Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.
A few short years ago, snazzy handsets were all the rage in the mobile device arena. Now the handset, while becoming more slick and hip to hold and carry around, is sharing center stage with all manner of mobile devices, wireless embedded software, services and applications throughout the global wireless market. In fact, fierce and intensifying competition around the world is unfolding to deliver a myriad of wireless applications and services powered by embedded software and new operating systems.
Rather than focusing on the intrinsic attributes of a device, such as its design, power, camera or hardware features, consumers now ask whether they can access social networking services such as Facebook, Twitter, and Foursquare. Today’s consumer wants to listen to music streamed wirelessly through services such as Spotify or Last.fm, and to upload their photos to sites like Flickr – all on the move. They also demand access to all their personal and professional email platforms such as Hotmail, Gmail, and Outlook. And, they want their devices to interconnect with their computers, tablets, and home media libraries.
What does this mean? For starters, some device manufacturers are developing specific services and content, and then working to attract consumers to buy all of it. But these efforts have delivered mixed results. Services are the new frontier in this industry, but nobody has gotten it totally right yet.
To solve this problem, mobile handset manufacturers are developing new business models focused on more open operating systems. The goal is to reach the largest addressable market. While the question remains as to which operating system platform will dominate, it’s clear there are a number of criteria that the most successful are likely to fulfill. One of those criteria is opening the maximum market size. Providers of these open operating system platforms are pursuing this by encouraging software developers and service providers to build applications and services using open platforms. Although it will be important in this process that developing applications and services on these operating systems is relatively easy and quick, the commercial reach of the potential platform, as well as the maturity and scalability of the feature set, will be the key issue.
Given this complex market situation, wireless device and service providers will need to:
–Develop new customer propositions to capitalize on customers’ appetite for applications and services.
–Develop or acquire new capabilities or, more likely, form partnerships that will create access to business processes and knowledge; this will allow them to deliver at the scale and speed required to meet customers’ demands.
–Manage third party relationships.
–Adopt open development with necessary tools and infrastructure to foster an open development community.
–Develop new revenue sharing models.
–Redefine their roles within a rapidly emerging and fast changing eco-system in which no one player holds all the best cards.
–Expand their product and services planning processes to incorporate a broader consumer perspective; this includes other device types and interoperability with enterprise solutions and home electronics.
Beyond these actions, these firms should:
–Decide on how they want to drive differentiation going forward, and its effect on their current product portfolio.
–Adopt their development models to cope with the application store dilemma of balancing between device feature development and providing applications in the aftermarket.
–Decide on a strategy for developing, porting, localizing, customizing, testing and certifying to support the application store model.
–Figure out how they will make their applications and services available on multiple platforms in multiple geographies simultaneously.
–Roll out application stores in one form or another or solidify deals with specific content.
–Investigate and create policies and process support regarding how to take care of issues such as security, intellectual property infringement and liabilities when open development communities create and launch applications and services.
Final Thoughts
The days of the snazzy-looking cell phone being the wonder of the world remain vibrant and legitimate and there are no signs of this abating anytime soon. They’re cool-looking, still, and getting cooler-looking and more fashionable. But the mobile industry faces serious challenges beyond the device itself. Many firms are wrestling with whether to change their development organizational models. The time it’s taking to figure this out is slowing their ability to bring new accessories, services and device types to market. Dozens of PC tablets based on new operating systems are coming to market. How is this going to change the center of gravity in the mobile electronics industry? What other device footprints should they be looking at? Furthermore, what services, software and applications running on these mobile devices are going to be the most lucrative? Answering these questions is paramount to achieve high performance in the wireless industry.
Tom Stuermer is a Senior Executive in Accenture’s Communications & High Tech Operating Group. He can be reached at Thomas.e.stuermer@accenture.com. Abhijit Kabra is a Senior Executive leading Accenture’s embedded software business and technology initiatives. He can be reached at Abhijit.kabra@accenture.com.
