Ding!
The bell has sounded for the rematch between Phone.com Inc. and Nokia Corp. in the fight over WAP browser market share, and Nokia is coming out swinging with a whole new strategy.
As the U.S. market readies for the coming WAP rollout, Nokia introduced the newest version of its WAP Browser 2.0, an upgraded microbrowser software package that supports the WAP 1.2 specification.
In a one-two punch combination, Nokia is hoping to chip away at Phone.com’s dominant WAP microbrowser market share not only by licensing the browser technology to other handset manufacturers as an OEM product-much like Phone.com-but also by including the source code with the license.
This is the first time Nokia has introduced an OEM product meant to be licensed externally, as well as the first time the source code has been made available for a WAP browser.
Phone.com licenses its UP.Browser software in binary form, meaning licensees cannot alter or manipulate the browser technology. By providing the source code, Nokia is giving licensees full access to the guts of the software, allowing them to make changes and additions at will.
This means two different manufacturers licensing the same browser can bring to market two completely different phones with different browser functionality meeting different market needs. Without the source code, manufacturers can only differentiate on phone features; the browser features remain the same.
“We recognized as a handset manufacturer that others needed to control the pace of innovation,” said Paul Chapple, Nokia’s manager of U.S. business development. “If it’s available in binary only, there’s a bottleneck to innovation. You have to wait for the next release of that product. You can’t add extensions or upgrades.”
In today’s WAP climate, innovation is imperative. In particular, critics have panned the user interface of WAP phones, saying navigating wireless Internet sites is a deterrent to usage.
With access to the browser’s source code, manufacturers can change the user interface in any way they like, allowing carriers greater freedom in dictating the look and feel of the phones created for their services.
“Phone.com dictates the user interface in every single instance,” Chapple said. “In some ways this is good because the carrier understands how it works on different phones. But this (giving the source code) allows the carrier to define the user interface. … Designing the user interface is not our business.”
Chapple said he also expects it to lead to new phones getting to market faster. Software development works on a six-month time frame, while handset development time is on an 18-month schedule. If manufacturers have to wait for the next version of browser software, it takes longer to get new phones to market. Access to the source code allows companies to make changes and add new software in phones as they are in development.
“I think it’s a wise move,” said Larry Swasey, senior vice president of communications research at Allied Business Intelligence. “One of the big obstacles for WAP is not having good applications. By opening up the source code, you are inviting others to make the browser better.”
And a good browser is the key that opens the door to the whole WAP business model. Nokia is not going to make any significant revenue by licensing the browser. Even Phone.com gives away its browser technology. The competition lies around server infrastructure.
Nokia, the world’s dominant handset manufacturer, also competes in network infrastructure. And in the wireless Internet world, that means WAP servers.
Compelling applications make the browser more valuable. The browser then makes the WAP gateway more valuable, which in turn makes the infrastructure more valuable. Nokia only cares about propagating its browser because the more the Nokia browser is used, the more valuable Nokia’s gateways become.
“The browser is not the large item. It’s the phone and the infrastructure that lets an application get to the phone,” Swasey said. “The browser is the lead-in item, like the two gallons of milk on sale that gets you to the grocery store.”
This is especially important in the U.S. marketplace, where WAP networks have yet to roll out. Current domestic wireless Internet solutions use a proprietary solution from Phone.com, which includes the company’s servers and microbrowsers.
Some estimate Phone.com controls about 70 percent of the worldwide WAP infrastructure market-browsers and servers. In fact, Nokia even had to concede to developing a version of its 7110 phone with Phone.com’s browser technology so Sprint PCS could offer the device to its subscribers.
“Nokia is far behind Phone.com in terms of browsers and gateways,” said Matt Hoffman, analyst at Soundview Financial. “They need to do something to catch up and opening the source code is a good first step. It’s Phone.com’s market to lose.”
With such a strong start, it’s unlikely Phone.com will lose much market share for WAP browsers. But by opening the source code, Nokia’s play seems to be for the more niche markets expected to arrive in coming years. Today, Internet access alone is a niche product. But if all phones three years from now are WAP-enabled, a need will exist to differentiate.
“If everyone has the same look and feel with the Phone.com browser, Nokia’s browser may allow you to develop a new, sexier browser and differentiate yourself from what everyone else has,” Swasey said. “Carriers have a lot of power. They can sit down with handset manufacturers and dictate what they want to sell to customers. A manufacturer that allows the carrier to differentiate is a manufacturer that’s going to do well.”
