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Making phones act like PCs
Seattle Times technology reporter
Microsoft envisions a day when the Start button, synonymous with the PC industry, makes it into a corner of most mobile phone screens.
The idea may be not too far off. The wireless industry is undergoing a change that could create new opportunities for high-end cellphone-operating systems, such as Microsoft's mobile version of Windows.
In getting there, the Redmond software giant will have to figure out how to operate in an industry unlike the PC world, while encountering the likes of Symbian and Linux.
For now, all three efforts are benefiting from an industry trend: Carriers and handset manufactures are replacing their homegrown cellphone-operating systems, as those so-called legacy systems grow creakier with each upgrade or new cellphone feature.
To solve that problem, carriers and handset makers are building phones with intelligent operating systems, so the phones act more like PCs. The theory goes that if the phones were more programmable it would take less time and money to develop them.
Typically, the operating system of the mobile phone doesn't get a lot of attention, but with features such as video and games becoming more prevalent, it's being thrust into the spotlight. With multimedia sure to be a theme at this year's CTIA Wireless 2006 show starting Wednesday in Las Vegas, it will be particularly crucial.
The mobile operating system today is an ecosystem of companies, all working to provide the heart of the phone. The carriers have the wireless networks, while handset manufacturers provide the phones. And most handset makers also provide the operating system.
Increasingly, wireless operators and manufacturers are looking outside to provide the operating system; they're finding their own software, in some cases, is unable to react quickly enough to industry changes.
"The bottom line is, they got to this scenario today where those old systems are hard to continue to migrate forward with all the innovation going on," said Randy Kath, vice president of mobile-software products at Intrinsyc in Vancouver, B.C, which is creating a platform on the Windows standard.
Intelligent operating systems are not new to the industry, but until now, they've been limited mostly to high-end phones or handheld devices that require more processing power to browse the Web or sync e-mail and calendar information. Because of the complexity, the phones can cost as much as $400.
That's why these so-called smart phones are only a sliver of the overall handset market. Last year, about 50 million of the 700 million cellphones shipped worldwide were considered smart phones, according to estimates from Nomura's London-based European Equity Research group.
The leader in this upper echelon is London-based Symbian. In 2005, Nomura estimated that Symbian held nearly 60 percent of that market. Its second-closest competitor was Qualcomm's Brew technology, which focuses on CDMA cellphone platform used by Verizon Wireless and Sprint.
Microsoft has about a 5 percent share, and Linux and Palm hold even smaller shares at 2 and 4 percent, respectively.
Below this top tier is the bulk of the wireless industry — the mainstream feature phones most consumers use. About 215 million handsets in this category were shipped last year, with many of them free to subscriber after carriers subsidize the cost.
If high-end operating systems can reduce costs far enough to make it into this larger segment, they'll find a big business.
NTT DoCoMo, a Japanese wireless carrier often considered a trendsetter, is leading the way. DoCoMo said it would support only two operating systems: Symbian and Linux. Other carriers are expected to follow suit.
Vodafone, the biggest carrier in the world, recently announced it would be narrowing its favorites to an unidentified three, said Tony Cripps, an analyst with Ovum.
Handset manufacturers are also choosing sides, Cripps said. Motorola has chosen Linux with Java riding on top of it. And Nokia is sticking with Symbian, not surprisingly, given it has a minority stake in the company.
Symbian's largest shareholder and customer is Nokia. With Nokia making more handsets than anyone else in the world, it makes sense that Symbian is the leader.
The London-based company's other owners include Ericsson, Samsung, Panasonic, Siemens and Sony Ericsson. And unlike Microsoft and the Start button, Symbian-based phones have no telltale sign that you are using a unit with its software.
The company, started in 1998, has 1,200 employees and sold 23 million phones last year, or about half of the smart-phone market.
Symbian Chief Executive Nigel Clifford was brought on board last summer to lead the company headed into a new direction, one Clifford calls the third since the company's inception.
From the company's headquarters — an old factory with wood-plank floors — he explains that the first step was for the company to prove its technology; the second was to get people to use it, and now the company is heading into step three: expanding its scope, geographically and on the number of handsets it runs on.
The company recently announced that it was reducing its licensing fee to encourage bulk purchases by handset manufacturers and would produce a core hardware design with Freescale Semiconductor.
High-end phones today need two chips, one for the operating system and the other to operate the phone's functions. If both functions can be placed on a single chip, the phones could be smaller and cheaper.
Both announcements are attempts to push smart phones into the mass market. Clifford calls it making the feature phone smarter.
Although Symbian is a well-established company, it feels more like a startup, where people stash their bikes in their cubicles.
The aura is fitting for the industry, where Symbian would prefer to have its partners — the handset makers and the carriers — get the exposure, while Symbian does the heavy lifting under the hood.
One Nokia executive calls Symbian the equivalent of Gore-Tex or Teflon, a reflection of how it prefers to be a generic or secondary brand.
"It doesn't compete at all. We have a strong belief that it works particularly well in this industry," said Mauri Metsaranta, Nokia's director of software platforms marketing. "If I were Microsoft, I would be worried that we had too strong of a brand. It may be compelling to some users, but not to the whole ecosystem."
David Wood, Symbian's executive vice president of research, said each year it seems like Microsoft is going to be a threat.
"We've been working on this for eight years or longer," he said. "We've grown immune to all this ... propaganda. We aren't complacent, it's a fierce market with an awful lot to do, but there's no reason to panic."
Compare Symbian's approach to Microsoft's, and it couldn't be more different.
Microsoft is approaching the mobile market like the PC market it knows so well as it leverages millions of users already up to speed with its brand and products.
"The Windows brand is an important way of signaling the capabilities of device," said Pieter Knook, Microsoft senior vice president of the Mobile and Embedded Devices Division.
"You'd be hard-pressed to find out that [Nokia phones] are running Symbian. It's not obvious on the box or in the advertising.... Next time you buy a device, you may look for Windows Mobile because it will tell you that you can sync your media, or whatever. It's important to convey that to the end user. Operators value that because it brings them users and revenue."
Tying all that together is the Start button. "It may be orange for Orange or red for Vodafone, or blue or orange for Cingular, but the one thing we always expect to have on the device is the Start button, which clearly identifies the list of programs and features," Knook said.
Microsoft has made a series of announcements of its own, starting with its release last year of Windows Mobile 5.0, which allows e-mail to get sent to the phone wirelessly.
It continued in February when CEO Steve Ballmer made his first appearance, in Barcelona, Spain, at 3GSM World Congress, the largest wireless conference in the world. The company unveiled numerous plans there, including a cheaper handset core being developed with Texas Instruments. The core would be similar to Symbian's work with Freescale.
However, unlike Symbian and Freescale, which is targeting high-speed 3G handsets, Microsoft is aiming at 2.5G.
All of this visibility comes three years after the first Windows phone was launched. Today, it's more than 100 devices with 102 operators in 55 countries. Last year it shipped 5 million handsets and expects to double that number this year.
Unlike the startup vibe exuded at Symbian offices, Microsoft's campus presence can be overwhelming. Knook wouldn't say how many work in the mobile unit, but the parking garage says it all. Valets shuttle cars all day to make them fit and workers double and triple up in offices.
Sensing Microsoft's ability to dominate markets, some analysts expect that to happen in mobile phones. The Diffusion Group said in a report that as the battle among mobile-operating systems intensifies, Microsoft will pull ahead. It calculated at the end of 2005, Symbian had a 51 percent share of the high-end market, Microsoft had 17 percent and Linux had 23 percent.
"Symbian will maintain leading share through 2009, but 2007 will see the beginning of Symbian's decline in share as the combined market penetration for Windows, Linux and native Java begin to erode developer and vendor support for Symbian," said Lee Allen, an analyst with The Diffusion Group.
By the end of 2010, Allen predicts, Symbian's market share will decline to 22 percent, trailing Microsoft's 29 percent and Linux at 26 percent.
Ovum's Cripps hesitates in making any predictions.
"It's difficult to say," he said. "I predict that all three major platforms will continue to grow; Symbian, Windows Mobile and Linux will probably be the core of what we have in the future."
Tricia Duryee: 206-464-3283 or firstname.lastname@example.org
Copyright © 2006 The Seattle Times Company