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Since its introduction, Apple’s iPhone has been a wide sales success, allowing the company to compete for the role of top smartphone maker in a handful of years. Aside from the design, capacitive touchscreen, and intuitive user interface, Apple has proven that to compete in the mobile space, the chances of success improve when the entire experience is integrated. That means not just solid hardware and software design, but a mobile app and media ecosystem as well as patents to protect your efforts.
Monday’s news of Google purchasing Motorola Mobility for $12.5 billion underscores this shift, as another big player, namely Google, is in position to adopt such vertical integration. Google will effectively enter the hardware market with the Motorola Mobility acquisition, although it’s possible it will choose not to alienate its hardware partners and later divest Motorola while retaining the many patents it gained from this deal.
That’s unlikely, though, because the mobile market is shifting away from the platform licensing model as the top companies are instead looking to replicate Apple’s business model, something my colleague Darrell Etherington thinks won’t happen for Google, even after the Motorola deal.
Outside of Google and Apple, take a close look at the rest of the who’s who in mobile and you can see the shift:
• Research In Motion. The company has always had an Apple-like approach, never licensing its BlackBerry OS to other companies. Instead, RIM integrated its hardware and software to build a popular brand, which it supplemented through closed services such as BlackBerry Messenger. That sounds like Apple, but a huge missing piece was an integrated mobile app store that provides easy one-stop shopping. RIM eventually added a store, called BlackBerry World, in April 2009 with 200 initial apps. Twelve months later, the company bought the QNX operating system and shows no signs of licensing it.
• Palm and Hewlett-Packard. Like Apple and RIM, Palm controlled both the hardware and software of its devices, although it did license the Palm OS to Sony for several years. There was never a Palm OS app store, however, causing consumers to find their own third-party apps either directly from developers or independent stores that aggregated software titles. Palm eventually replaced the Palm OS with webOS, didn’t license it, and was snapped up by HP for $1.2 billion in 2010. HP now sells webOS hardware, doesn’t license the platform—although it says it’s open to the idea—and runs the webOS App Catalog for software sales. The company is rumored to be working on a music store and launched a movie store for webOS in July.
• Samsung. The company is poised to become the next smartphone king on the back of Android phones, but it’s hedging its bets with its own Bada platform, which is reportedly outselling Windows Phone 7 handsets. Samsung’s efforts to create media stores for e-books, music, and video content helps make Samsung Android devices more appealing, but those stores could be leveraged by the company’s Bada phones. That would give Samsung its own ecosystem to supplement the platform and the hardware it builds.
• Microsoft. Licensing platforms is a core business model for Microsoft, which previously developed Windows Phone for hardware manufacturers to build around. Palm, HP, HTC, Samsung, and many others used Windows Phone to get in the smartphone game prior to Apple’s 2007 entry. Microsoft continued this approach with its new Windows Phone 7 software, but added a mobile app store and penned a huge deal—reportedly $1 billion—for a flailing Nokia to rely on WP7 for smartphones going forward.
