MWC Barcelona - Mobile Platform Battle Intensifies
Nokia Corp. stole the show with its announcement of several devices based on a modified version on Google Inc.'s Android (see OTR Global notes from Jan. 6 and Feb.13). While Nokia management stressed the devices are primarily aimed at emerging markets, we hear that several European network operators plan to launch Nokia X devices in select markets within the next three months -- earlier than expected. "The price points are good, and the availability of more than 75% of Android apps on this new platform makes it attractive," a carrier said.
To demonstrate how fast Android apps can be ported onto the new Nokia smartphone, the vendor gave away a free Nokia X device to every developer who was able to port all (non-Google exclusive) apps from his Android device to a Nokia X device in less than an hour. "It worked out easier than I thought," a developer said. Contacts in the developer community questioned whether the design is appealing enough to move customers to the new product, however. "The design is not very fashionable, just OK, I would say. I am not sure this will fly," the developer said. A carrier said the platform is "much worse" than he thought but the low price and the app store size should help sales.
Samsung's Tizen Not Taking off
Samsung Electronics Co. Ltd.'s (005930 KS) attempts to reduce its dependence on Android OS with the creation of its own OS, Tizen, has failed so far as device launches continue to be delayed, sources said at the show. At the same time, the Korean vendor is struggling to find other manufacturers to support the alternative OS, despite vendors like ZTE Corp. (000063 CH) recently joining the Tizen Association. “It’s tricky, as Tizen is not getting traction with the handset vendors,” a source said.
A high-level source said, "Orange [S.A.] would still launch a Tizen device in the first half of 2014, but effectively I think Tizen is dead, although Samsung will try to save face."
Google is trying to convince Samsung to drop its Tizen initiative, we also hear from software developers. Sources believe in return Google would be willing to pay Samsung more than $1 billion to make up for the development costs and allow Samsung to modify the existing Android platform to a much larger degree than currently accepted by Google.
Microsoft's New Partner Program
Microsoft Corp. surprised many of OTR Global's industry sources with its announcement of a broad partner program for its Windows Phone OS. With that move, Microsoft is clearly going after the sub-$100 smartphone category in emerging markets dominated by Android. Microsoft is partnering with China’s Lenovo Group Ltd. (992 HK), ZTE, Gionee Communication Equipment Co. Ltd. and OEMs such as Longcheer Holdings Ltd. and Foxconn Technology Co. Ltd. (2354 TT). In India, Microsoft plans to partner with brands such as Lava International Ltd.'sXOLO and United Telelinks (Bangalore) Ltd.
At first glance, it seems like a good strategy, but sources at the show said partners are skeptical and are not expecting a large-scale deployment of low-cost Windows platform phones in the emerging markets anytime soon. Instead, they expect a gradual launch in 2015 and slow uptake. They said Microsoft partners don’t want to launch another low-cost platform because margins are very low in that business and they prefer to keep their brands at premium price points where margins are better. Good examples are XOLO and Gionee, which currently focus on the high end.
Lenovo is another example. “[Lenovo] currently partners with Microsoft for tablets and PCs but does not have a Windows platform phone because the platform isn’t popular in China or emerging markets,” one source said, adding companies like Lenovo are caught between a rock and hard place. They want to ignore the Windows platform, but they can’t risk doing so, especially in light of Nokia's announced plan to drop the price of its Lumia-series handsets based on the Windows platform. "This poses a significant threat to companies like Lenovo if Nokia’s prices hit sub-$100,” he said, “They won’t have a choice but also to launch a Windows platform phone to compete.”
