posted by Howard Fosdick on Sat 19th May 2012 08:59 UTC
IconSmartphones have become the preferred computer of the masses. Sales surpassed those of personal computers in 2010, having grown over 50% per year for several years. Nearly 500 million smartphones shipped in 2011. This radically shifts the terrain in the consumer operating system competition that was, for years, firmly decided in favor of Windows. This article analyzes the New OS Wars.

This chart shows how, over the past three years, smartphones have decimated Windows' long OS dominance in popular computing.

The_OS_Wars Source: Horace Dediu of Asymco


Tablets play a role in this change, too. TechCrunch projects iPad sales of 66 million this year. Forrester Research optimistically predicts that tablet sales will explode to 375 million yearly by 2016.

Smartphones are killing off dumb feature phones. The shrinking light blue shading at the top of the chart below shows the rate at which feature phones are losing market share to smartphones in the U.S.:

Smartphones Installed Base
Sources: Asymco and comScore


The chart also shows that Android and iOS market shares grew greatly, while those of Palm OS/webOS, BlackBerry OS, and Windows Phone/Mobile dwindled.

Now, let's consider the future. Here is International Data Corp's projection for world smartphone OS market share in 2015, contrasted with real 2011 numbers. These estimates show Android and iOS doing well over the next several years, with minor decline for BlackBerry OS and major decline for Symbian OS. The key point here -- one that some other predictions dispute -- is that Windows will dramatically come back in the market.

Smartphone OS Market Shares Source: Mobilemancer and IDC

Winners

Google Android and Apple iOS are the big winners in the new OS wars. Results over the past two years show dramatic growth for both. IDC projects that Android will gain another 5 to 10% market share by 2015. They believe that iOS will retain about the same market share in 2015, but this still represents a cummulative annual growth rate (CAGR) of 17.9% for the OS, given the rate at which the total market is growing. (These predictions exclude tablet sales, an area in which Apple currently has a huge lead.)

Windows?

Windows is the big question mark in all smartphone predictions. Microsoft's smartphone market share has atrophied over the past couple years and is only about 5% of the worldwide pie today. In response, in February 2011 Microsoft inked a deal with Nokia, which agreed to replace its popular Symbian OS with Windows Phone. The duo debuted their first Windows Phone 7 devices in 2011. Analysts were generally positive about the products.

Microsoft's goal is to create a third "smartphone ecosystem" to compete with Apple iOS and Google Android. To that end it has not only signed on Nokia but also other partners including HTC, Dell, Samsung, Acer, Fujitsu, and ZTE.

One challenge Microsoft faces is whether it can get developers on board to create a viable universe of apps and downloadable content. The New York Times estimates that Windows Phone has over 70,000 apps, versus 600,000 for Apple and 400,000 for Android. Beyond the numbers, there is the question of whether Windows Phone has the right apps: those the public wants. Microsoft pays developers to join in. While some analysts see this as a sign of weakness -- which it is -- I also see it as an astute move. Some companies with Microsoft's history might be too inflexible or arrogant to pursue this necessary strategy.

Another issue is whether the Windows brand is a draw or a liability. Microsoft believes it's a big plus. They've kept the Windows name and have even gone so far as to combine their smartphone and laptop/desktop operating systems. But it's possible smartphone buyers will see Windows as a legacy OS rather than a cutting edge offering. (Do you want IE on your phone? How about Windows malware?) My feeling is that the Windows brand will attract consumers and turn off the technically-oriented.

The Microsoft - Nokia partnership presents interesting asymmetries. For Nokia, it's do or die. They've bet their company on this. In contrast, Microsoft could survive a failure. It is diversified with its sales of personal computer, enterprise, and gaming software. The two companies have different geographic strengths. Nokia sells best in Europe and Asia, whereas Microsoft's trump card has always been its U.S. monopoly. Will these two companies synergize? Or is this a mismatch?

My guess is that consumers will give Windows Phone a fair test. If the software is appealing and featureful, and if the apps are those consumers want, there is room for a third smartphone ecosystem to grow and prosper.

Niche Systems

BlackBerry OS -- Only a few years ago, "BlackBerry" was synonymous with "smartphone" among North Americans. But failure to respond in a timely fashion to the dual challenges of Apple's iPhone and Google's Android are slowly but surely reducing RIM's market share.

A recent article titled "RIM To Give Up Most Consumer Markets" quotes RIM CEO Thorsten Heins as conceding the consumer smartphone market in order to concentrate on its business customers: "We plan to refocus on the enterprise business and capitalize on our leading position in this segment... BlackBerry cannot succeed if we tried to be everybody’s darling and all things to all people. Therefore, we plan to build on our strength."

If RIM indeed concedes the consumer market, BlackBerry OS will lose market share faster than the above IDC projections. RIM could end up with a strong niche serving business customers.

Symbian OS -- Symbian OS has a larger presence in Europe and Asia than in the United States. Symbian's market share will recede as Nokia pulls its support from the OS in favor of its deal with Microsoft for Windows Phone. Nevertheless, over 400 million Symbian phones have been shipped over the lifetime of the OS.

webOS -- webOS was introduced by Palm, Inc., as a successor to Palm OS in 2009. Hewlett-Packard acquired webOS in April 2010, intending to use it in smartphones, tablets, and printers. Since then HP has backed off its aggressive plans, and in December 2011, it announced it would open source webOS.

Does open source webOS have a future? It all comes down to whether OEM's use it and developers accept it. I believe that if Microsoft can grow a Windows smartphone ecosystem, a fourth ecosystem won't be viable. WebOS will be confined to niche status.

Bada, Tizen, and Others -- There are many other smartphone OS's around, including Samsung's Bada and Tizen (evolved from MeeGo). Like webOS, these could be useful to consumers and profitable for vendors, but I doubt any will achieve the major market share required to become a third smartphone ecosystem. All will be niche products.

Summary

Smartphones are now the preferred computer of the common man. Sales are exploding; soon almost everyone will have one. Smartphone operating systems hugely impact overall OS market shares. iPads and other tablets will also have an affect. After years of stasis, the rise of the handhelds is shaking up the somnolent market for personal computing operating systems.

Google Android and Apple iOS are the big winners in this OS shakeup. BlackBerry OS and especially Symbian OS appear destined for lesser roles in the future. Samsung has a good niche with Bada. webOS and Tizen might become niche products or they could fail altogether.

The big question is whether Microsoft and its partners can nurture a third smartphone ecosystem. If so, we'll have three dominant standards and a handful of popular niche systems. Otherwise the Android/iPhone duopoly continues, with small market share for Windows, and larger possibilities for niche alternatives.

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Howard Fosdick (President, FCI) is an independent consultant who supports databases and operating systems. He also consults for vendors as an industry analyst. Read his other articles here.
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