Microsoft and Nokia have teamed-up to offer Microsoft Office software on Nokia’s E-series phones, and eventually on other handsets, starting in 2010. Technically, both compete in the smartphone market with their separate operating systems for mobile devices. Microsoft has its Windows Mobile platform, while Nokia has its Symbian sytems. So why join forces now? Because both are using the move to defend their lead on different fronts.
Nokia’s fight: smartphone dominance. "This is really about creating a formidable challenge for RIM," said Nokia EVP for Devices Kai Öistämö at the official press conference. He’s referring to BlackBerry-maker Research in Motion, which holds 18.7 percent of the smartphone market, according to technology research firm Gartner.
While that’s less than Nokia’s 45 percent market share, the BlackBerry is seen as being favored by businesses, largely due to its emailing and productivity features. In fact, a recent survey of 300 high-end users by investment firm Goldman Sachs (as reported by tech publication ZDNet) found that 57 percent of respondents owned BlackBerries. Of those, 32 percent were subsidized by their companies. By offering Office software on its phones, Nokia hopes to appeal to more business users.
RIM, however, is not the only challenger to Nokia. Gartner also reports that iPhone 3G S sales are a big factor. iPhone sales were the most impressive out of all the smartphones launched in the 2nd quarter of 2009, including Nokia’s N97. It also says Apple had the biggest market share growth in the past year, from 2.8 to 13.3 percent.
Some industry analysts attribute this success to the iPhone App Store, among other factors (see our previous post on App Stores). Indeed, telecoms analyst firm Juniper Research predicts mobile app downloads will approach almost 20 billion per year by 2014. To compete, Nokia launched its own app store, the Ovi Store, in May. The store’s selection, however, is still sparse. The addition of Office software could give Nokia phones the boost it needs among users seeking productivity apps. BlackBerry too has launched its own App Store.
Microsoft’s fight: dominance in communications software. Microsoft Business Division President Stephen Elop says the partnership is part of a strategy to “provide the best productivity experience across the PC, phone and browser.”
Microsoft’s Business Division, which includes Office, has recently reported declining revenues. As Office is a top moneymaker for the company after Windows OS, a lot rides on its continued success. Office, however, faces increased heat from competitors like Google’s free, Web-based productivity apps. “Google's initiative is forcing Microsoft to change its business model,” said Sandeep Aggerwal of the financial advisory group Collins Stewart, in a Dow Jones Newswire interview.
Indeed, Microsoft appears to be covering its bases while it can. Back in July, the company also announced plans to launch free Office Web apps in 2010. Gene Munster, analyst at investment firm Piper Jaffray, thinks it’s a wise move. In an interview with The Wall Street Journal, Munster says making sure people are still using Microsoft products is more important in the short term than risking revenue.
E-book sales are on the rise, but apparently, so too is the competition facing e-readers.
According to June 2009 data from the International Digital Publishing Forum (the trade and standards association for the digital publishing industry) and the Association of American Publishers (the trade association of the U.S. book publishing industry), domestic sales of e-books rose 224 percent over June of last year to $37.6 million. This information doesn’t include retail sales or sales to libraries, universities and professional institutions, so the picture may even be rosier.
Does this mean e-readers will soon be a hot commodity? For now, there are differing opinions among industry analysts. A study by financial services group Credit Suisse (as reported by TWICE, a consumer electronics trade publication) predicts e-reader sales could penetrate about a third of the U.S. adult book-reading population within five years.
However, a survey by research firm Simba Information (as reported by the Associated Press) found that most users actually read e-books on their personal computers. And while Amazon’s e-reader, the Kindle, has sparked interest in e-books, downloads of e-reading applications for smartphones have far outnumbered the Kindles sold, according to a report by technology and market research firm, Forrester Research.
With PCs and smartphones competing for market share, some analysts think e-readers could benefit from increased features and flexibility. Talking about the Kindle, Paul Starr, professor of sociology and public affairs at Princeton, said in a recent interview with MSNBC: "As it develops, how multifunctional will be it? More like a dedicated word processor, which only does one thing, or more like a computer, for which applications are written by the thousands? The more versatile it is, the better it will compete."
New developments continue to be made in the e-reader industry, suggesting more device versatility in the future. In fact, according to the Financial Times, Apple, Inc. is planning to launch a portable, full-featured, tablet-sized computer before the end of the year. The device, which book publishers reportedly see as an alternative to the Kindle, would enable access to the Web and to Apple’s online stores for software and entertainment. Full details haven’t been released yet.
Could the combination of an iTunes-type store for books and a “cool” device from Apple be a “Kindle killer?” We will have to wait and see what Apple’s product will look like. Will this “innovation” make e-readers the next “it” item, or just create disruption in the market?
Verizon Wireless knows this: Software sells hardware, and hardware plays a role in your choice of wireless network. That’s why it’s building its own app store. Just consider:
Among the smartphones launched in the past quarter — including Nokia’s N97, Apple’s iPhone 3GS and the Palm Pre — iPhone sales were the most impressive, netting one million units within its first weekend, according to a recent report by technology research firm Gartner, Inc. Sure, Apple’s strong brand image helped. So did pricing. But the biggest contributing factor to the iPhone’s success may be the App Store.
“The App Store business is a facilitator of hardware sales,” according to Shaw Wu, an analyst from technology and media investment firm Kaufman Brothers, in an interview with The Wall Street Journal. Indeed, users have downloaded more than 1.5 billion apps from the App Store within its first year.
How is that affecting Verizon Wireless? Since it signed an exclusive contract with the iPhone, Verizon Wireless’s long-term rival AT&T has grown its subscriber base substantially. In fact, AT&T reported more than 2.4 million iPhone activations for the second quarter, 35 percent of which were new to AT&T.
To defend its market lead, Verizon Wireless is launching its own app marketplace, the V CAST Apps Store, by year’s end. “We are intent on making the Verizon wireless platform the choice for developers,” Verizon Wireless CFO John Killian said during the company’s earnings call.
Verizon Wireless says developers could potentially reach a wider audience through V CAST because, as part of the “Joint Innovation Lab” (JIL), Verizon Wireless and other carriers like China Mobile, Vodafone and Softbank would push for common standards, enabling developers to create apps that could work across different operating systems, including RIM’s Blackberry, Google’s Android, the Windows Mobile, Palm and Symbian (used by Nokia).
Verizon Wireless also promises developers a simplified and speedy app approval process that would take no longer than 14 days, a jab at the App Store’s own vetting process, which more and more developers say is too restrictive, too mysterious and sometimes lengthy.
And to further sweeten the deal, Verizon Wireless is offering a $50,000 prize in an application development contest.
Will V CAST be able to cut into the iPhone’s market share and significantly help Verizon Wireless? V CAST might stand a chance if it can attract some of the best app developers to switch to its camp, something that, considering the App Store’s popularity and first-mover advantage, may not be an easy feat.
