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[Following the uninspiring announcements at the annual MWC show, Research Director Andreas Constantinou looks at the Megatrends that are shaping the mobile industry in 2009] After many months in the making, we ‘ve just released our annual Mobile Megatrends 2009. Last year’s Megatrends covered 15 trends for 2008 and got over 40,000 views at slideshare – we have no lesser expectations for this year’s edition. In this 2009 edition we ‘ve focused on fewer trends with deeper analysis. These are trends which over-arch the many micro-announcements which took place during the MWC week in Barcelona. The bigger picture that emerges in 2009 is not this or that App Store, this or that open source effort, or a new developer portal; these were just meta-effects set in motion by some tectonic shifts which started in 2008. [slideshare id=1071449&doc=mobilemegatrends2009visionmobilenew-090226011714-phpapp01] So what are the overarching trends of mobile in 2009? We ‘ve covered 8 core themes: – Eight Centres of Gravity, the New Rules of Mobile: how Google, LiMo, Nokia, Qualcomm, Apple, Microsoft, Adobe and Intel are consolidating power in mobile around complete vertical stacks (from hardware to services), essentially forming virtual centers of gravity and attracting mini-ecosystems around them. – Market Gravity, The Rise and Fall of Market Value: we explore how all market sectors (from App Stores and widgets to ringtones and location services) move across the lifecycle of market value: from novelty to differention and finally to commodity. We also discuss the concept of gravity accelerators or decelerators, forces which determine how fast each market transitions through this lifecycle. – The Software Industry is Consolidating: how Android and S60 are the remaining two choices for smartphone operating systems, what caused Linux to fade out, the landscape of today’s Linux market and Qt, WebKit, Flash Lite, Java ME, the four service delivery environments that are set to dominate. – Mapping Revenue Model Innovation – Value Quadrants: an evolution of a strategy tool we introduced back in early 2008, which explains how revenue models are changing, where the handset software value is migrating and what are some of the untapped opportunities in value creation in mobile. – Open is the New Closed: why ‘open’ is one of the most overstated terms of 2009, and how in practice open source is used to drive ‘closed’ commercial agendas in LiMo, Symbian Foundation and Android. The analysis also explains how open source licenses are almost orthogonal to governance models, and how source code control fundamentally differs from product control in this new era of openness. – The Mobile Application Store Phenomenon: digging beneath the often superficial coverage, this analysis explains what is the 5-ingredient recipe for a succesful Mobile App Store (MAS), why Apple and Qualcomm have been the only two that got it right, and why handset OEMs stand to succeed in developing MAS solutions, contrary to operators/carriers. – NaaS: Network as a Service: we discuss how operators/carriers are opening up their networks to third parties (Betavine, Orange Partner, Litmus, etc), and why the current offerings are currently too little too late. – Mobile Service Analytics: the Most Underhyped Opportunity: Last but certainly not least, we explain why service analytics present the most underhyped opportunity today, how mobile phones and networks are beehives of information with unprecedented richness and how startups are exploiting the opportunity today. We ‘ll be updating the Mobile Megatrends as new announcements are made during 2009, so new trends and information will be included over time. Comments welcome as always. – Andreas twitter: @andreascon

[Following on from three hardware related Nokia press releases, guest blogger Thomas Menguy discusses how these announcements fit within the new Nokia strategy] MWC is in full PR mode at the moment.. and the following three announcements from Nokia  show how the game is changing in Finland. Nokia selects Broadcom as a next generation 3G chipset supplier: “Today’s announcement with Broadcom is a further example of Nokia’s commitment to our diversified, multi-supplier chipset strategy,” said Kai Oistamo, Executive Vice President, Devices, Nokia. “This agreement, which targets low cost, high volume markets, demonstrates that we view Broadcom as a reliable supplier to bring the benefits of 3G to Nokia customers around the world.”… Then Nokia’s selection of the ST-Ericsson platform for Symbian/S60 phones: …Nokia and ST-Ericsson announced they are co-operating to provide the Symbian Foundation with a reference platform based on ST-Ericsson’s U8500 single chip… and finally how Nokia and Qualcomm plan to develop advanced mobile devices: …Nokia and Qualcomm Incorporated (Nasdaq: QCOM) today announced that the two companies are planning to work together to develop advanced UMTS mobile devices, initially for North America. The companies intend for the devices to be based on S60 software on Symbian OS, the world’s most used software for smartphones, and leverage Qualcomm’s advanced Mobile Station Modem(TM) (MSM(TM)) MSM7xxx-series and MSM8xxx-series chipsets… What does this all mean? For years Nokia has been relying on Texas Instruments to produce its custom 2G/2.5G/3G chipsets. Nokia was designing the core chipset and letting Texas Instruments finish the integration and physically produce the chips: Nokia has been mastering the whole hardware IP of its phones, and has not been relying on generic chipsets for the vast majority of its production, with all the margins this implies :-). Nokia is now feeling the wind of change: from one supplier, the OEM is transitioning to three. Nokia has licensed its 3G hardware IP to ST (and presumably to Broadcom, rumors mentioned Infineon also), and will also use some “generic” chipsets. Texas Instruments has really missed the ball here, by stopping 3G investment (well they have made some, but failed to deliver), and being mostly ruled by business guys with no technical vision of where the market is going: How can a company with 70% of the billion units chipset market leave the market completely in such a short amount of time? Nokia diversification is part of the equation, for sure. And Nokia really seems to be shifting their focus: relaxing their efforts on the chipset front, not simply to cut internal costs but to invest, and my guess (as everyone else 🙂 is of course on Ovi, services, etc. PR after PR, announcements after announcement, product after product, Nokia is showing how serious it is about reinventing itself again. It won’t happen overnight, but it is coming, and it may be a game changer indeed. – Thomas

[PC and mobile ad networks are beginning to converge – guest blogger Raj Singh discusses how this evolution is a good thing for the industry.] When Admob first launched in 2006 (not saying they were the first), the focus was on creating a new ad network specific to mobile devices. This meant, when you bought an ad for mobile, it wouldn’t appear on your PC but only on your mobile device. Later that year, when Google launched their initial mobile advertising beta, PC advertisers were automatically opted-in for mobile – this created some commotion on the blogosphere andGoogle soon reversed their tracks and made it an opt-out. What’s interesting, is that Google’s initial gut may not have been off – the network or better known as inventory is blurring between PC and mobile advertising. I used to joke that when I did search several years ago on the Yahoo Mobile WAP site for pizza, that I would get a ringtone ad but when I did the same search on the PC, I would get national pizza ad, as you would expect. The reason for this, is the two different networks were treated separately – I would not get a PC ad on my mobile device even though the PC ad unit could have easily been presented as a mobile text ad unit. At the time, this made a lot of sense; why show an ad to a PC site if when the user clicks that ad, the site doesn’t render. The browsers were not up to par and so the destination pages would often crash the browser or not display at all. Today, browsers have significantly improved especially on the higher-end devices, those that get 80% of the browsing usage anyways. This means PC advertisers have less reason to be averse to displaying their ads on a mobile device since their pages will render. As a result, we are beginning to see a new trend line that has been forming over the past year, the convergence of the PC and mobile ad network. This is best exemplified in mobile search where the size of the ad network is critical to driving relevant results, much more than display advertising which has been difficult to target with the limited text and in-links in the mobile web. Try it now, go to m.yahoo.com and search.yahoo.com – I just searched for “pizza in san francisco”, notice how the PC ads are not yet displayed in mobile – it’s only a matter of time before they converge. Comments and discussion always welcome. Raj Singh

It’s hard to believe that it’s been twelve months since we published the last Print Edition of our blog. A lot has happened since then; we introduced the 100 million club, launched the Mobile Industry Atlas , worked on a zillion projects (long year!) and were voted the best blog in the Mobile Comms category by Electronics Weekly Magazine! To celebrate the past year of blogging we’ve published our Blog Print Edition 2009. Read on to find out how to download a copy. Looking for Bright Minds! The VisionMobile blog is a place where mobile strategists can voice, share and exchange ideas on market happenings and trends. It is a think tank for strategists who share a passion for uncovering the future of wireless telecoms. Our blog revolves around one key message: Distilling market noise into market sense. It’s about discerning technologies, vendors and the mobile markets, filtering the market noise and helping readers see out of the box. We are looking for bright minds with a passion for writing and flair for original, thought leading articles which cut through the hype and marketing noise into uncovering trends and new opportunities. Articles can be about market analysis and facts, observations on under-the-radar markets, analysis of technologies and their impact, etc. Company pitches are out, thought leadership is in. So, if you think you have an original idea or two to air, and want to get in front of of 1,600+ subscribers and industry insiders, do get in touch. And of course, we ‘ll be selecting the best articles to go into the next Print Edition of our blog Print Edition 2009 This year’s Blog Print Edition contains excerpts from a number of seminal articles which appeared on the blog in the last 12 months: – The 7 centres of gravity in mobile. Nokia+Trolltech+Symbian, Android, BREW+Flash, Adobe Open Screen, LiMo devices.. As the dust settles, we look at how the mobile landscape is shaping around 7 centres of gravity. – The darker side of Android. Can an open Android result in a closed phone? We explain why this will not be the exception, but the rule. – Watchlist: The 100 million club. We discuss the latest update to VisionMobile’s 100 million club, and the bigger picture that emerges from our research, including de facto standards and software that’s truly mass-market. – Value Quadrants: understanding value creation in mobile. How are the revenue models changing in the mobile industry? We introduce Value Quadrants, a tool that deciphers the multitude of revenue models and maps how value creation is changing in mobile. – Making money on the last mile: Introducing Channel ARPU. Has the industry been expecting too much from data ARPU? We revisit Channel ARPU as a new way of capturing not just the user’s wallet, but also his attention and heart. – Mobile software is dead. Long live.. mobile software. Mobile software has always been a tough business and is getting tougher. We explore how the value is migrating from embedded to downloadable software. – The Mobile Application Store phenomenon. Apple’s App Store, Android Market, RIM Application Center.. application stores are the latest fad of the mobile industry. We analyse the recipe of the mobile application store phenomenon and the movers and shakers of this virgin market. – Application Environments: Order from Chaos. Flash, Web Runtime, OSX, widgets, Java engines, Python.. the array of software platforms is chaotic to say the least. We dig deeper into application environments, explaining who’s what and identify 5 clear market trends. – The SIM card evolution: finally, a breakthrough? Is there a future for the SIM card in operator service delivery? We review the state of the SIM card industry, the commercial developments in the last 12 months and discusses why the role of the SIM may be indeed coming to a positive inflection point. – Mapping open source into mobile: who, where and how. Android, Symbian Foundation, Maemo, Trolltech… there’s been so much talk about open source moves in the mobile industry, but so little analysis on the big picture.  We distill market noise into market sense by mapping out three dimensions of open source in mobile: the who, the where and the how. – Community dynamics in mobile open source. How do open source communities work? We discuss how community dynamics can be mapped and better understood. Want to read more? You can download the PDF version here. Alternatively, if you would like a printed copy, email us your postal address and we’ll send it out to you (offer valid for the first 50 copies). – Vanessa

[Cloud Computing is the new buzzword, blogger Thomas Menguy tries to decipher its underlying concepts, the main actors, the business models and the implications for the industry ]. Cloud Computing is everywhere, and begins to look like the next big thing. But the term seems to regroup a plethora of new and old concepts with no clear consensus about it: everybody seems to understand what it is but when asked, having a clear definition is not so easy (I know, I’ve tried recently…and miserably failed 🙂 ). Here is my attempt to give it some sense. I’ll begin with some quotes grabbed from this nice video from the web2.0 expo Everything that we think of as a computer today is really just just a device that connect to the big computer we are all collectively building…Cloud computing : how computing services will be delivered in the future Tim O’Reilly Chance for developer to no worry about “things” …business concerns, scaling concerns Matt Mullenweg (WordPress Co-founder) A way to deliver services rather than applications completely independent of platform completely independent of physical hardware and I hope it works. Vamshi Krishna Mokshagundam Ok, so to sum up those gurus’ words, cloud computing seems to be about: Software Services deployment Transparent scaling of those services Reliability (no down time worry) Monetization handling Decorrelate the software from the physical hardware it is running on After this helicopter view, we can try to be a little be more educated, reading this excellent article from ExplainingComputers about the cloud may help: It describes a very good metaphor for all this cloud stuff: In his book The Big Switch, Nicholas Carr compares the growth of cloud computing to the development of the electricity network around a century ago. Before that time businesses had to generate their own power and therefore had to choose their location based on the available means of generation, such as moving water to drive a wheel or a supply of coal. However, with the availability of a reliable electricity grid to which they could connect, firms were increasingly freed from such constraints to focus on the other aspects of their business.In exactly the same manner we are today just about entering an age in which both individuals and organizations will be able to dispense with a large home computer or corporate data centre, and instead connect far leaner computing devices to cloud computing resources that will fuel their information processing requirements. It is therefore hardly surprising that cloud computing is also being referred to as “grid computing” or “utility computing” ExplainingComputers about the cloud: What a paradigm shift! Computing power data storage and services will soon be outsourced to 3rd parties. Now getting back to the industry, Cloud computing seems to be the sum of two concepts Software as a Service, or SaaS, perhaps you know it under another name : web 2.0 It can be described as desktop like application accessed within the browser (or a  RDA technology like AIR) and where the storage/processing is on dedicated servers. Those services can be free or not, here are some notable examples: http://www.salesforce.com/ : CRM for marketing/sales, per user monthly fee (9$ to 65$ a month) The excellent http://zoho.com free for personal use then few bucks per month/per user for business http://www.clarizen.com/ : project management software, per user monthly fee (around 20$ to 40$) Even IBM is going this route with https://www.lotuslive.com/ a kind of hosted Lotus service (I can’t get prices…) Of course : http://docs.google.com/ to store/share/edit office documents, free but has a paid version for enterprise. Of course Gmail is there also as Google web album (price depend on storage) Adobe plays the game with https://www.photoshop.com/ a kind of “online” Photoshop elements to store share and edit your personal photos, free for simple use, from 19$ to 129$ a year to grow the storage, different services are proposed if you already own Photoshop elements or premiere elements. Adobe also provides an office online collaborative suite: https://www.acrobat.com/ free to use, but acrobat desktop is heavily advertized across the tool. Apple MobileMe for photos, mail, events contact calendar shared between desktop and mobile (iphone) 99$ a year. Microsoft answer to Apple: SkyBox/SkyLine/SkyMarket (MobileMe+Appstore for WinMob). Microsoft has also some offers, around Microsoft live, http://home.live.com/, and some plan for hosted exchange services, I don’t have any price point to compare it to “standard” Exchange installations Of course I forget a lot of others, like Flickr, yahoo! services, etc. All those services have in common: Ease of use, not only for the service itself, but also for billing, maintenance, installation, deployment, etc. Affordable, price depending on storage/number of user/services accessed Neat and modern UIs Packaged and well defined services This is this last point that led some of those providers to open their infrastructures, putting in place the Next Big Thing : Hardware as a Service, HaaS Those SaaS providers have grown their infrastructure  to support scaling and reliability for their services…the next step is to open it and monetize it. So here is HaaS where the business model is simply to sell some RAM/CPU/Storage/Bandwidth/some services according to the needs of the customer. The real first One: Amazon EC2, part of Amazon Web Service (AWS) platform. A way to deploy and scale a web application, paying only for the resources it actually uses (prices are around 0.10$ to 0.80$ of cpu/hour, 0.10$ per GB transferred, 0.15$ per GB stored per month, 0.01$ per 1000/10000 PUT/GET requests).(side note: Adobe proposes LiveCycle ES on Amazon Cloud).  Amazon describes its solution as: Elastic: user can increase or decrease their hardware requirements within minutes Flexible: user can choose specification of each individual instance of computer power purchased Inexpensive: no dedicated capital investment required Reliable: make use of Amazon proven datacenter and network infrastructure. Google of course is there (do your self a favor and read this about the AMAZING Google infrastructure) with Google App Engine , free for now but fairly limited Little actors like Mosso,  GoGrid or 3tera are popping out on the same kind of technology IBM is jumping also with Blue Cloud HP, Intel, Yahoo join forces on cloud computing research For me Facebook is part of the game: easy way to deploy and monetize (?) social applications. Ning is another example (for social networks) And of course Microsoft with Azure: Azure seems to be really complete with a new OS, great marketing materials etc…but as always with MS not really available yet. Business model is again identical: you pay what you use as resources. See above a schema about those technologies. What is emerging is a new kind of OS capable to handle faulty hardware, load balancing, heavy multiprocessing and parallelization, virtualization technologies are key here (at least I understand the market cap of VMWare now!) , advanced storage technologies and databases. Google has built its own stuff (the three core elements of Google’s software: GFS, the Google File System, BigTable, and the MapReduce algorithm), Microsoft too (and present Azure as it is : a new OS), Amazon, Yahoo and others are using some Open-Source initiatives like http://hadoop.apache.org/ . A nice summary of what we can do with cloud computing, from the Yahoo white paper: What does it take to get the Next Great Thing off the ground? Now: Set up multiple replicas of a clustered data store Set up a system for indexing Set up a system for caching Set up auxiliary DBMS instances for reporting, etc. Set up the feeds and messaging between them Write the application logic Fairly complex system at first line of new codeOur vision: Write the application logic Use a hosted infrastructure to store and query your data => Or, as Joshua Shachter puts it: “The next cool thing shouldn’t take a team of 30, it should be three guys, PHP and a long weekend” Yahoo white paper This is all well and good but where is the catch? Many aspects are slowing this IT revolution Concerns around privacy and collusion: giving all my (as a company) data AND processing of my critical business to Amazon and Google may lead to collusion, Google is no more the “don’t be evil” it may have been, nor Microsoft or Amazon…Or even worse if I am a service provider new entrant (hum say like Nokia with Ovi for example), I just can’t use Google Infrastructure for that! How can I trust Google about my competing usage of its own resources to deliver a service …that competes with Google own ones? Concerns about stability. Most cloud vendors today do not provide availability assurances. This is particularly an issue with Mashups that need a set of web services hosted in various cloud computing environments, and many may stop working at any time. Seeing the MobileMe launch fiasco, Apple learnt how difficult it is! Concerns around security. The old dilemma: “should I put my money in a Bank or in my own building” …we all know the right answer now. Regulation issues:  For Example in Europe, some countries require services and/or customer data be retained within a country’s borders. This is new technology: even if simple, there is a learning IT service may feel threatened: after all the tedious tasks of updating, backup, hardware handling are now externalized… One key point seems to be that to be trusted cloud computing providers have to stop offering their own services and focus ONLY on providing a compelling and efficient cloud platform. Where is the Mobile industry: client side? As said by Tim O’Reilly in the first quote, ALL the devices are morphing to cloud access points, phones are on their way, MID and Netbooks are just showing it more clearly. The iPhone is the first real device to access the cloud effectively, and what is really interesting about it is that the browser is not the preferred choice to access the cloud: the vast majority of non-game iPhone applications are simply optimized front-end to a dedicated  SaaS! I predict the same for Android Marketplace…and many software actors will pop out  around this cloud interaction. Nokia is morphing into a cloud computing provider …but doing the whole stuff alone: Ovi being the infrastructure AND the service, and Nokia devices nice cloud front-end. Time will tell if an actor alone can handle those three aspects, Google, Microsoft and Apple are also trying… Where is the Mobile industry: server side? Doing this overview I was really surprised to not see the “natural” actors of this new paradigm: Who has a BIG infrastructure? Who can link this infrastructure to the final devices/customer? Who is deploying complex services to million of customers for decades? Who handles directly the customer billing? ….hum you guessed it : our beloved CARRIERS! Cloud computing would be a fantastic way for them to not fall in the dumb pipe category. Let’s face it, developing services has to be done by service providers, not operators (who wants to use its operator IM or mail? social network? photo sharing?) . If carriers were able to leverage their fantastic cloud computing capabilities, they may stop developing sure-to-fail-services and monetize their pipe not only to the final customer but also smartly from the service provider ( NaaS seems to be a first attempt but I still don’t understand the business model). Perhaps a bold statement, I would be more than happy to have some carrier comments on this one! Looking forward to your comments. –Thomas

OpenSource World, the biggest open source conference now in its 10th year, is fast approaching in August 2009. Previously LinuxWorld, the conference is expanding on open source software beyond desktop Linux, with two dedicated tracks on Mobile Open Source. I ‘m priviledged to be a member of the mobile programme committee alongside prominent open source figures Bill Weinberg and Rick Lehrbaum. Open to contributions The Mobile Open Source programme of the conference is now open to speaking proposals; presentations are invited on (or around) the following themes: Track 1. Mobile Platforms – Android, LiMo, Maemo, Moblin, OpenMoko and other Linux-based open source mobile platforms – Open SymbianOS – Shared Source around Windows Mobile – Browsers and Browser-based platforms – Mozilla/Gecko, Webkit, Pre, etc. – Open Source Java platforms – Application Frameworks: GTK, Enlightenment, Qt, etc. – Emerging form factors – MIDs, voice-enabled nettops, etc. – State of key platforms technologies – power management,  multi-core support, virtualization, etc. – Building and sustaining communities around mobile platforms – Platform licensing choices and impact Track 2. Mobile Applications – Mobile application development tools and techniques – Comparing application frameworks and paradigms – End-to-end applications development and deployment – Enterprise mobile application development, rollout and management – State of OSS applications technologies – VoIP, multimedia, etc. – Content and content management with open source software – Mobile application delivery – Working with operators, application stores and other channels – Licensing of mobile applications and content Please submit speaking proposals by February 20, using this online form. Please note: inspirational presentations are in, marketing pitches are out. – Andreas

[why do most phone user interfaces look alike? Research Director Andreas Constantinou reviews the technology and vendors that are making it possible for phones to adopt radically different UI Personalities, changing from a Barbie to a BMW at the touch of a button; and putting a new premium content market on the radar] Handset user interfaces today lack differentiation; while industrial design seems to leap ahead each year with fresh layouts and materials, the user interface retains the same monotonous appearance as in the last 5 years with lists, grids, text everywhere and icon menus for a topping. Even in the recent paradigm of touch-screen devices only iPhone has been a true innovator with the likes of Nokia’s 5500 resembling a touch UI welded on top of a traditional Symbian OS. So why don’t manufacturers produce unique handset UIs ? Why doesn’t each phone have a completely different UI, allowing users to select diverse phone personalities from retro to ultramodern or from macho black to girly pink? The bottleneck in user interface innovation The software development process is in fact the bottleneck in UI innovation. From a technology perspective, the user interface is made up of a set of core applications such as the idle screen, dialer main menu, inbox, contacts, calendar, camera, browser shell and settings menu. Core applications are designed on a product line basis, rather than a handset model basis, with UI specifications set in stone 18 months before handset launch. Individual core applications are customised to meet regional and operator requirements 6-9 months before launch. Core applications are written in native C language, mixing logic and presentation and fused together via a chain of static dependencies. This makes altering application look & feel as risky as a complex surgical operation, which carries a high opportunity cost; delaying a handset launch results in 2-3 million dollars per week in lost profits for a high-end model. Handset themes, i.e. skin-deep application colouring options today implemented on most handsets, are in effect superficial and do not affect the interaction and graphics design of the phone. All in all, UI innovation has hit a process bottleneck. UI Personalities A new class of technologies has been quietly in development since 2004, slowly making it into manufacturers’ product lines to revitalise the UI development process; these are software frameworks like that decouple application engine from the handset look & feel, across the entire core application suite, a type of software solution that we refer to as UI Frameworks. UIFs are designed for rapid development of new user interfaces, reducing the time to radically change the handset UI from 18 months pre-launch to post-sales; this enables the handset look & feel to change from a Barbie personality to a BMW one, while enabling a new market of premium downloadable content. Examples of diverse UI Personalities (source: TAT) The downside is a high upfront integration cost; a complete UIF integration requires an OEM to ‘rip out’ all of their core applications and rewrite the UI-related elements of each application; we understand that it takes an OEM 10 man years to develop the complete software for a key-based device using an existing OS core and a mature UI framework. Technical challenges must also be noted; UIF performance is an issue for handsets below ARM11, 300 MHz, representing a ballpark 90% of the handsets produced in 2008. Plus OEMs are too cash constrained and wary of competing handset launches to focus on a radical software redesign. Due to these challenges, very few UIF products exist, namely Acrodea’s Vivid UI, TAT’s Cascades, Digital Airways’ Kaleido and Mentor Graphics’ Inflexion, in order of market penetration. Qualcomm’s uiOne HDK is effectively a UIF solution bundled with a complete application suite, while Adobe’s Flash UI can been stretched to deliver UIF functionality on an application-by-application basis. Vendor profiles: TAT, Digital Airways and Acrodea The Astonishing Tribe (TAT) is a software company developing graphics rendering and UI framework technology for mobile phones. Founded in 2002, the company employs 140 people with headquarters in Sweden and offices in Korea and the US. TAT has seen its Kastor 2D/3D graphics framework embedded in over 200 million handsets across 5 out of 6 top OEMs as of mid 2008. The company reports that Motorola, Asus and one more tier-1 OEM have licensed TAT Cascades (a UIF product), and expects Cascades to have been embedded within 30 handset models released to the market in 2008. On legacy platforms, TAT’s customers typically apply Cascades functionality to 3-5 core applications, while in new platforms, the product is used across the complete user interface. It is also worth noting that the Vodafone Simply series of five handsets launched between 2005 and 2007 featured a UIF product based on Digital Airways‘ Kaleido. We understand that Digital Airways is also behind the Porsche P9522 handset introduced by Sagem in late 2008. Acrodea is a Japanese mobile software vendor offering graphics, messaging and gaming middleware. Founded in 2004, Acrodea employs 127 staff with offices in Japan, Korea, Finland and California and reported revenues of 3.1 billion yen (circa $35 million). Acrodea’s Vivid UI is a UI framework that has been deployed with operators DoCoMo, KDDI and SoftBank in Japan across 70 handset models and 30% share of handset shipments as of mid 2008, according to the company; the Vivid UI engine has been powering the idle screen and main menu across these handsets. The business case for Vivid UI varies per operator. Since November 2006, DoCoMo has been offering a “Kisekae Tool” service which allows users to download branded UIs for $3-$5 each. As of August 2008, the KDDI Naka-Change service offers branded UIs to buy through its retail stores via a cable connection. SoftBank’s “Onajimi Sosa” service on the other hand uses Vivid UI to help users transition from one handset menu system to another. Operators provide the Vivid UI SDK to content providers who develop branded content; as of mid 2008 there are 100s of official (on-portal) and unofficial (off-portal) content providers of Vivid UI – based content. Revenue is shared based on existing operator models, while Acrodea monetises under a per-unit royalties models plus NREs. The potential for downloadable UIs cannot be understated; the ‘Kisekae Tool’ service alone is a fast growing one, expected to reach revenues of $100 million-a-year by end 2008, according to Acrodea, particularly as the addressable market expands beyond 30% of handsets sold. Outlook: UI Personalities as a new form of premium content UIF technology is poised to break through the bottleneck of user interface innovation; despite the technology adoption moving at a slow pace since 2004, 2008 has been the year where at least two tier-1 OEMs have incorporated UIF products in their product lines.  The main technology inhibitor – the multi-million opportunity costs associated with revamping software development processes – is slowly subsiding, opening up the potential for a new market of UIs as premium downloadable content, following in the footsteps of Japan. We believe that UI Personalities will eventually emerge as a new premium content market in Europe and US. We see this first happening in 1H 2010, where tier-1 OEMs with an aggressive service agenda will be deploying own premium UI portals in Europe, in partnership with branded content providers. Less aggressive tier-1 and tier-2 OEMs will be approaching the market via tier-1 operators. Overall, we expect a new premium content market of downloadable UI Personalities to emerge in Europe and US. Following in the footsteps of Japan, this market may also compensate for the declining market of ring-tones, wallpapers, music and other commoditising forms of content. Moreover, we expect to see downloadable UI Personalities resist price erosion for two reasons; firstly, UIF technology cannot be easily standardized across handset OEMs; secondly UIF technology can permeate the entire look & feel of the handset, resulting in high-value, deep forms of branded content that engage the buyer across the user journey, even adapting to handset usage and context. Comments welcome as always. – Andreas

[Adobe just released and new way to package Flash Lite Applications for S60 and WindowsMobile: this announcement, if linked to the announced Google native client, the Adobe Alchemy product and other industry initiatives is an indication of where the desktop and mobile development are going. Blogger Thomas Menguy tries to bring some coherence to these seemingly uncorrelated initiatives]. At one time application developers were targeting OSes: Windows, MacOS, Unix. At one point the target began to move towards runtimes (or Application Environments as discussed in this earlier article): the web browser, Flash player (inside the web browser), Java VMs, .NET, and more recently Java FX, Silverlight, AIR… In all cases each runtime is imposing its own development environment, tools, SDK and above all a development language (Java for the Java VMs, Action script for Flash/Air, Javascript for the web browser, C# for .net). And of course the runtime has to be installed on your final target, BEFORE deploying your application or content. But the lines between tools, languages and runtimes are now blurring, as evidenced by several industry moves: Mobile Open OS are all offering solid and robust application and content management (the Mobile Application Store syndrome). A runtime sandboxing its dedicated content from the rest of the system is seen like an unnatural way and bad user experience for handling content. Google has a framework (GWT: Google Web Toolkit) to develop for the web browser runtime … except that the development language is NOT javascript You develop in Java In Eclipse or NetBean You can use a RAD The Java code is compiled in Javascript and will run in a browser not a javaVM (except for development) This brings a kind of unified approach for the client and the server OpenLaszlois a great RIA development platform …without a specific runtime : You develop in the OpenLazlo language : LZX, a specific XML + Javascript You compile your code for flash or DHTML (a Java version exists but doesn’t seem to be supported anymore) so you can select your runtime! .Net /Silverlight You can choose you development language VB#, C# or action script All are compiled to the .NET bytecode runtime Microsoft is releasing its “Expression” line of tools to bring ease of development to the designer/developer Adobe AIR You can develop in Flash/Flex/Action Script or … in AJAX (Javascript)+HTML The Air runtime is in fact an aggregation of a Web Runtime (Webkit) and a standalone Flash player Your applications are deployed …nearly like any other application on the underlying platform. The ‘nearly’ is important because the AIR runtime installation is still visible, as is the application air packaging Adobe is releasing Catalyst, a very nice WYSIWYG application prototype IDE targeted to designers with strong links to CS4 Google Native Plugin Allows to develop and reuse C/C++ code … in the browser use a raw GCC toolchain (and so the browser plugin has certainly to embed an OS independent dynamic loader…reminds me something we are doing for years at Open-Plug 🙂 ) Haxe: An Action script like language you can compile to … php, C++, java and of course ActionScript Unification of the client and server development The adobe Alchemy project (for the techies, explained here): Compile any C/C++ code to ActionScript byte code to be run in a flash player (examples of Doom, here,  and Quake running in Flash are now famous) And the announcement triggering this analysis: Adobe Mobile Packager Development in CS4, with CS3 device central Flash Lite Application is packaged in a “standard” .CAB file for Windows Mobile or an .SIS file for S60, with everything needed to make your application run Flash Lite applications are no more second class citizens, you don’t have to open the Flash runtime anymore to launch such applications SonyEricsson Capuchin … is at the end the way to package flash lite application in a java jar file. All those examples are depicting underlying trends: We see, more and more a decorrelation between the development environment and the targeted runtimes Many development languages are popping out, and we won’t have a “one language fits all”: developers will tend to use What they know , and it’s even easier now with all those tools Reuse legacy code as much as possible What fits best for a particular task What can help with client/server development Ease of development and tooling seems to be key, especially looking at Microsoft and Adobe strategies The on device final Application Management is left to the underlying platform/OS and will be more and more abstracted for the developer that is targeting multiple platforms with a single application development environment. From what I see today, I tend to think that Adobe is getting it right, little by little, especially thanks to their very strong tooling offer (CS4/FlexBuilder/Catalyst)…and we may see other initiatives from other players like Nokia or even Google to accelerate the development and deployment of services (web or not). Interesting times for a developer! Looking forward to your comments. Thomas

[Android, Symbian Foundation, Maemo, Trolltech… there’s been so much talk about open source moves in the mobile industry, but so little analysis on the big picture.  Andreas Constantinou distils market noise into market sense by mapping out three dimensions of open source in mobile: the who, the where and the how.] The Android launch, the Symbian acquisition and open source roadmap, Intel’s Moblin 2.0 and OpenedHand acquisition, Nokia’s adoption of WebKit as a feature of the S40 platform, the Trolltech acquisition and incorporation of Qt on S60, Purple Labs acquisition of Openwave and Sagem assets, AOL’s Open Mobile Platform… it seems that in the space of just one year open source has transitioned all of a sudden from geekware for Linux enthusiasts to a succesful commercial alternative to closed-door standards.  Moving forward, 2009 will be the year of maturity for how open source can be used as a tool for cheaper, faster collaborative software development, which reduces barriers to entry and breeds innovation. Yet rarely do analysts, bloggers or media cover the big picture of open source use in mobile; in other words who is using open source, where are they using it and under what terms (i.e. the license and governance terms). Here I ‘ll attempt to do just that; paint the big picture of mobile open source against three dimensions, the who, the where and the what 1. The Who’s Who Who is who in mobile open source? The following table provides a near-complete list of who’s who, from operating systems to development tools and industry initiatives. Naturally, the table excludes the 100s of smaller open source software projects that have been used in some capacity in one phone or other. Table: who’s who in mobile open sourceLinux support packagesWind River (also one of the most prominent integrators for mobile Linux stacks), MontaVistaOperating systemsfor feature phones: Purple Labs; for smartphones: Azingo, Access Linux Platform, A la Mobile, OpenMoko; for MIDs: Intel Moblin, Ubuntu Mobile. Also OKL4 is virtualisation (hypervisor) software for mobile phones.MiddlewareGNOME’s GTK+ and related projects (e.g. D-Bus, Gstreamer), the graphics subsystem of Nokia’s Qt and the db4o database engine.Application environmentsGoogle’s Android, Nokia’s Maemo, Nokia’s Qt, Eclipse eRCP, Sun’s Java phone ME, Motorola’s Java MIDP3, AOL’s Open Mobile Platform and Nokia’s Web RuntimeBrowsersApple’s WebKit (on the verge of becoming a de facto standard for web-centric service delivery) and Firefox MobileService deliv. platformsFunambol (consumer email sync), Volantis (content adaptation)Development toolsEclipse Foundation (manages the Eclipse IDE, used as the basis for Nokia’s Carbide, Wind River tools and many others). Plus RhoMobile – a new set of open source developer tools for creating connected enterprise apps on smartphones.Industry initiativesSymbian Foundation (EPL license), Open Handset Alliance (APL2 license), LiMo Foundation (open source as it builds on top of Linux), GNOME Mobile and Embedded (LGPL-licensed GTK+ and related software) There are also a couple of initiatives which are associated with ‘openness’ but are not related to open source; Microsoft Shared Source is a complex array of 10s of different licenses involving access to source code for Microsoft software, only two of which have been approved by the Open Source Initiative, the gatekeeper of open source license compliance; and the Adobe Open Screen Project which does not employ open source licensing at all. 2. The Where Where is open source software used in mobile phones ? The following table provides a 10,000 foot view of where open source licensed software is used within a mobile phone, from the kernel to applications. The rule of thumb is that the lower you go towards the base of the software stack, the more open source software you ‘re likely to find. Table: where is open source used in mobile phone softwareKernel + base oper. systemIn a Linux-based OS, 90% of the kernel and base OS (drivers, base services) is community-sourced and unmodified, while 10% is community sourced and modified. The drivers for the modem stack are always closed source.MiddlewareWhere GTK+ is used (e.g. traditionally NEC and Panasonic phones), about 30% of the middleware stack is open source licensed based on the GNOME family of multimedia middleware (e.g. Gstreamer, D-Bus)Application environmentsThe percentage of open source software ranges from 100% in the case of Android and OpenMoko to 0% in the vast majority of feature phones where a proprietary Java ME engine is used.ApplicationsApplications are nearly 100% closed source, with the exception where WebKit is used as the browser. Open source licensing is also used in server software; most notably in Funambol’s email synchronisation server and Volantis’ Mobility Server, a device identification and content adaptation framework. Network infrastructure vendors like Nokia Siemens sell Linux-based boxes and software, but that doesn’t really imply an open source product. 3. The How How is open source used in mobile? In other words, what are the licenses and the governance models employed in open source projects? Several major mobile open source projects use a weak copyleft license (e.g. EPL, LGPL or MPL). Generally speaking, weak copyleft licenses carry some obligations for publishing source code modifications if distributed, but clauses around derivatives are less strict so can be used with proprietary software. The APL2 (non-copyleft) license is also popular – it is used in Google’s Android, Motorola’s planned MIDP3 release and AOL’s Open Mobile Platform.  Note how the GPL license, by far the most popular license in PC and Internet OSS projects is rarely used in mobile. This is one of the reasons for the zero adoption of Sun’s Java phone ME by handset OEMs and the same reason why Qt will have to be re-licensed under a more permissive license if Nokia wants to see it adopted by other handset OEMs. Governance models vary widely; from Funambol’s moderator-based incorporation of contributions, to a single-company control over contributions, as is the case with Apple’s popular WebKit browser core. There’s lots more parameters to a governance model – particularly control over the release schedule, membership-only access, membership fees and IP ownership, but this a lengthy topic that deserves a separate discussion. The next table summarises the license type and governance model (how contributions are managed) for popular mobile open source projects (see also earlier article on community dynamics). Figure: comparing community governance models and licenses for popular OSS projects Here it’s worth shedding some light over a common misperception; an open source license does not imply a zero licensing cost. For example many Linux-based OS vendors like Wind River, Azingo and Purple Labs are charging per-unit royalties for the software. As another example, the Symbian Foundation has vowed to release Symbian OS code under an EPL license, while members of the Foundation will have access to source code under a zero royalty license, for a flat membership fee of $1,500 per year. However the Symbian Foundation hasn’t publicised the fees members will have to pay for shipping handsets with the Symbian Foundation code; if the Foundation is to support is sub-500 staff (numbers according to Lee Williams), then the effective license fees should be in the region of millions of dollars per year per member. Updated: OK Lab’s OKL4, a virtualisation (hypervisor) software engine is available under a dual license (commercial and a copyleft-like license similar to the one used by Sleepycat). OK Labs does not open contributions to the OKL4 engine, but instead supports a community of value-add software contributors that develop on top of the OKL4 engine. Comments welcome as always. And thanks to LinuxDevices and the O’ Reilly Radar for covering this article. – Andreas [If you ‘d like to find out more about open source in mobile, check out our 360 degree workshop, a one-day deep-dive into everything and anything that is mobile open source, from economics and business models to license best practices, software management guidelines and 20+ case studies of real world lessons from open source use in the mobile industry. You can also download our free research report on GPL2 vs GPLv3: The two seminal open source licenses,  their roots, consequences and repercussions.] Update: We ‘ve been voted as the best blog in the Mobile Comms category by  Electronics Weekly Magazine! #opensource

[Research Director Andreas Constantinou, discusses the latest update to VisionMobile’s 100 million club, and the bigger picture that emerges from our research, including de facto standards and software that’s truly mass-market] [update: the latest edition of the 100 million club is here] In this H1 2008 update we ‘ve identified 25 software products from 23 companies which have shipped on more than 100 million handsets cumulatively as of June 2008. The watch list  provides the basis for three key observations (especially in comparison to our 2007 update): – Firstly the 100 million club is a testament to the commercial and technological complexities inherent in the mobile industry; there are over 6 billion handsets having been shipped up to June 2008 and around 1.2 billion handsets estimated to be shipped in 2008. Yet our research shows that only 4 software products have reached the 1 billion deployment mark, 9 products have exceeded the 500 million mark and 25 products in total have shipped in more than 100 million handsets. Considering that there are 250-300 companies that license embedded software products – not to mention the circa 30,000 mobile software developers – this is clearly a tough market in which to achieve scale. Indeed, the revenues and developer mindshare are migrating from the pre-load to the post-sales phase of the handset lifecycle, as we ‘ve covered in an earlier article (mobile software is dead.. long live mobile software). (click for the download page) – Secondly, the results of the research point to the de facto standards that are emerging with regards to software components. Adobe’s Flash Lite has been embedded on 723 million handsets as of June 2008. Adjusting for seasonal variations, Flash Lite is being deployed on over 500 million handsets per year in 2008 – phenomenal numbers and close to challenging the penetration of Java ME implementations which are generally estimated to around 80% of the global sales base. On the other hand, browser shipments are slowing down (see earlier article on Bye Bye Browser). The Openwave (now Purple Labs) browser was shipped on 180 million devices in H1 2008 and Opera Mobile shipped on just under 20M handsets in that same period. The de facto standards here are under the radar for the time being; WebKit (which should make it into the 100 million club in H2 2008 thanks to Nokia’s S60 and S40 pre-installs) and Opera Mini which saw over 95 million downloads in total as of August 2008. Nuance is also a company to watch, given that it tops our 100 million club with a clear margin to the second runner, and is expanding across multiple forms of text input technologies. – Thirdly, the watch list points to some surprising observations on mass-market software. The industry talks too much about smartphone software – Symbian, S60, Windows Mobile and Android – yet these are overshadowed by the volume deployments of feature phone operating systems. Mentor Graphics’ Nucleus and ENEA’s OSE have been deployed on well over 1 billion handsets, in many cases as the single OS powering both the applications and the modem stack. Nokia’s S40 has been embedded on an estimated 730 million handsets, while Qualcomm’s BREW has been shipped on an estimated 469 million handsets in total. Both S40 and BREW expose a large part of the device capabilities to software developers and force into question the term ‘open OS’ which is typically associated with Symbian and Windows Mobile. All in all, the 100 million club lists 25 products which have shipped on more that 100 million handsets as of June 2008, grouped into five product categories: – Application environments: Adobe Flash Lite, Aplix Jblend and Esmertec Jbed. – Browsers: ACCESS Netfront, Opera Mobile, Picsel File Viewer and the Purple Labs (ex Openwave) browser. – Middleware: Beatnik MobileBAE, BitFlash Mobile SVG, Ikivo SVG Player, Nuance VSuite, NXP Software’s LifeVibes MxMedia, PacketVideo CORE, Red Bend vCurrent, Scalado CAPS and TAT Kastor. – Operating systems: ENEA OSE, Mentor Graphics Nucleus, Nokia S60, Nokia S40, Open Kernel Labs OKL4, Qualcomm BREW and Symbian OS. – Input engines: Nuance T9 and Zi eZiText. For a detailed discussion of the common traits of the companies listed in the 100 million club see our 2007 update of the watch list. Note that the 100 million club is based on an original article by Morten Grauballe. We have excluded ARM, InnoPath and Sun from the watch list as they were unable to disclose exact shipment numbers for their products, and Teleca’s Obigo browser which has been discontinued since May 2007. Warm congratulations to the vendors who have succeeded in crossing the 100 million handset mark! – Andreas #100millionclub

[Apple’s App Store, Android Market, RIM Application Center.. application stores are the latest fad of the mobile industry. Research Director, Andreas Constantinou, analyses the recipe of the mobile application store phenomenon and the movers and shakers of this virgin market] $30M revenues in the first 30 days of operation, 200 million downloads in the first 100 days.. the facts point to a rediscovered revenue source that the mobile industry is eager to capture. [Update: John Doerr at O’Reilly has shared some research that shows App Store applications growing by 170% each month between August and October 2008 and then plateau’ing to about 6000 apps in early November]. Many industry observers will point to the on-device storefront as the reason behind the success of Apple’s App Store. Others will point to Apple’s single OSX platform that allows developers to target more than 10 million devices globally with a single application build. But our research shows that it’s far more than that. Mobile Application Stores (MAS) are a new solution market which promises the development of a new revenue stream for operators, handset OEMs and application developers. In the last few months here at VisionMobile we ‘ve analysed the key MAS solutions, namely Qualcomm’s BREW shop, Apple’s App Store and held briefings with Nokia, Handango and GetJar. In this article, we discuss the recipe of the mobile application store phenomenon and the movers and shakers of this virgin market. The next figure compares five popular MAS solutions in terms of fundamentals, performance and features. Mobile Applications Stores have been around long before the iPhone – in fact since 2001 with Qualcomm BREW offering not only an SDK for application developers, but also a complete developer-to-consumer channel for discovering, provisioning, distributing and billing applications on BREW handsets. On one hand Qualcomm’s BREW solution has been criticised for stringent application certification requirements and a cumbersome developer accreditation program. Yet it is by far the most successful MAS solution, with an average of 80 million application downloads per month in 2007 and over $1 billion shared with developers as of early 2007. [Updated: The official BREW figures from QIS state “80M+ average monthly transactions during 2007”, so that number should include content downloads as well as application downloads. It’s also worth mentioning that BREW’s download system offers one of the most advanced range of billing models, including subscriptions and prepaid credits that can be used for purchasing  applications or content.] Beyond the 10-11% of the sales base of BREW-capable handsets, there have been very few, usually unsuccessful efforts at building an ecosystem for application downloads. Nokia Download! Nokia’s Download! on-device storefront represents a half-baked MAS solution. Launched in June 2006, Nokia’s Content Discoverer was designed to replace Preminet, the supply-side marketplace for distributing applications. Nokia’s NCD, later renamed to Download!, has been widely deployed on S60 and S40 handsets but failed to get the MAS recipe right due to a number of reasons: – an on-device storefront with very few applications, poor catalog management, inconsistent structure and operator-dependent availability. – installing an application presents the user with multiple confirmation dialogs, making installation counter-intuitive. – the process of submitting an application to be featured on Download! is far from transparent with no central portal and distribution agreements done on a case-by-case basis. – billing relies primarily on premium SMS via specific operator deals and takes a large revenue cut away from the developer. To improve the rev share balance, developers have to implement their own credit card charging mechanisms in which case they have to lure the user to their website to make the payment – plus developers have to use their own IMEI-based licensing schemes. GetJar Despite lacking an on-device storefront, GetJar is a successful Mobile Application Store reporting a respectable 17 million downloads per month. GetJar was started by Ilja Laurs in 2004, is profitable, and has recently received $6 million from Accel Partners. GetJar started as a community site, connecting developers with beta testers, where users can download and test applications. It has since evolved into a distribution channel for application developers including brand-name applications like Opera Mini and Google Maps. GetJar reports 26,000 registered developers and 10,000 hosted applications. GetJar features mostly free and ad-supported applications. Developers can upload applications to GetJar for free, and get downloads for free. Developers monetise through four revenue models: 1. Free applications with no advertising 2. Ad-supported applications, where the developer monetises through GetJar’s in-house ad-injection (CPM) system, or other ad systems (e.g. Greystripe, Smaato) for interstitial ads. 3. Trial applications, where the activation or upgrade takes place via the developer’s own website. 4. By the end of 2008 GetJar plans to add a centralised billing facility via credit card to support paid-for applications, according to Bill Scott, GetJar’s SVP. GetJar allows developers to promote their apps on GetJar website for a fee of circa $4,000 per month per application. According to Scott, Google Maps downloads jumped from 20,000 downloads/week to 90,000 downloads/week thanks to GetJar promotional banners. GetJar is also offering hosted application store solutions for operators. The company allows operators to build own-brand or co-branded mobile application stores in what seems like a no-brainer deal: GetJar offers the hosted solution to the operator for free and is also willing to share part of the ad revenue. GetJar operates custom portals for 11 operators and OEMs, including Three, MAXIS Malaysia and Optimus Portugal. One downside of GetJar is that it does not offer an on-device storefront, where we may see the company partner with on-device portal providers. Handango Handango is one of the first application retailers and bills itself as the largest cross-platform smartphone application distributor with over 140,000 applications (including variants) in its online stores and over 100 million applications downloaded to date. Handango offers application developers three channels of distribution: – Direct, via handango.com – Via channel partners such as Verizon Wireless, AT&T, T-Mobile, Alltel, Nokia, RIM, Sony Ericsson, Samsung and AOL. Handango has recently expanded with distribution through physical retail stores, namely BestBuy and Carphone Warehouse. – Via Handango’s commerce engine web-shopping infrastructure used by over 1,000 content providers. Handango offers InHand, an on-device storefront which features ratings, recommended and best seller apps. InHand can be freely downloaded from the Handango site and in some cases comes pre-loaded on handsets – in the order of ‘low millions’ of handsets according to Handango’s Alex Bloom, VP Content and International. Another provider who has entered the MAS scene is US-based mPortal, best known for having powered Disney Mobile’s on-device portal. The company has now turned to offering a client and server infrastructure for application stores. mPortal offers a white label client-server product that combines an on-device storefront, application provisioning, aggregation of 3rd party application catalogs and integration with operator billing – in other words key elements for helping operators take a Mobile Application Store to market. mPortal already powers the branded application store of a tier-1 operator and reports being deployed on 50 device models (SKUs) as of the end of 2008. Naturally, there are a number of other vendors offering partial MAS solutions, namely Cellmania, Motricity, Jamba, Buongiorno and Handmark. The recipe behind Mobile Application Stores At the end of 2008 we are clearly seeing a turn towards complete Mobile Application store offerings in the footsteps of Apple’s App Store. There’s been plenty of blogoshere coverage on Google’s Android Market, RIM’s Application Center, Microsoft’s SkyMarket and Adobe’s Appzone. This new wave of MAS solutions encompass the complete recipe for a developer-to-consumer channel, contrary to the previous half-baked efforts. The next figure lists the five key ingredients of Mobile Application Store solutions; single marketplace, centralised billing, global distribution, provisioning and on-device discovery. The ingredients of the recipe are far from simple to put together – requiring not only the right ingredients, but also the right cook – which is why Apple and Qualcomm are the only two successful, complete Mobile Application Stores as of the end of 2008. New market = new opportunities We are already seeing a number of software vendors, OEMs and operators planning to offer Mobile Application Stores, many of them still in stealth mode as of the end of 2008. We expect the most successful MAS solutions to come from handset OEMs, particularly the top-10. OEMs can manage the distribution, provisioning and on-device discovery elements of the recipe, while partnering with billing and retailing vendors to complete the picture. Operators will find it harder to put together successful MAS propositions, as they control a much smaller percentage of the recipe. The few players who have developed vertical ecosystems are also in a very strong position – specifically Google, Microsoft, Adobe, Qualcomm, Nokia, Intel and RIM (see earlier article on the 7 centres of gravity in mobile). It will also be interesting to see if Qualcomm is willing to export its very successful MAS solution outside the narrow realm of BREW-capable handsets. We expect handset OEMs and network operators have gone for shopping early this Christmas, as they try to piece together the key ingredients of a MAS solution. Supply of these ingredients is in abundance: billing (Tanla, Bango, Qpass), distribution and retailing (July Systems, Motricity, Jamba, Handmark), on-device storefronts (mPortal, SurfKitchen and the dozen or so ODP vendors) and provisioning (InnoPath, Red Bend as well as many software services outfits). Comments welcome as always. – Andreas

Updated: We ‘ve been voted as the best blog in the Mobile Comms category by  Electronics Weekly Magazine and we ‘re thrilled!. We managed to rise to top spot despite competing with very popular blogs such as Disruptive Wireless, Engadget Mobile and Mob Happy. Thanks to all those who voted for us and to the 1500+ regular readers of our blog. Here’s to an even more exciting year in 2009 with lots of smart moves in the industry chess board. We ‘ll be watching, analysing and, as always, distilling market noise into market sense. Thanks for your support! – Andreas

[Mobile software has always been a tough business and is getting tougher. Research Director, Andreas Constantinou, explores how the value is migrating from embedded to downloadable software]. OK, I ‘m exaggerating. Mobile software isn’t dead, and it will never be. You need software to turn an expensive brick into a walking talking phone. Mobile software is critical to the function of both the handset itself and the mobile industry as a whole. But the revenue potential of mobile software is changing in a very symmetrical way: it’s migrating from embedded pre-load software, to downloadable, post-sales software. The business of software The business of embedded mobile software is a very tough one and it’s getting tougher. There are 100s of vendors that have emerged in the last 10 years offering embedded software like multimedia & graphics engines, operating systems, browsers, middleware and core applications, application environments, on-device portals and active idle screen solutions (see our Mobile Industry Atlas for who’s who). These vendors have based their business on a built-it-and-it-will-scale model. The assumption here is that by shipping your software on millions of handsets the business model of per-unit royalties will easily scale, as in the simple equation. Revenues $$$ = high-per-unit-royalties * many millions of devices However, revenue scalability is far harder to come by for two reasons. 1. Embedded software has been commoditising – meaning that handset OEMs are willing to pay less, even though they recognise software as indispensable; much like the FM radio feature in your car. This is the case for operating systems – see Android which is available to license for a price tag of $0 and the effect it had on Nokia’s acquisition of Symbian. Same applies to application environments (Flash Lite will now come with a zero royalty under the OSP project). Web browser royalties have dropped from an estimated $0.75-$1 per unit in 2005 to $0.05 to $0.25 per unit in 2008 in large volumes. WebKit and the tough browser economics have signaled dire consequences for Teleca’s Obigo and Openwave’s browser. On-device portal vendors are suffering from a similar fate; ODP pure-play software should be selling for $0.10 or less per unit today. A handful of pure-play ODP vendors have survived to late 2008: Cibenix, Communology, Crisp Wireless, INSPRIT IntroMobile, Streamezzo, SurfKitchen and weComm. Most ODP software is offered as a loss-leader, acquired or developed into OEM channels (Nokia Download!), media brand channels (Yahoo! Go), tools companies (Adobe FlashCast), social networking services (Xumii, Reporo), content publishing channels (Cellmania, Handmark, ROK, OnMobile),  Service Delivery Platforms (NewBay, Qualcomm uiOne) and software services providers (MobUI). Numerous ODP products have been very quiet, namely Airmedia, Comverse ODP, EveryPoint, Infusio, Tricastmedia and U-Turn. Only vendors with unique intellectual property (IP) have been able to resist commoditisation – ranging from input technology to graphics acceleration and multimedia software companies. As a result embedded software vendors are now settling for uncapped pre-licensed royalty bundles and NREs (non-recurring engineeering aka professional services fees) in place of running royalties. The smarter vendors are repackaging their assets into a service delivery model where they can charge for the more popular per-active-user model. 2. Deployment challenges: As ironic as it may sound, in a market of 1 billion devices sold per year, it is very difficult for any single software vendor to become embedded on more than 1 million mobile devices. Our 100 million club charts just over 20 companies (out of an estimated 250-300 companies in the inner circle of the mobile industry) which have had any single product embedded on more than 100 million cellular handsets. Deployment challenges arise as handset OEMs are reluctant to ship 3rd party software on a platform-wide basis, but are rather trying to accomodate specific channel requirements for a relatively small volume of handsets. Moreover, tier-1 operators who in theory can mandate (read: request) that certain software is embedded on the handset have been challenged with time-to-market delays for customised handsets and so are  acutely aware of the opportunity cost of deep handset customisation. Overall, both per-unit-royalties and deployment volumes have been reducing, signalling the down-spiralling revenues of the embedded software business. So what options do embedded software vendors have? Some are favouring professional services fees for software integration, customisation, certification and indemnification (WindRiver is a good example here). Others are repackaging their assets in the form of vertical service delivery platforms, where the embedded software is the loss-leader (see list of ODP vendors earlier). Pre pre-load to post-sales monetisation What is most interesting is that as the embedded software market is spiraling downwards, a new mobile software market is being re-ignited, that of downloadable software. In essence, the revenue opportunity is moving from the pre-load phase of the handset lifecycle to the post-sales phase (see our report on Mobile Software Management for definitions and a perspective on the handset lifecycle). Open OS platforms and application stores have existed at least since Qualcomm’s BREW platform and Shop launched in 2001. Handango reports 140,000 applications on its stores and BREW has generated more than $1B for developers as of March 2007, averaging 80 million downloads per month in 2007. Yet applications sales haven’t really picked due to the *commercial* challenges in connecting developers directly to end users. Outside the BREW ecosystem (accounting for 11-12% of the global device sales), very few application developers have been making money, at least until the advent of Apple’s App Store. The App Store has near-perfected the five key elements of a direct developer-to-consumer channel: a single marketplace for application submission and testing; centralised billing; global distribution; application provisioning; and on-device storefront. Apple’s App Store has broken down most commercial barriers (save for the stringent application selection criteria) – the success speaks for itself:  100 million application downloads in the first 2 months of launch and $30 million in revenues in the first month. Google, RIM and Microsoft are launching their own Appstores, while a number additional of Appstore initiatives are under development in stealth mode. We ‘ll compare and contrast Apple’s App Store with Nokia’s Download, Qualcomm’s BREW, GetJar and Handango in a next article. Update: To clarify, the core argument of this post is that the revenue opportunity (future market size) of the embedded software market is shrinking while the revenue opportunity of the post-sales market is growing – in this sense market value is migrating from pre-load to post-sales. We estimate there are 250-300 software companies active in the pre-load phase of the lifecycle, and about 30,000 developers in the post-sales phase. Naturally, the average 3rd party developer revenue is going to be tiny in the post-sales phase. We should also see increasing importance in the promotional and marketing channels for 3rd party developers and consolidation of such providers. Comments welcome as always. – Andreas

[Flash Lite, WebKit, Java ME, Silverlight, Qt, Lua, Python… Research Director Andreas Constantinou takes an analytical look at the new battleground for mobile application runtimes and the struggle for dominance.] Flash Lite and Java have been quietly penetrating the mobile handset market. Both application runtimes have in a sense shown that openness is not an exclusive privilege of open operating systems, but of the majority of mobile handsets. A new set of application runtimes have also surfaced in the form of WebKit, Silverlight, Qt and Lua – shifting the battleground for software platforms from the OS level in 2002 up to the application runtime level in 2008. We have explored the wide range of application runtimes before – but we have recently analysed how the key contenders compare and contrast. The next table lists the commercial, product, licensing and technology terms for seven leading runtimes. I will be discussing this analysis with a panel of industry execs at the Symbian Show on October 22nd in London. Java ME is the most pervasive application runtime, installed on approximately 8 out of 10 handsets shipping in 2008/9 by most analyst estimates. Java’s proliferation looks set to continue as Motorola plans to release the MIDP3 source code under an APL2 license by April 2009, which should reduce both fragmentation and the costs of implementing Java ME for handset OEMs. Adobe’s Flash Lite reached the 500 million installed base mark in May 2008 and looks set to penetrate even further thanks to the zero royalty fees that Adobe has pledged. The exposure of the underlying Flash Lite device integration layer should enable OEMs to develop more tightly integrated and more consistent FL implementations. Nokia has already integrated Flash Lite 3 on the latest S40 6th Edition platform; note that the S40 operating system is on more than half of Nokia’s 40% share of annual handset shipments. The Finnish OEM also plans to integrate Flash Lite more tightly on S60 through Platform Services. Sony Ericsson has also been pushing Flash Lite integration into Java apps through project Capuchin (see earlier analysis). WebKit has been a surprise in the making during the last 5 years. Although initially developed as the engine to Apple’s Safari desktop browser, the software has been evolved and optimised significantly; Nokia’s mass-market S40 6th edition OS features WebKit, as do Nokia’s S60, Motorola’s WebUI, Adobe’s AIR and Google’s Android. Silverlight is a newcomer from Microsoft, aiming to compete head-to-head with Flash Lite, and initially expected to appear on Nokia S60 handsets. Qt presents an interesting riddle. We believe that Qt is Nokia’s technology platform for deploying Ovi services across mobile devices and consumer electronics. Longer term Qt should be forming a platform for Nokia to deploy their own apps and a consistent signature UI environment, although the transition will take 2-3 years to materialise. Lua is an interesting new contender; it is a scripting language optimised for embedded environments and is known for both its simplicity and flexibility compared to JavaScript. It’s also licensed under the permissive MIT license, which has resulted in it being adopted and embedded into games SDKs and most notably as part of the BREW platform and Qualcomm’s uiOne SDK 2.0 (see details here). I will be moderating the panel ‘Who will win the Runtime race?’ at the Symbian Show on October 22nd in London. joined by well-respected representatives from Adobe, Microsoft, Nokia, Sun and Symbian: – Jürgen Scheible, author ‘Mobile Python – Rapid prototyping on the mobile platform’ – Pete Barr-Watson, Senior Business Development/Deployment Manager, Microsoft Silverlight – Terrence Barr, Senior Technologist and Community Ambassador, Sun Microsystems – Antony Edwards, VP Developer Product Management, Symbian – Matt Millar, Director of Mobile and Devices, EMEA, Adobe – Benoit Schillings, CTO, Trolltech/ Nokia If you are attending the Symbian Show, do join – I do expect an intense and stimulating debate as we discuss which application runtime will win. Thanks to Erik Jacobson, Timo Bruns and Terrence Barr for their feedback on the comparative table of application runtimes. Update: The keynote panel session went well. I did not expect any revelations, especially in front of an audience of 1,000+ people attending the panel. But there was one very interesting announcement at the Show; the role Qt will play for Nokia’s applications, devices and Ovi. This slide, originally from Nokia’s analyst webcast on Qt on Oct 28, is quite revealing. Nokia is planning to use Qt, its cross-platform application environment, to port its own core applications and Ovi services across a broad range of devices. Qt will then be ported onto S60 (as Nokia announced) as well as across the Nokia device portfolio – which includes S40 – as this slide reveals. Naturally, Nokia’s Ovi services should expand to non-Nokia phones and desktop PCs. We predicted this strategy for Qt in earlier research notes here and here, but Nokia is moving much faster than we were expecting. Another interesting quasi-announcement was that WebKit will be one of the key pillars of the Symbian Foundation efforts, as announced by Lee Williams, the newly appointed head of the Foundation. WebKit is already integrated on Qt, so we should see the Qt + WebKit stack penetrating mobile devices very fast very soon. In the light of these announcements, we have upped our estimates of Qt embeds in 2009 to 50M handsets, assuming S60 starts shipping with Qt from 2H09. So which application runtime will win? If Google searches is anything to go by, then WebKit is clearly the ‘runtime of the year’ for 2008. As for the foreseeable future, one thing is certain; there will be more runtimes supported by mobile devices, before real consolidation settles in. – Andreas