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12/18/2012
11:03 AM
Eric Zeman
Eric Zeman
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Smartphone Race's Third Horse: Microsoft Or RIM?

Apple and Google are the two strong leaders in the smartphone wars. Microsoft recently kicked off its comeback bid, and RIM follows next month. Which one has the best shot of being the third horse in this race?

Microsoft and Research In Motion both face an uphill battle to win back market share from Apple and Google. More important than taking back share from the leaders, however, Microsoft and RIM need to focus on beating each another first if they hope to take on Apple and Google later.

The smartphone platform wars have evolved markedly in the last 10 years. In 2002, BlackBerry OS, Palm OS, Symbian OS, and Pocket PC 2002 were the reigning smartphone platforms (if one can say that less than 5% of the entire cellphone market counted as reigning anything). Five years later, in 2007, these platforms were still at the top, though Pocket PC 2002 had morphed into Windows Mobile 5 and Palm was already beginning to decline. Now, 10 years later, these four are all but dead.

Google's Android platform and Apple's iOS platform have taken their place. Together, these two now hold 90% of the entire smartphone market, leaving little more than scraps for the rest. A market that was briefly a five-horse race eventually dwindled to a four-, then three-, and now a two-horse race.

There's one important ingredient a challenger needs, one that supersedes good hardware and a solid operating system. That ingredient is an ecosystem. Ecosystems lead to customer stickiness.

[ Would RIM be able to win back market share without Google apps? See What If Google Ignores BlackBerry 10? ]

My friend Kevin Tofel, who writes for GigaOm, offered a very good argument with respect to ecosystems. "The longer a handset owner sticks with one platform, the more they invest in content and apps that only work with that platform. This lock-in cost is a potential barrier to switching. And for those who invested early in a platform, as much as four or five years, it's highly unlikely a switch will occur. Who wants to re-buy premium apps, books, videos and other content?"

Apple and Google have been building their ecosystems for years. The ecosystem includes not just the device and the operating system, but the tie-in with desktop systems, content stores, the cloud, accessories, and so on. Apple's iTunes Store is the world's largest seller of music. Google is attempting to catch up and has greatly expanded its own Google Play Store in recent months.

Consider alone the number of movies you may have purchased via iTunes, for example. If you've bought 10 movies, that's $100 to $200. Movies purchased from iTunes play only on Apple devices; you can't port them to an Android, BlackBerry, or Windows Phone device. If you give up on iOS, you lose mobile access to that content. The same example can be applied to Android or Windows Phone. That's a powerful motivator to keep people where they are.

Now consider Microsoft and RIM. Which has the better ecosystem? Clearly, Microsoft does -- at least as far as consumers are concerned.

Windows Phone 8 ties in to Microsoft's Xbox gaming and content services, in addition to Windows PCs. Microsoft's access to music and video content is far greater than RIM's, for the moment. (RIM plans to add video and audio content to the BlackBerry World store with the launch of BlackBerry 10.) Further, Microsoft has a great story right now with the launch of Windows 8, Windows RT, and Windows Phone 8, which share their kernel and have a similar user interface.

But RIM has a solid enterprise ecosystem. It has good developer relations, incredible messaging services, strong ties to the government and big business, and a dedicated user base that has historically kept BlackBerrys ahead of Microsoft's mobile efforts for ten years.

In the end, the battle between Microsoft and RIM may come down to which group exercises is purchasing power more freely: consumers or enterprises.

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jaysimmons
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jaysimmons,
User Rank: Apprentice
12/31/2012 | 8:01:50 AM
re: Smartphone Race's Third Horse: Microsoft Or RIM?
Microsoft is making a big push with it's new design from Windows 8 and mobile platforms, but what exactly has RIM pushed out lately? It seems their last 'revolutionary' device was a touchscreen version of their pre-existing phones, which competitors had similar devices out long before them. RIM should try to push and regain their business and enterprise customers by finding a new niche. Much of their proprietary features have been replicated, like their messaging. With BYOD becoming increasingly popular in the medical field, it would be nice if RIM shifted their efforts to providing a very secure mobile platform or something else that others aren't going for. Only then, do I believe they will have a shot.

Jay Simmons
Information Week Contributor
EVVJSK
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EVVJSK,
User Rank: Apprentice
12/23/2012 | 2:42:08 PM
re: Smartphone Race's Third Horse: Microsoft Or RIM?
Your comments imply that there MUST be a competitive 3 horse race (like it is pre-ordained or something). Microsoft, RIM, Nokia, etc... or anyone else who wants to compete MUST provide excellent functionality, service, etc... at at reasonable price. Customers have to want to buy it and need a reason for coming back (I think Apple is going to start seeing some of this due to extremely high prices of their devices). Failure to meet those criteria will be cause for not purchasing/continue to purchase products by consumers.
Case in point, I purchased an Acer Android Iconia A500 tablet summer of 2011. That table received an upgrade from Honeycomb to Ice Cream Sandwich this Spring, but is NOT getting Jellybean. While ICS is decent, it is NOT smooth. There a pauses and delays that should not be there. I took a chance on Acer by early adoption of their product (by product I include the hardware and the software/OS). In my opinion, Acer abandoned their customers with this product (especially those who took an early chance on buying Acer when Samsung and others were probably product leaders). The fact that Acer has chosen to leave it users hanging with a so-so product, when an OS upgrade would have made their product experience significantly better, shows me that Acer is this business for the short run. They aren't too worried about keeping customers long term. As a result, I will be moving on to a different manufacturer for my next tablet when that time comes.
RobMark
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RobMark,
User Rank: Apprentice
12/19/2012 | 6:19:05 PM
re: Smartphone Race's Third Horse: Microsoft Or RIM?
Having just switched from BlackBerry Torch 9850 to a Nokia Lumia a couple of weeks ago, I can't believe that I would ever go back to BlackBerry. I suffered for years on a sluggish phone, that always needed to be rebooted, would not answer some calls because it was close to locking up, having it redial phone numbers when in my pocket, lack of apps (huge lack of apps compared to WP8), apps that worked on older BBs, but not available on my new BB (that I had for a year and the apps were never available). and apps like Netflix queue manager that were suppose to work, but did not and no support was available.

Never going back to BB.

Having Win8 at home and me and my wife on WP8, we are still finding all the ways to make use of the the apps and share. Only thing I wish WP8 had is more granular control of volume, ringtones (such as a specific ring tone when I get a text message from a specific phone), and repeatable ringtones for a new text message that you have not responded to. I am on call and get text messages from computer systems for critical failures and would like those text messages and only those text messages to have a distinct ringtone at high volume that repeats until I tell it to stop. But, pretty much all smart phones have a problem with this.
wht
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wht,
User Rank: Strategist
12/19/2012 | 6:12:57 PM
re: Smartphone Race's Third Horse: Microsoft Or RIM?
As a business technology user primarily, and a consumer user secondarily, the coolness factor is about Zero, zilch, nada, 0, to me. I want something that works, does the necessary tasks well, is reliable, and sturdy enough for 2-3 years usage. Coolness doesn't matter. Platform doesn't matter that much to me for personal use, but it does for business (security, native applications like Office on Windows phones, etc.) As far as Apple iTunes ecosystem attempting to tie me into their product line so I won't go elsewhere, that is not a factor. I use iTunes on my PC only, and can play music, videos and movies on my desktop or laptop, or an HDTV. Using iTunes content on an Apple smartphone or tablet is not necessary, but obviously more convenient for most people. I currently use both Windows and Android devices. My preference going forward is Windows.
lgarey@techweb.com
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lgarey@techweb.com,
User Rank: Apprentice
12/19/2012 | 4:39:35 PM
re: Smartphone Race's Third Horse: Microsoft Or RIM?
There's also the coolness factor; nowadays, very few people want to be seen with BlackBerrys, and the hardware is distinctive enough that there's no hiding it. I know -- I have a teenager who "broke" four Torches. Somehow though, her Droid has survived.

Lorna Garey, InformationWeek
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