Monday, May 10, 2010

Software is Hard, Hardware is Easy

I have been following the latest smart phone race with interest. It seems to have the same underpinnings as the early personal computing trends. It even has one common player; Apple.

Interestingly, Apple has risen to a rather enviable prominence with iPods, iPhones, and now iPad. Even their personal computer business has picked up steam in the recent years. And somewhat surprisingly, North America has got its mojo back as a place of innovation in mobile computing again. Who knew?

The PC story seems to be repeating itself as well, which should be a warning sign for Apple. Hardware is becoming a commodity. There are cameras, a good deal of memory, touch screens, GPS and all kinds of gizmos, and every manufacturer has it. The result is that the differentiators are climbing a level of abstraction: Software is King.

Apple's App Store is obviously the thing that gives Apple the lead. The usability of the iPhone is rather good, and it was a small revelation at the time when it first came out. The usability comes from great design, close integration, and tight control of the experience but it has its price; a closed system works as long as there is no viable alternative market.

Google's Adroid OS is making some promising headway and is now exceeding the sales figures of iPhone. There are many manufacturers and a variety of operators. Apple has hinged itself onto AT&T only. That seems to be a sticking point since the user base is saturating in the realm of AT&T (don't get me wrong; it was great while it lasted). Verizon might no longer give Apple a good deal because it does not have to.

We must not forget Blackberry. They are still holding steady but Android might be a problem for them on the long run as well. Still, plenty of innovation here should keep the Candian message phone maker in the game for years to come.

The elephant in the room is Nokia. Nobody is talking about them, though they sell more mobile phones in one day than Apple sells iPhones in a whole quarter. Nokia is very stong in the emerging markets of China, India, South America, Africa etc. They still produce healthy margins from commodity phones and have access to far cheaper components than any of their competition. But no winner in the smart phone race.

Nokia's problem is that Software is Hard, Hardware is Easy. Nokia never was a real software house that could churn a winning operating system in the scale that is now required. Sure, Symbian was a passable solution in the past but right now it just can't do it. The Ovi app store is remains a question mark and Nokia can't seem to crack the North American market which is tightly under control of the operators. Regardless, other phone makers have a long way to go to catch Nokia so maybe they have their chance.

Interesting times.
Post a Comment