strong rate, and it deserves a close attention of its future potential. Handsets with Google’s Android platform overtook some part of Nokia’s Symbian smartphone market share in the fourth quarter of 2010 although Symbian is still the best selling system. Nokia’s market share dropped to 28.9%

from 36.4% in 2009.

In the past the operating system leaders are RIM, Symbian, and Microsoft Windows

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Mobile. In order to compete with recent newcomers Android and iOS, the pro-operating system leaders need to keep up with the launch of refreshed operating systems. However, the latter operating systems have taken away both mindshare and market share and helped propel the market forward. More smartphone vendors have been switched to Android because it helps them to comply with their own approach to what a smartphone experience can be. The main reasons for user choose Android are its ease of use and increasing free mobile application, comparing it to Apple iOS mainly paid applications.

3.2.2. Partnership

Except iOS and RIM OS only adopted in their own products, Android, Window, Symbian are also provided to their partnership device vendor. In 1998, Motorola was overtaken by Nokia as the world's biggest seller of mobile phone handsets.

Since that, Motorola has kept losing its position in smartphone battle. In 2006 before the iPhone launched, Motorola was the second biggest mobile phone maker offered both dumbphones and smartphones. After the iPhone coming out, Motorola became number 6 in smartphones. Current Motorola smartphones are all embedded with Android system; however, from InformationWeek, it was reportedly working on Android alternative OS by hiring engineers from Adobe and Apple.

For Android market, HTC was the first mobile phone manufacturer put Android into mass production. Besides developing its own OS, bada, Samsung also provides

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Nokia 100 47% 32 68 Symbian

RIM 48 30% 11 37 BlackBerry

Total 298 70% 123 175

Share 22% 8% 14% Of all mobile

phones

Table 1: OSs adopted by vendors. Source from Ahonen 2011

From Table 1, Android system is the most popular adopted OS by smartphone vendors. On February 2011, Nokia announced its partnership with Microsoft that was interpreted to be a great move to Microsoft Window 7 Phone but a great loss as well to Open Source. Since 2007, Nokia has been a member of the Linux Foundation in which Nokia and Intel are the biggest supporters of the MeeGo project, an embedded Linux for smartphones and other devices. “The game has changed from a war of devices to a war of ecosystems” said by Microsoft CEO Steve Ballmer. We can presume that both Nokia and Microsoft are trying their best to win back the lost market share of their position.

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