« Top Searches of 2002 | Main | Privacy Rings »

IBM -> Microsoft -> Nokia?

This is a couple of weeks old, but interesting nonetheless. The Economist ran a editorial on the "collision of the computing and mobile-phone industries:"

"A computer on every desk and in every home." This was Microsoft's mission statement for many years, and it once sounded visionary and daring. But today it seems lacking in ambition. What about a computer in every pocket? Sure enough, Microsoft has recently amended its statement: its goal is now to "empower people through great software, anytime, any place on any device". Being chained to your desktop is out: mobility is in. The titan of the computer industry has set its sights on an entirely new market...

In short, the once-separate worlds of computing and mobile telephony are now colliding, and the giants of each industry -- Microsoft and Nokia, respectively -- are squaring up for a fight for pre-eminence. Both camps are betting that some kind of pocket communicator, or "smartphone", will be the next big thing after the PC, which has dominated the technology industry ever since it overthrew the mainframe 20 years ago...

If this is the next stage in the evolution of computing, one obvious question arises: which firm will dominate it, as IBM dominated the mainframe age, and Microsoft the PC era? The answer is that there is unlikely to be a single winner this time around. IBM ruled in mainframes because it owned the dominant hardware and software standards. In the PC era, hardware became an open standard (in the form of the IBM-compatible PC), and Microsoft held sway by virtue of its ownership of Windows, the dominant software standard. But the direction of both computing and communications, on the Internet and in mobile telecoms, is towards open standards: communication devices are less useful if they cannot all talk to each other. Makers of pocket communicators, smartphones and whatever else emerges will thus have to compete on design and branding, logistics, and their ability to innovate around such open standards.

At the moment, these considerations seem to favour Nokia more than any other company. But Nokia faces a direct challenge as Microsoft leads the computer industry on to its turf; its continued dominance of the mobile-phone industry is by no means assured, since it is not based on the ownership of proprietary standards. Microsoft, for its part, will try to exploit its dominance of the PC industry to help force its way into the new market. But it may well fail. Either way, there will be no need this time round for any repeat of the long-drawn-out antitrust cases, against first IBM and then Microsoft.

I think we can look at the experience in the Japanese cellular industry for examples here. For the past few years, NTT DoCoMo had by far the most popular cellular service in Japan with i-mode. Then they distracted themselves with building expensive, mostly useless 3G videophones. Meanwhile, their competitors began shipping 3G phones with cameras, GPS receivers, and location-based services, and rapidly ate into their market share. For the last eight months, the most popular phones in Japan have been KDDI's au models, as illustrated in this story from Reuters earlier this week:

KDDI Corp, Japan's second-largest wireless operator, said on Monday the number of users for its high-speed, third-generation (3G) mobile phone service had topped four million, keeping a wide lead over larger rival NTT DoCoMo Inc.

The figure indicates the operator is on track to winning seven million 3G subscribers by the end of the current business year on March 31 -- a KDDI target reiterated by President Tadashi Onodera last week.

KDDI began its 3G service based on the CDMA2000 standard in April, while DoCoMo, whose 3G operation is based on the competing WCDMA format, has only won about 150,000 users despite a six-month head start...

DoCoMo's 3G service has met with tepid demand due mainly to limited geographic coverage and short battery life.

Now DoCoMo is coming back -- last week, Joi Ito showed me his new DoCoMo phone with dual zero-lux cameras built in. Apparently it's the hottest thing in Japanese cell phones at the moment, and very difficult to find in stock. This is the kind of back-and-forth competition that has been sorely lacking in the market for operating systems, but which we can hope for -- and should do all we can to encourage -- in the wireless market.

Post a comment