In November, the heavyweights of the wireless telecommunications industry descended on Las Vegas to announce a global, open set of standards for mobile software called the Open Mobile Architecture initiative.
The OMA, they said, will be an all-encompassing wireless standard built on existing open standards such as XHTML, Java, and SyncML. The OMA, they said, would lead the way to an all-encompassing, interoperable network of products and services for smartphones and other wireless devices.
From this day forward, these companies (including AT&T Wireless, Cingular Wireless, MM02, NTT DoCoMo, Telefonica Moviles, Vodafone, Fujitsu, Matsushita, Mitsubishi Electric, Motorola, NEC, Nokia, Samsung, Sharp, Siemens, Sony Ericsson, Toshiba, and Symbian) would be working together to establish a platform upon which everyone could prosper in the bright new world of high speed wireless networks.
Why the sudden lovefest between formerly cutthroat competitors? No, nobody slipped ecstasy in the water cooler. The mobile community had banded together to keep Microsoft, who has been pushing its Stinger smartphone technology, from moving in on their turf.
You can't blame Microsoft for wanting to get in on the action. The pie is mighty tempting: non-voice revenues for mobile operators are going to leapfrog from $3.3 billion in 2001 to $44.8 billion in 2005, according to research company IDC. Microsoft is deadly serious about getting its software embedded in the coming crop of smartphones that will take advantage of speedy wireless 2.5G and 3G networks.
Unfortunately for Microsoft, the major mobile handset manufacturers want to keep Microsoft away from their pie. They've seen what happens to companies like Dell and Gateway, who've become little more than low-profit boxmakers locked in perpetual servitude to their masters in Redmond. None of them want to go down that same grim path.
In the spirit of coopetition
In response to the Microsoft threat, the wireless industry has re-organized itself around the OMA. Sure they'll still be competing against one another by trying to make the coolest phones and communicators, and they'll still be protective of their secret projects, but they'll be making them from a shared set of standards.
At the center of these standards sits Symbian, a joint venture software company formed back in 1998 by the major handset manufacturers (Nokia, Ericsson, Matsushita/Panasonic and Motorola) and Psion, the UK-based manufacturer of handheld computers that run on the EPOC 32 operating system, the basis for the Symbian platform.
Shortly after Symbian was established, a number of high profile companies signed on as licensees, including Siemens, Sony, Philips, Kenwood, and Sanyo. The feature-packed EPOC operating system, which has been running Psion's handhelds since the mid-80s, competes with Microsoft's Windows CE Palm PC software (which debuted in 1996), and to a lesser extent, the Palm OS (which has shown up on a couple of mobile phones, including Kyocera's Smartphone and Handspring's Treo).
Without a doubt, EPOC is an ideal OS for mobile handhelds. Even in its earliest incarnations, the software was designed with wireless functionality in mind, such as low-power consumption, and ARM-chip operability. Symbian's OS is a flexible, powerful platform designed to ride the transition from 2G to 2.5G and 3G and beyond, as well as provide a framework that supports everything from Java to WAP/XHTML. That's one reason the device makers didn't simply roll over and begin licensing Windows CE just to avoid sparring with Microsoft.
By getting the entire industry to go along with Symbian, says Jouko Hayrynen, vice president of Nokia's mobile software unit, "it allows different manufacturers devices to operate with each other, while still enabling a substantial differentiation of products."
In other words, the handset companies have learned to balance cooperation with competition. It's not like they've always been at odds with each other, anyway. They've learned to play nice with each other when it counts. Where would the industry be, for example, if the players hadn't agreed on the GSM standard for digital mobiles?
Can Stinger penetrate the market?
The first Symbian handhelds were introduced last year, most notably the Nokia 9210/9290 Communicator, which drew tremendous interest at Comdex in November. The high-end, business-user handheld combines voice, fax, email (including attachments), calendar, and Web browsing, with images, video clips, and audio. Hayrynen says that by 2004 "half of all Nokia devices shipped are expected to contain the Symbian OS."
Microsoft's smartphone technology, which has been in development since 1998 and is codenamed Stinger, offers many of the same features as Symbian phones. Based on the WindowsCE OS, Stinger combines voice with the features found on Pocket PCs, including email, web browsing, contact database, and calendaring.
But so far, Microsoft hasn't been able to convince any of the major mobile handset manufacturers to make Stinger phones. It has signed up Samsung, Sendo Holdings, Mitsubishi, and HTC (the company that builds the iPAQ Pocket PC for Compaq) to make them, but these companies represent less than five percent of all mobile phones made. Symbian licensees, on the other hand, account for over two-thirds of the phones sold around the world.
Does this mean Microsoft is dead in the water? It's certainly not a good sign that none of the major handset makers want anything to do with them, but don't count them out yet. This isn't the first time Microsoft has entered a new market with a strong disadvantage. The company has a knack for using its dominance in the PC world to make up for lost ground in new territories.
Look how it clobbered Netscape, which had over 95% of the market in Web browsers and Web servers when Microsoft finally woke up to the Internet and introduced its Explorer Web browser. It took several years, but Microsoft obliterated Netscape. And while the Palm OS is still holding on to the majority of the market for PDA operating systems, Microsoft's Windows CE is slowly but surely stealing away slices of the PDA pie from Palm. Palm lost 8 percent of its marketshare last year (dropping to 80 percent) to Microsoft, which doubled its share from 8.5 percent to 16 percent. Today, over 60 device manufacturers now use Windows CE in their products.
Get in on the ground floor
How is Microsoft able to enter a new market and grab it away from everyone else? Microsoft will tell you it's because they make better software. Whether or not that's true, it's obvious one reason Microsoft can jump into the game late and still gobble up new markets is because it knows how to leverage its dominance on the desktop by offering compatibility with Window applications.
But this time around, Microsoft is going to have a hard time gaining control of the smart phone market simply by relying on its compatibility advantage. First of all the vast majority of mobile phone users don't use Microsoft software, and to these folks, compatibility doesn't matter. They just want a cool phone, and they're going to go to the companies that have become successful by offering sexy phones with sexy features. So far, all the sexy phone makers are signed up with Symbian.
And for those phone users who do use Microsoft applications on their laptops and desktops, Symbian is doing everything it can to make sure its software works seamlessly with Windows products. Symbian has partnered with several companies who are experts in the PDA-to-PC synchronization business, such as PumaTech, Starfish Software, and fusionOne, and it has embraced the SyncML standard to provide synchronization of data between devices, networks, and desktop machines. A component of the Symbian OS, called Epoc Connect (Nokia calls it the "PC Suite") can read and write to Microsoft application modules, giving Symbian-equipped handheld users the ability to transfer and synchronize files, contacts, and schedules from commonly used applications such as Microsoft Outlook and Lotus Notes.
Even though Symbian devices will work with Microsoft applications, that doesn't mean Microsoft is going to be able to get a toehold inside the devices themselves - not if the members of the OMA can help it. Case in point: in June, Symbian dumped Microsoft's Mobile Explorer microbrowser in favor of Opera, made by a tiny company in Norway.
That's quite a blow to Microsoft, because while there are 250 million PC users worldwide, there are over 500 million mobile-phone users, and that gap is increasing daily. So even though Opera has less than one percent of the desktop computer browser market, if Symbian takes off, there could conceivably be more people browsing the Web using Opera on their handhelds than people browsing the Web using Explorer on their PCs.
Battling war chests
Microsoft is using Stinger as a way to work its .NET platform into the wireless world, and they've set aside $5 billion to develop .NET, which is basically a proprietary data format that would allow devices to seamlessly communicate and conduct transactions with each other, with Microsoft taking a healthy cut of any micropayments made using it.
By comparison, Symbian's cash reserves seem paltry. The situation was looking rather bleak for Symbian, until January 30, when its shareholders kicked GBP20.75 million, bringing Symbian's war chest to GBP37 million. That's enough, it says, to keep it running until the 3G networks are up and running around the world, by which time handsets that run Symbian's software can really show their stuff.
Hopefully, by that time, Symbian will be receiving enough in per handset royalties to avoid having to return to its shareholders for another infusion of cash. Symbian may not have the money that Microsoft can throw around, but it's got the support of the industry behind it.
Symbian likes to pretend it's not at war with Microsoft. Don't be fooled. Those sounds you hear are guns being loaded.
Mark Frauenfelder is a writer and illustrator from Los Angeles.