Mobile Giants Vulnerable, Says Microsoft Exec
Dow Jones News Service ~ May 1, 2002 ~ 2:05 am EST
By Gren Manuel
LONDON (Dow Jones)--Major mobile phone manufacturers churning out millions of look-alike handsets are likely to suffer as operators increasingly seek customized devices that enable them to target clients more accurately, says Juha Christensen, corporate vice-president of the mobility group at Microsoft Corp ( MSFT).
He told Dow Jones Newswires that Microsoft's move into supplying software for top-end mobile phones means that large vertically-integrated manufacturers such as Nokia Corp (NOK) and Sony Ericsson Communications - what he sees as high-cost operators locked into mass production - will find their positions quickly eroded as an era of "mass-customization" of more targeted handsets arrives.
"You know, it's kind of like a Model T Ford - you can get any device you want as long as it's the standard device they sell to everyone," he says, adding that the mass-producers are being buffeted by forces outside their control.
"There is a shift in business models in this market," said Christensen.
That argument's already been dismissed by Nokia Chairman and Chief Executive Jorma Ollila, whose company made more than one-third of the mobile phones sold worldwide last year.
Speaking last week, he said Nokia would maintain its status as industry leader because of its depth of industry knowledge.
"We will be the company which will make it happen, with the software capabilities particularly, but also with the user interface and handset attraction that made us number one in this industry," he said.
Christensen counters by saying that tomorrow's winners will be no-brand manufacturers in Asia who can quickly create small- or medium-sized runs of high-quality phones based on "reference designs" that use Microsoft software and standardized hardware from Intel Corp (INTC) or other chip makers, and enable the operators to put their own brand on the front.
It's a trend that will start at the top end of the market with so-called smartphones, he says, pocket computer-like devices that will also allow email and other data services that are currently the target of Microsoft's efforts. But it'll trickle down as ordinary phones get more powerful with falling hardware costs.
That's not to say he won't deal with conventional phone makers. He hints that the company has good relations with Samsung Electronics Co (Q.SSE) and points out that Siemens AG (SI) makes a Microsoft-powered handheld computer - but offered no further details.
But with a Microsoft-powered smartphone costing a few hundred euros, there's no chance for Microsoft to make much money on supplying handset software. Christensen says the company can make a little out of transaction charges using Microsoft software, but the real money may be in other parts of the "eco-system" of software, developers, servers and other parts of a network that would be required before mobile phones become data devices.
Nokia is plainly a rival for Microsoft, said Christensen, now that the Finnish-based giant is licensing its phone software to other manufacturers.
"We are very clear about this, that Nokia is a competitor for one very simple reason - that Nokia feels that Microsoft is a competitor to them," said Christensen.
He's well-placed to assess the future of Europe's handset makers. Before joining Microsoft he was an executive vice president of Symbian, a U.K.-based mobile phone software consortium that has Nokia and other major handset makers as shareholders.
However he scotches any idea that Microsoft may join the 18-member standards- setting alliance named the Open Mobile Architecture, which groups almost every equipment maker and operator in the industry apart from Microsoft.
"It's very much a Nokia-led alliance," he says, saying it is a "thinly-veiled way" of promoting Nokia's Series 60 phone software, which Nokia is now licensing to other phone-makers in competition to the software offered by Microsoft.
"All the standards that are contained there exist in other standards groups which are not run by Nokia," he says.
Microsoft's belief in the changing nature of the mobile business has meant that it has had to do a lot of work that was previously the preserve of Nokia and other handset giants.
Christensen says Microsoft has researched which companies make the best joystick-style switches that are now found on mobile phones, even how to best print the legends on the keypad - all in the name of creating the recipes that Asian manufacturers can use to quickly bring new Microsoft-powered phones to market.
It's also researched what bothers customers about using advanced mobile phones. The key niggle? That data is being duplicated in many places.
That's why the company is betting heavily on its .NET technology, in which data could be held centrally and accessed over the Internet any time a user needs it, no matter what equipment they're using or where.
He says his ambition is that mobility will soon be worked into every one of Microsoft's products, in the way that the Internet is today.
"You could say that my biggest goal," he said, "is to do myself out of a job." |
