[Infographic] The Open Governance Index – A new way of measuring openness

We are proud to present our latest infographic – the Open Governance Index, measuring the relative openness of 8 major open source projects, from Android to WebKit. This infographic presents some highlights from our full report (free download here). The Open Governance Index is authored and researched by VisionMobile, and part-funded by webinos

Feel free to copy the infographic and embed it in your website (embed codes below the infographic).

Infographic- The Open Governance Index - A new way of measuring openness
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From MeeGo to Tizen: the making of another software bubble

[Just a short 1.5 years from MeeGo’s birth, Intel dumps it to shift focus to a new platform, Tizen, in partnership with Samsung. Guest author Dave Neary discusses the underpinnings of Tizen and why both MeeGo and Tizen are software bubbles].

VisionMobile - From MeeGo to Tizen: A software bubble in the making

Eight months after Nokia embarrassed Intel by withdrawing support for the MeeGo project, Intel has followed suit. On 27th September, Intel and Samsung announced the birth of a new mobile platform called Tizen. After only 19 months, MeeGo has been left parentless, and appears to be on life support. Tizen is, in fact, a successor of the Samsung Linux Platform, a reference platform of the LiMo operator consortium, with some components taken from the MeeGo stack.

Given that LiMo and MeeGo have both failed to set the mobile computing world alight, and Android has a four year head start, can we expect better things from their offspring? What has changed with this announcement? Is this Intel’s last chance to have a stake in a credible smartphone platform? And what  should Samsung, Intel and the Linux Foundation do to give their new platform a fighting chance at success?

The Birth of Tizen

Last year, when reviewing the progress which MeeGo had made in its first few months, we reserved judgement on the project, on the grounds that it was “too early to be able to tell how the final product will compare to iOS or Android”, but we noted that there had been some growing pains between Nokia and Intel.

Those growing pains stretched to breaking point earlier this year, when Nokia finally gave up on MeeGo and turned to Windows Phone to revitalise its smartphone products. Intel was left looking for a heavyweight consumer device partner to come in and lend credibility to their claim that MeeGo was no longer a one-man show. Rumours that LG would be joining the project failed to materialise. Finally, Intel ran out of patience, and partnered with Samsung on a new platform, Tizen, to be based on SLP (Samsung Linux Platform), a platform which Samsung have previously provided to the LiMo Foundation to be used as a reference plaform for its members.

While the move has obviously been in the planning for months, Samsung were perhaps encouraged to partner with Intel on the back of the news that Google has acquired Motorola Mobility in August – a view supported by their recent settlement of an Android-related patent dispute with Microsoft. In addition, as LiMo members, most notably Vodafone also ran out of patience, SLP was left as a platform without a home.

MeeGo on Life Support

How does MeeGo fit into the big picture now? High profile participants like GENIVI, China Mobile, Asus and Acer have committed to shipping MeeGo devices. Will they be based on the unreleased MeeGo 1.3, or the previous 1.2 release? Or will these companies move en mass to Tizen?

Given the lack of reaction from partners like GENIVI, we suspect that the Tizen announcement caught these vendors unawares. Jerermiah Foster, a community manager working for one GENIVI member, informed me that his company would reuse MeeGo 1.2 in the short term, and while Tizen looked interesting, there were no current plans to move development to the platform. He also confirmed that he found out about Tizen through the project announcement, and not before.

In spite of vendors withdrawing their support, part of the community is banding together to salvage their work. After Nokia pulled out of MeeGo, community developers working on the MeeGo Handset UX banded together to continue work (with several Nokia engineers) in the MeeGo Handset Community Edition, aiming to provide MeeGo support for the Nokia N900, N950 and N9 devices. In spite of the Intel announcement of Tizen, these developers have vowed to continue the development of MeeGo on ARM, and released the MeeGo Handset Community Edition 1.3 at the end of September. The current plan proposed by these developers is to create a lightweight core distribution based on Qt, under the brandname “Mer” (“MeeGo Rebooted”), on which vendors can build custom user interfaces. The MeeGo Handset Community Edition will be the first consumer of Mer’s core operating system.

The MeeGo community mailing lists are full of developers wondering where they stand now. The announcement suggests that no software will be released from the Tizen project for another 6 months. According to Joel Clark, MeeGo IVI Program Manager, the MeeGo 1.3 release has been shelved, and only incremental updates to the previous 1.2 release can be expected until then. While the MeeGo community certainly has some enthusiastic community supporters, it is unlikely that any major vendors will adopt the community-supported Mer.

Ironically, the move away from MeeGo comes at a time of potential wins for the project. Nokia’s MeeGo-based N9 is finally shipping, and getting rave reviews. And continued demand for netbooks has fueled the launch of several MeeGo based netbook and tablet products, including the Asus EeePC X101, the Acer Iconia M500 and other devices from Samsung, Lenovo and Fujitsu.

Perhaps Intel ran out of patience just as the project was about to take off.

Tizen = SLP, with a pinch of MeeGo

Technically, Tizen is a successor of the Samsung Linux Platform, a reference platform of the LiMo operator consortium, with some components taken from the MeeGo stack. The project governance and infrastructure, however, will look a lot like MeeGo. According to Imad Sousou, the director of Intel’s Open Source Technology Center, and head of the MeeGo project: “in the new project, a lot of things will be the same as they were in the MeeGo project”.

We also know is that the primary APIs for 3rd party developers are targeting HTML5 and WAC environments. WAC stands for Wholesale Applications Community, a set of APIs for building and delivering rich HTML5 applications, based on APIs from JIL (Joint Innovation Labs) and BONDI (a platform specified by the now-defunct Open Mobile Terminal Platform, OMTP). The Enlightenment Foundation Libraries (EFL), are also set to be a key part of the platform. We can infer two things from this: Qt will be taking a back seat in Tizen, if it is part of the platform at all, and it appears that SLP will be the basis of the Tizen platform.

One thing which has not changed from MeeGo is the wide range of participants being targeted by the project. At the moment, the target audience can best be summarised as “everyone”. Tizen is aimed at platform developers, integrators, vendors, application developers, and mobile enthusiasts. That’s a very wide range of target audiences, each with different needs and expectations. Not knowing your target customer is a surefire way to throw money down the drain.

Challenges, challenges, challenges

Tizen’s main difficulties at this point can be broken into three groups.

First, there will inevitably be teething problems between the project founders. The fact that Samsung have not yet mentioned Tizen in any press releases or announcements, and the lack of new information coming from Intel representatives since the launch announcement, suggests that there may be some communication issues to be worked out in the relationship. In fact, at this point it looks like the active partners have not yet agreed on what will and will not go into the platform. Intel and Samsung will have to work hard to overcome the cultural dissonance which is inevitable given the very different corporate DNA.

On top of this, unless something changes soon, there could be a major mismatch between the reality of working with Tizen and the public positioning of the project. The project isn’t yet open for business, and when it is, it will only be useful for a small subset of its target market. If it were a new project, they might get away with it. But with the legacy of MeeGo, Moblin and Maemo, disappointing early adopters could be a very dangerous thing to do for Intel and Samsung. Getting the project governance and community dynamics right from the start is vital to learning from the mistakes of MeeGo and Moblin.

Beyond the community, there are question-marks over Tizen’s potential to make an impact in the industry. Google’s purchase of Motorola Mobility, not just a patent portfolio play, has created a disturbance in the force around the Android universe. Samsung does not want to find itself competing with Google at the same as they are dependent on them for their smartphone platform. This creates an opportunity for Tizen which it is too immature to exploit. For third party developers, concentrating on HTML5 is great. But will there be a demand for a native API also? And if so, will Tizen be capable of providing the kind of unified developer experience you get on iOS or Android?

It will be interesting to see if Intel and Samsung manage to get substantial support from other ARM vendors. As long as Intel are seen as the main custodians of the project, that seems unlikely. It will also be interesting to see the effect which Nokia’s first Windows Phone based devices, due to be announced at the end of October, will have on the project.

The main challenge for the Tizen partners will be getting devices to market. The key constituency for the change, vendors who were committed to MeeGo before, appear to have been neglected during the announcement. Intel and Samsung need vendors to adapt the platform to sell more chips, to give breadth to the ecosystem around the project, and to give credibility in the industry that this is not a party of two.

The Long Road Ahead

To succeed and make a space for itself in the mobile ecosystem, execution will need to be flawless on Tizen. If the internal bickering which dogged MeeGo rears its head again, if the initial release of the platform does not meet vendor and community expectations in terms of functionality and quality, or if there is an 18 month wait for well integrated finished products running Tizen, then the project may not have a second chance to make good.

Tizen seems set to be another victim of misaligned incentives across several industry partners. Samsung is bringing SLP to the “standards” table simply to find a new home for it, now that LiMo is winding down. Intel is seeking another marriage of convenience, trying to tempt a major OEM to ship significant x86 chip volumes.

– Dave

[Dave Neary is a regular columnist at VisionMobile writing on how companies can work more effectively with open source community projects. Dave is the founder of Neary Consulting and  has also been an active member of the GIMP, GNOME, OpenWengo, Maemo and MeeGo communities, with over 10 years of experience in open source community issues. He can be contacted at dave (at) neary-consulting (dot) com]

[Report] A new way of measuring Openness, from Android to WebKit: The Open Governance Index [Updated]

[Much has been said about open source projects – and open source platforms are now powering an ever-increasing share of the mobile market. But what is “open” and how can you measure openness? As part of our new research report (free download), VisionMobile Research Partner Liz Laffan introduces the Open Governance Index – a new approach to measuring the “openness” of software projects, from Android to WebKit]

Update: We have been amazed by the amount of interest to our Open Governance Index (OGI) report that we published just over two weeks ago. Our report was covered in mainstream media across Wired, ZDnet, PCPro, Gizmodo, ARS Technica, BGR, Zeit Online and ReadWrite Mobile. Our intention was to start a debate around ‘what’ openness is, ‘how’ it can be measured and ‘why’ it is important – and we certainly got the ball rolling!

Open Governance Index cover

Openness = governance

We at VisionMobile have been researching, investigating and helping to educate the industry about open source for the past five years.  In this time open source software has been transformed from geekware to business as usual. Much has been written and debated regarding open source licenses – from the early days of the GPL license to the modern days of the Android platform.

Despite the widespread use of open source, from Android to WebKit, there is one very important aspect that has been neglected: openness and how to measure it.

Openness goes far beyond the open source license terms and into what is termed Governance. While licenses determine the rights to use, copy and modify, governance determines the right to gain visibility, to influence and to create derivatives of a project, whether in the form of spin-offs, applications or devices. And while licenses apply to the source code, governance applies to the project or platform.  More importantly, the governance model describes the control points used in an open source project like Android, Qt or WebKit, and is a key determinant in the success or failure of a platform.

VisionMobile - Licensing vs. Governance Models

The governance model used by an open source project encapsulates all the hard questions. Who decides on the project roadmap? How transparent are the decision-making processes? Can anyone follow the discussions and meetings taking place in the community? Can anyone create derivatives based on the project? What compliance requirements are there for creating derivative spin-offs, applications or devices, and how are these requirements enforced?  It is governance that determines who has influence and control over the project or platform – beyond what is legally required in the open source license.

In today’s world of commercially-led mobile open source projects, it is not enough to understand the open source license used by a project. It is the governance model that makes the difference between an “open” and a “closed” project.

Measuring openness

Our research (free copy of full report here) showcases eight mobile open source projects: Android, MeeGo, Linux, Qt, WebKit, Mozilla, Eclipse and Symbian.  We selected these projects based on breadth of coverage; we picked both successful (Android) and unsuccessful projects (Symbian); both single-sponsor (Qt) and multi-sponsor projects (Eclipse); and both projects based on meritocracy (Linux) and membership status (Eclipse).

All of these are open source projects, whether platforms (Android, MeeGo, Qt, Symbian) or engines (Linux kernel, WebKit) or multi-project initiatives with a single, uniform governance. We appreciate that these projects are unique in many ways but they are all ultimately open source projects and to that extent our governance measures can be applied to them all equally. For example all of these projects have decision-making groups and processes that are directly comparable. In the Open Governance Index we attempted to document who these decision-makers are, how they operate, what processes are used to determine project decisions and how easily is to influence these project decisions.

Our research, carried out over a six-month period, included analysis of these popular open source projects, through discussions with community leaders, project representatives, academics and open source scholars. This research was partially funded by webinos, an EU-funded project under the EU FP7 programme, aiming to deliver a platform for web applications across mobile, PC, home media (TV) and in-car devices.

We quantified governance by introducing the Open Governance Index, a measure of open source project “openness”. The Index comprises thirteen metrics across the four areas of governance:

1. Access: availability of the latest source code, developer support mechanisms, public roadmap, and transparency of decision-making
2. Development: the ability of developers to influence the content and direction of the project
3. Derivatives: the ability for developers to create and distribute derivatives of the source code in the form of spin-off projects, handsets or applications.
4. Community: a community structure that does not discriminate between developers

The Open Governance Index quantifies a project’s openness, in terms of transparency, decision-making, reuse and community structure.

Does openness warrant success?

But what is it that makes an open source project successful? Why do some projects become an immediate success, while others barely get off the ground before crashing and burning? We know that just like commercial ventures, open source projects have different cultures and drivers – but we do believe that you should be able to measure the way that open source projects interact with the community of users and contributors that they build up around themselves.

Our research suggests that platforms that are most open will be most successful in the long-term. Eclipse, Linux, WebKit and Mozilla each testify to this.  In terms of openness, Eclipse is by far the most open platform across access, development, derivatives and community attributes of governance.  It is closely followed by Linux and WebKit, and then Mozilla, MeeGo, Symbian and Qt. Seven of the eight platforms reviewed fell within 30 percentage points of each other in the Open Governance Index.

Moreover, our research identified certain attributes that successful open source projects have.  These attributes are timely access to source code, strong developer tools, process transparency, accessibility to contributing code, and accessibility to becoming a committer.  Equal and fair treatment of developers – “meritocracy” – has become the norm, and is expected by developers with regard to their involvement in open source projects.

The Android Paradox

We found Android to be the most “closed” open source project. In the Open Governance Index, Android scores low with regard to timely access to source code in that the platform does not provide source code to all developers at the same time; it clearly prioritises access to specific developer groups or organisations and has acknowledged this with the delayed release of Honeycomb. Additionally Android scores low with regard to access to developer support mechanisms, publicly available roadmap, transparent decision-making processes, transparency of code contributions process, accessibility to become a committer (in that external parties cannot ‘commit’ code to the project) and constraints regarding go-to-market channels.

Android ranks as the most closed project, with an Open Governance Index of 23%, yet at the same time is one of the most successful projects in the history of open source. Is Android proof that open governance is not needed to warrant success in an open source project?

Android’s success may have little to do with the open source licensing of its public codebase. Android would not have risen to its current ubiquity were it not for Google’s financial muscle and famed engineering team. More importantly, Google has made Android available at zero cost, since Google’s core business is not software or search, but driving eyeballs to ads. As is now well understood, Google’s strategy has been to subsidise Android such that it can deliver cheap handsets and low-cost wireless Internet access in order to drive more eyeballs to Google’s ad inventory.

Equally importantly, Android would not have risen were it not for the billions of dollars that OEMs and network operators poured into Android in order to compete with Apple’s iconic devices. As Stephen Elop, Nokia’s CEO, said in June,2011, “Apple created the conditions necessary for Android”.

Moreover, our findings suggest that Android would be successful regardless of whether it is an open source project or not, to the extent that the vast majority of developers working on the project (the platform itself) are actually Google employees.

 Evolving the Open Governance Index

Having published the report, we aim to continue the discussion on governance, to refine our criteria even further and to make the OGI measure as meaningful as possible for the open source community. One of the first suggestions has been with regard to having a time dimension to the criteria i.e. does openness change over time. Mature open source projects such as Eclipse, Linux and WebKit that have stood the test of time, score quite highly with regard to openness of governance. But this has not always been the case. For example consider the following. Apple forked KHTML to create WebKit in the early 2000’s, releasing the first WebKit open source project in 2005 but with reviewer and commit rights restricted to Apple personnel only which effectively sidelined the KDE community. In 2007 however Apple reversed this decision allowing allow non-Apple developers to have full commit access to the WebKit source code version control system. This shows that openness can and does change over the project lifecycle.

Our vision for the Open Governance Index is to for it to be a robust, and as much as is possible, an objective measure of Governance for open source projects. We believe that this is necessary such that users and contributors to open source projects, including commercial entities, understand the means by which they can, or cannot, influence the direction and content of the project.

Download the full report for an in-depth analysis of the openness of Android, MeeGo, Linux, Qt, WebKit, Mozilla, Eclipse and Symbian. Drop us a line and tell us what you think.

– Liz

Addendum – Is copyleft more or less open?

We awarded a higher score to those licenses that are permissive and not copyleft licenses. Firstly it should be noted that all the licenses used by the eight mobile open source projects are Open Source Initiative (OSI) approved and meet the Open Source Initiative Definition, which provides for free redistribution of source code, access to source code and ability to create derived works amongst other requirements. We believe that the OSI is the appropriate arbiter of the appropriate Open Source License definition and all of the licenses used by the open source projects researched in this report meet this definition of being ‘open’.

However we also believe that from a commercial viewpoint there is still some concern about using code that is under a copyleft license – our experience of working with mobile software development organisations confirms this. Our findings suggest that organisations will be more comfortable using permissive licenses which do not mandate copyleft requirements and we reflect this in our criteria and scoring. We are happy to continue debating these findings further with the community. For example it has been suggested that the problem here is not with copyleft licenses but with the business model used by those organisations. Be that as it may, our experience is that this concern is still a valid one being expressed by many organisations, especially in the mobile device domain.

Finally we had a methodology typo which unfortunately survived the proof reading: assigning a bonus to “copyright assignment”. We fully acknowledge that copyright assignment is unnecessary – indeed we state this in our analysis of Qt whereby we acknowledge copyright assignment as inappropriate and a heavy-handed requirement.

[Liz Laffan is a Research Partner at VisionMobile. Liz has been working in the telecoms and mobile industry for over 20 years, with large telco organisations, start-up technology ventures, software development and licensing firms.  Liz’s interests lie in open source software governance and licensing and in particular how best can commercial organisations interact with open source projects.  She can be reached at liz [at] visionmobile.com]

[Report] Developer Economics 2011 – Winners and losers in the platform race

[Who is leading in the platform race – and who’s lagging behind? Marketing Manager Matos Kapetanakis examines the flow of developer mindshare and discusses how success is measured in the app era – in part 1 of our 3-part blog series on our newly released Developer Economics 2011 report.]

Developer Economics 2011 – free download here – has been created by VisionMobile and sponsored by BlueVia.

VisionMobile - Developer Economics 2011 - Platform race

Developers driving innovation


The role of mobile developers has changed dramatically over the past three years, from a lowly position as back-room engineers to the much-sought-after engine that drives mobile software innovation. Never before have developers, from big development houses to aspiring students to garage entrepreneurs, had such an enormous impact in mobile industry innovation and dynamics.

Handset manufacturers, platform vendors and even network operators (or carriers to our American readers) are competing over who’s going to build the biggest developer community, as success today is measured in terms of thousands of apps and billions of downloads. Platform and OS vendors are the most active in this game, trying to steer developer mindshare towards their platform and create a new plateau of innovative services, as well as a whole ecosystem around them.

So, which platforms lead the race and which are lagging behind?

The platform race

In the platform race for developer mindshare, there are some clear winners. According to our research, the developer mindshare is firmly flowing towards Android and iOS, with 67% of developers currently using Android and 59% using iOS.

VisionMobile - Developer Economics - Developer Mindshare

These figures show a considerable increase since last year, with the two platforms climbing nearly 10%. In contrast, the ‘old guard’ comprised of Java and Symbian are leaking developer mindshare.

However, the most surprising finding is the adoption of mobile web, i.e. the platform for apps written in HTML or JavaScript, which claimed the 3rd spot in terms of developer mindshare, being used by over 55% of the developers. We do not attribute this to the ease of learning this platform (which has a deceptively steep learning curve, as you can see in the full report), but rather the influx of non-mobile developers to the industry. Also, mobile web is fast becoming the de-facto cross-platform choice for developers, especially now that Java and Flash are waning. In addition, there is a veritable host of HTML-to-native development tools that are helping HTML/JavaScript developers target smartphone native app markets.

More on Developer Mindshare in the full report.

It’s also worthwhile to take note of the Developer Intentshare, i.e. the platforms that developers are planning to use.

VisionMobile - Developer Economics 2011 - Intentshare

Android still reigns supreme, but the surprise comes in the form of Windows Phone, which is fast becoming a developer favourite. Despite lukewarm sales in 4Q10 and 1Q11, the newly revamped Microsoft platform has managed to gain the vote of developers.

This can be attributed to a number of reasons: First and foremost, Microsoft has actually released a competitive platform with a strong toolset. Also, the platform’s future seems bright, after the now-famous Finnish Deal. Finally, Microsoft has invested a lot of time (and money) into attracting developers, tapping into the Xbox and Silverlight developer communities to divert the flow of mindshare in their favour.

The inclusion of Chrome OS in the top 5 platforms in Intentshare is more a result of curiosity for Google’s dark horse platform – how will it stack up to other platforms? MeeGo also seems to be vibrant, which goes to show that strong developer communities go a long way in this software era.

In contrast, BlackBerry has lagged behind in Intentshare, suffering from fragmentation issues (see our full report for the surprising answer to which platforms are the most fragmented), as well as minor fixes to an aging platform.

Who’s lagging behind in the platform race? Symbian and Java have suffered the biggest losses in terms of developer mindshare. Nearly 40% of developers currently using Symbian and 35% of developers currently using Java ME are planning to abandon the platforms.

VisionMobile - Developer Economics 2011 - Abandon index

No surprises there, especially in the case of Symbian, which carries an expiration date, despite Nokia’s slow transition to the WP platform. Java’s loss of mindshare is less expected, especially considering the platform’s reach as global sales are still dominated by feature phones – but developers are not sticking around for that.

Palm’s platforms are also being rapidly abandoned by developers, since Palm is all but dead and HP has still to ship its first webOS handset.

What’s in a platform?

 

How do developers make that all-important decision of which platform to select? Well, according to our research, the biggest driver in platform adoption is large market penetration – a sentiment shared by 50% of our respondents, irrespective of the platform they spend most of their time on.

VisionMobile - Developer Economics 2011 - Platform adoption

But what exactly is market penetration? A platform’s installed base is an important aspect – i.e. just how many actual handsets can run a given app – but that is not all. Penetration is also measured in terms of a platform’s ability to reach users and that is also a factor of how and where that content is available. – a centralised distribution and discovery point, such as an app store, accessible by mobile devices, tablets and PCs goes a long way towards providing developers with a direct access to their customers.

Proving that there’s more to market penetration than a large installed base, we present the case of handsets sold vs. apps. There is a large discrepancy between the number of handsets sold and the number of apps available on a given platform.

VisionMobile - Developer Economics 2011 - Apps vs. sales

In an app economy with close to 1 billion [Update: million] apps, more than half of those are concentrated on two platforms: iOS and Android. It’s easily apparent from the graph that vastly more pervasive platforms in terms of total shipments, like S40 and Java claim just a fraction of the app pie. Granted, this is a smart-centric game, but even a pervasive smartphone platform like Symbian cannot much app to the two app moguls.

Do apps mean money? Not directly, but it’s no coincidence that 2011 marks the first time Apple overtakes Microsoft in terms of revenues and Android rushes past the finally burned-out Symbian platform in terms of shipments.

-Matos

Want more Developer Economics?

Follow us on Twitter (@visionmobile) for updates and stay tuned for part 2.

And for those of you who still haven’t done so, don’t forget to download the full report!

Is Microsoft buying Nokia? An analysis of the acquisition endgame

In a surprising move, Nokia and Microsoft decided to enter a strategic relationship for the OEM’s smartphone business. While the marriage appears promising at the outset, Research Director Andreas Constantinou argues that the only way for that marriage to succeed is for Microsoft to acquire Nokia’s smartphone business.

VisionMobile - Nokia & Microsoft deal_pic

The Elop and Ballmer duo on stage on February 11th was the main topic of discussion at this year’s Mobile World Congress. The reverberations of the Microsoft-Nokia announcement were felt even by the huge green robot tucked away at Google’s stand in Hall 8.

Following the news of the Nokia and Microsoft tie-up, Stephen Elop’s appointment to the helm of Nokia seems like an arranged marriage – and one whose best men were the carriers who wanted to avoid an all-out Android coup. It was also a marriage of desperation, which Elop memorably described in his memo as ‘jumping into the unknown’ from the ‘burning platform’ that is Symbian.

A marriage of desperation
Microsoft has been desperate to see its mobile business succeed. After a decade of lacklustre efforts at mobile device sales and severe product delays, Microsoft was getting desperate; it needed to stop the churn of Microsoft users to the Apple ecosystem and plug its $1 billion-a-year operational costs for its mobile phone business. Even having spent most of its $500M marketing budget for WP7 it had only got breadcrumbs in terms of sales, with Microsoft reporting 2 million shipments but no comment on sell-throughs (which leads us to suspect this was not more than 1 million of actual end-user sales).

VisionMobile_Smartphone_Sales_2010_pic

Nokia has been desperate seeing its platform play fail spectacularly in comparison to its newfound competitors; Apple who had amassed a developer ecosystem and operator demand which was second to none, and Android who in 2 short years matched Nokia’s smartphone sales in Q4 2010. MeeGo was trumpeted as the big guns in Nokia’s arsenal in February 2010, but once again Nokia’s software R&D failed to deliver on the promise. More importantly, despite the 10+ acquisitions during 2007-2010, Nokia failed to amass a strong-enough developer and services ecosystem on Symbian, Java or Qt that could compete with Apple or Google. Like Elop said in his now-famous burning platform memo, “our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem”.

It was in an act of desperation that led Nokia to befriend the lesser of two evils in the shape of Microsoft. It is ironic how in mobile the least enemy is a friend, much like how carriers backed Android in 2008-9 to fend off Apple, and backed Microsoft in 2003-5 to fend off Nokia.

The courtship
Despite the surface-level coverage of the Microsoft and Nokia news, not much has been said about the two giants’ courtship and even less on the prenuptial agreement. According to our sources, Nokia asked both Microsoft and Google to bid for its smartphone business, with the help of a small army of McKinsey suits. Following a long negotiation cycle with both parties, Nokia came to a straightforward conclusion; it would back Microsoft who’s total bid equalled more than $1 billion (including patents, licensing fees, marketing support and revenue shares) and not Google who’s bid was about half that. Funny how cash-rich platform vendors are buying their way into the market these days.

Nokia announced its decision to Microsoft and Google on February 9th , only 2 short days before the Ballmer/Elop press conference – which prompted Vic Gundotra to pen the tongue-in-cheek tweet “#feb11 “Two turkeys do not make an Eagle”, scornful of both Nokia and Microsoft.

The last-minute decision meant that Intel heard the news at the very last minute, and in turn had to ask its MeeGo partners on Friday night (Feb 11th) to remove the mention of Nokia from the MeeGo PR quotes going out on the following week at MWC. This is the stuff industry disruptions are made of.

 

A chemistry mismatch
What Nokia announced was not just a marriage; it was a radical change in its business model, from a vertical powerhouse to an assembler – which is what prompted us to question the motivations and the end goal for Elop.

We already knew that Symbian had been demoted to an internal-only OS (see earlier analysis – Symbian is dead, long live Symbian). However we were expecting to see Nokia take a more measured stance; for example using Windows Phone 7 in certain markets (especially in North America where carrier handset subsidies are OS-led) or taking a classic dual-supplier strategy by inking deals with both Microsoft and Google.

Instead Elop presented a terminal picture for Symbian which would be destined to ship on only another 150 million devices until being completely replaced by WP7.  Elop knew that an all-out replacement of Symbian with WP7 would mean haemorrhaging valuable brainpower as the 7,000+ Symbian staff had spent 15 years on the anti-Microsoft camp. These are the decisions made by boards with long-term strategy agendas, who see organisations made up of ‘assets’ and not ‘people’.

Besides the death blow to Symbian, Elop relegated MeeGo to an R&D project with just a single device launch in the horizon, if any at all (which carrier is going to subsidise a platform that’s dead on arrival?). Moreover Qt’s future seems uncertain as it has no place on Windows Phone (Microsoft wouldn’t allow copyleft software to be used with Windows Phone), plus it is too heavy for S40 class devices and MeeGo is too small an addressable market to justify the Qt ongoing investment. Qt (and its 400 thousand developers) need a new home.

Nokia Mobile Devices Net Sales Mix

What appears somewhat suspicious is that Nokia went not for a tactical, but a deep partnership with Microsoft, solidified by the multiple revenue streams exchanged between the two companies, a kind of revenue ‘keiretsu’ that ties the two giants in a longer commitment.

More importantly, the marriage to Nokia’s smartphone business seems like it’s lacking in chemistry. For the last decade, Nokia has operated as a vertical silo, owning and integrating all value elements, from software, UI, industrial design, services, app store and developer ecosystem. That silo has now huge holes punched through so that it can accommodate Microsoft’s horizontal software-licensing business model. This situation is somewhat like trying to fit a square peg in a round hole.

There are fundamental conflicts here, as both Microsoft and Nokia want to own the developer experience (think APIs, support, tools, developer marketplace, conferences, marketing), and the application discovery and delivery process (think Windows Marketplace vs Ovi Store). This is a chemically unstable mix that won’t survive the test of time. It would be like having Nokia owning Office while Microsoft still runs the Windows business. Yet at the same time Nokia has little value to offer other than design, development, manufacturing and sales of handsets in the picture Elop and Ballmer painted. Something’s not right.

Moreover, Microsoft faces a fundamental customer imbalance on its mobile platform. With such a strong endorsement of Nokia, Microsoft has placed too much favour and device sales expectations on a single vendor.

Microsoft did not only hurt the feelings of HTC, Samsung and LG (previously committed to launching 50! Windows Mobile handsets) with such an imbalanced endorsement. More importantly, with Nokia volumes likely to ramp up fast, Microsoft will have to deal with a single-customer monopoly and end up financing Samsung, LG or HTC towards ramping up Windows Phone production to balance it up. Windows Phone may quickly end up looking like a platform of unbalanced OEM interests – much like Symbian Ltd or Symbian Foundation were – and we know how these panned out.

There are two more troubling clues in the way this ceremony was setup. Despite fundamental changes to the handset business, Elop made no reorganization in the NSN business which is performing at marginal profit (operating margin at only 3.7% vs 11.3% for handsets). As Tomi Ahonen points out, Elop seems to be ready to get rid of NSN. Plus there was no announcement of Ovi plans or clear strategic guidance with regards to the Nokia services business.

 

The acquisition scenario
There have been earlier rumours of acquisition discussions between the two companies. We now believe that the only scenario for the Nokia and Microsoft partnership to succeed is an acquisition scenario; Microsoft buys Nokia’s smartphone business, while Nokia gets more resource to play with what it does best – that is creating mass-market phones at unbeatable levels of supply chain efficiency, unmatched supplier bargaining power and customisation to 100s of variants per handset model for distribution to diverse global regions, channels, carriers and retailers.

From a financial standpoint, Microsoft capitalisation stands at $220B, more than six times Nokia’s market cap of $33B at the time of writing. Microsoft would also acquire a high-profit margin business that would go a long way in helping the Redmond giant push its Entertainment and Devices division at high profitability levels for the first time. Despite Microsoft being a software business, it has experience in running hardware products, with the Xbox business doing well recently on strong Kinect sales.

For Nokia, a joint venture would make more sense than a pure sale of its smartphone business, given that the hardware giant is an important component of the Finnish economy. It would allow Nokia to focus on what it does best and substantially increase its S40 R&D budget (as Elop already announced it would) to rework its aging feature-phone OS. A joint venture would also allow Nokia to make a comeback when they are ready to take on the high-end phone market again.

Besides, with shares recently hitting a 13-year low and Nokia being owned by American institutional investors, the Nokia board has little they can do in the face of potential suitors. This makes Nokia a very interesting acquisition target, not just for Microsoft but for anyone with cash at hand and mobile ambitions, including Chinese, Korean and Japanese suitors.

The acquisition scenario would allow Microsoft to leverage on Nokia’s accounts with carriers across the world to woo them into moving subsidy budgets from Android into WP7. This is all too important, as the Microsoft brand enjoys little consumer awareness compared to Apple and Android, meaning that Microsoft is more dependent on carrier subsidy and marketing budgets than its nearest competitors.

Fundamentally, we believe there is no place for Nokia, an all-in-one integrated handset OEM and services company, in the new telecoms value chain. The old guard of top-5 OEMs are squeezed between leaders (Apple, RIM) who lead in terms of performance & profits, and assemblers (Huawei, ZTE, Dell, Acer) who lead in terms of me-too designs & razor-thin margins (see our earlier analysis on the evolution of the handset value pyramid). Nokia’s business needs to break-up into independent, self-sustained entities, particularly the smartphone business (within Microsoft’s new home) and the mobile phone business as an independent entity that can focus on competing with PC-borne assemblers.

The Microsoft-Nokia acquisition might not have been planned from the outset, but it is a scenario whose viability has been ensured from the outset. There are no conspiracy theories here, except that Elop (as the 7th biggest shareholder of Microsoft) would benefit greatly from trading Microsoft shares with Nokia ones, only to see them boost in value after being repatriated.

Let the debate begin!

– Andreas
you should follow me on Twitter: @andreascon

Andreas Constantinou is Research Director at VisionMobile and has been working in the mobile software industry since 2001, when he fondly recalls being a member of the team behind the very first Orange-Microsoft handsets which set the world of telecoms software in motion.

[Survey] Developer Economics 2011: The evolution of app development

[Developer Economics 2011 is here! As we launch our new survey on all things developer-related, Marketing Manager Matos Kapetanakis looks back at the 2010 report and examines the major events that have shaped mobile development in the past 6 months]

VisionMobile - Developer Economics 2011

The evolution of Developer Economics
Last July we published the definitive mobile developer research report: Developer Economics 2010, dubbed by TechCruch as “one of the most profound…to date”. Our report delved into all aspects of mobile application development, across a sample of 400+ developers segmented into eight major platforms.

We’ve just launched the follow-up to this research report: Developer Economics 2011, once again made possible thanks to BlueVia, the global developer platform from Telefonica that helps developers take apps, web services and ideas to market. Our goal is to see how the dynamics of the developer world have changed since early 2010 and to provide more insights into app marketing, monetization and many other factors.

Join the survey or help spread the word! This year we ‘ve also secured a prize for each of the first 400 developers; 10 hours free testing time on DeviceAnywhere’s 2000+ handsets. UPDATE: Thanks to overwhelming support, all 400 free testing time prizes have been awarded by DeviceAnywhere. Of course, the $1,500 Amazon voucher is still up for grabs!

Major shakeups of the mobile industry for H2 2010
So, what’s changed since our 2010 research? The mobile industry is an ever-evolving landcape. In the past 6 months we have seen the Symbian Foundation close shop, with Nokia hoping that the as-yet untested MeeGo project will carry their smartphone banner. We have also seen the stellar rise of Android, zooming past Apple’s iOS and BlackBerry and becoming the no2 smartphone platform behind Symbian.

In the handset OEM arena, we have seen more shakeups in 2010 alone than in the 10 years preceding it. Apple and RIM have overtaken some of the traditional handset OEM powers (Sony Ericsson, Motorola, LG) and claimed a spot in the top 5. According to some estimates, ZTE could join them soon.

Moving forward, Developer Economics 2011 is looking at how the key metrics of mobile development have changed in the last year.

The migration of developer mindshare
One of the major findings of our 2010 report was the migration of developer mindshare away from the ‘old guard’, i.e. Symbian, BlackBerry and Java, towards the new powers of the realm – iOS and Android. According to our research, nearly 60% of the 400+ respondents had developed apps on Android. Apple’s iOS took second place, with more than 50% of respondents having a go at it, with Java ME following third.

In our Developer Economics 2011 research, we’ll be asking participants which platforms they’re currently targeting, which ones they plan on targeting and which ones they’re abandoning.

So, what’s changed since then? Well, if anything, the gap between Android and iOS and the rest of the platforms has grown even larger. The Apple App Store carries more than 300 thousand apps, while recent estimates place the number of apps in Android Market at around 130 thousand.

While Nokia has been spending considerable effort on the Ovi Store and increased its popularity with consumers and developers alike, they still have a long way to go to catch up with the two app-dispensing behemoths.

Why do developers head towards iOS and Android? Our Developer Economics 2010 analysis showed that Apple offers a platform that is relatively easy to master and using which a developer can design great UIs. They also have the largest app store and although the certification problem is an issue for some,  porting and fragmentation are not a challenge;. Android, on the other hand, has been gaining momentum across all fields, storming its competitors’ key market – the US. Of course, Android’s many fragmentation issues are often overlooked in the face of many handset OEMs’ dependency on the platform.

The disparity between handset sales and available apps

Our Developer Economics 2010 research uncovered a disparity between the number of devices sold for each platform and the number of available apps. One would expect the platforms with the highest market penetration to dominate in terms of apps, but that couldn’t be further from the truth.

Taking 3Q10 as a reference, it’s easy to see that the two platforms with the lowest penetration, iOS and Android, have the highest number of available apps.

On the opposite side of the spectrum, while Java ME and Flash Lite have the greatest market penetration by far, they can scarcely measure up to the newer platforms when it comes to app volumes.

In Q4, the contrast is even sharper. Both Android and iOS stores have grown by almost 100 thousand apps apiece. Windows Phone has shown an admirable growth, reaching 4 thousand apps in just two months, although it still has a long way to go before becoming truly a threat to incumbents.

Monetization and revenue expectations

In Developer Economics 2010, we asked developers how they felt about the revenues they’re receiving from selling their apps. Almost one in four respondents reported poor revenues, while only 5% reported revenues exceeding their expectations.

VisionMobile - Developer Economics 2010 - revenue expectations

While there has been a boom of app stores, that’s not necessarily a blessing for developers. Most developers face a discoverability issues, having their apps buried under thousands of other apps. Like one developer said in our previous research “It’s like going to a record store with 200,000 CDs. You ‘ll only look at the top-10″.

What options are there for developers? One option is to adopt a multiple storefront strategy, as well as to tailor your monetization model to specific app stores. As the CEO of Rovio, creator of the prodigious Angry Birds app, noted: “Free is the way to go with Android. Nobody has been successful selling content on Android”.

Developing apps in 2011
Care to see how the apps world has changed in the last year? Stay tuned for Developer Economics 2011, where we delve into app development, monetization, distribution, retailing, porting and fragmentation issues among many others.

Mobile developer? Join the survey and have your say.


The MeeGo Progress Report: A+ or D-?

[Eight months after the announcement of the MeeGo  project by Intel and Nokia, guest author Dave Neary analyses the progress made to date in MeeGo Handset, and the project’s prospects for the future]

VisionMobile - The MeeGo progress report

The end of October saw the release of MeeGo 1.1, the second major milestone release of the platform since it burst onto the scenes in February 2010. The MeeGo project was born under the auspices of the Linux Foundation from a merging of Nokia’s Maemo platform, targeting smart phones, and Intel’s moblin platforms, aimed at netbooks.

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The merger grew from a core idea: pick the best of breed components from both stacks, collaborate on the integration and testing of shared components, and standardise a number of open source UX (User eXperience) profiles, on which vendors could build and deploy complete commercial grade stacks. The initial UX profiles announced were netbook, smartphone, IVI (In-Vehicle Interface) and media center/TV.

Nokia and Intel have both made a major commitment to the platform, but critics say that the relationship is little more than a marriage of convenience. After all, Intel is a silicon vendor, betting heavily on the Atom-based Moorestown platform, and Nokia is a handset designer, largely shipping ARM-based devices.

Growing pains

The project has had some teething problems. Troubled Nokia has changed CEO, and the founding father of the Maemo project, Ari Jaaksi, has been among a number of high level software executives to leave the company, leading some to ask whether Nokia might have a change of heart about the platform. The first MeeGo device for Nokia, originally expected at the end of 2010, will now appear in 2011, according to recent comments from new CEO Stephen Elop, as Nokia strive to ensure a good first impression for its first MeeGo device.

There are some early public signs of friction in the working relationship of the stakeholders in the project, also.

The adoption of Qt as the primary toolkit for both platform and applications has met with resistance from Intel engineers, who acquired Clutter in 2008 and integrated it heavily into the netbook user interface, plus partners like Novell who developed versions of GTK+ applications like the Evolution email client and Banshee music player specifically for the netbook form factor.

Long-awaited MeeGo compliance specifications have resulted in drawn out and sometimes acrimonious debate.  Trademark guidelines have been a sticking point for community ports of the MeeGo netbook UX to Linux when these ports do not include required core components.

Related to the technical governance of the project, there is some uncertainty around the release process, and the means and criteria which will be used when considering the inclusion of new components. And there are some signs that the “all open, all the time” message at the project launch has been tempered by the reality of building a commercial device.

The Promise of Openness

Many of these issues are to be expected when merging two projects into one and pairing two very different animals. Every open source project has its own culture, and Moblin and Maemo are no different. Relationship capital which participants built up in the contributing projects must now be rebuilt within a broader group.

MeeGo has had some early successes. MeeGo 1.0, which included the Netbook UX and an early prerelease of the smartphone UX, was delivered in July, complete with the source code of a number of components which had previously been proprietary. Novell MeeGo has been shipping on a number of netbooks since then. The MeeGo wiki lists dozens of MeeGo-compatible devices. The inaugural MeeGo Conference is set to take place in Dublin, from the 15th to the 17th of November, and has sold out with over 600 registered attendees to date.

And there is no denying that the companies involved in the project are committed to it. With the recent rumours that the Symbian Foundation may be shutting up shop, Nokia has few choices of platform left for upcoming high-end devices. Announcing their updated software strategy during their quarterly results call this month, the company confirmed that they are fully committed to MeeGo as the only platform for high end devices from now on.

Clearly, there is a future for the project. The question is, how will MeeGo Handset hold up against the competition from the platforms with the most momentum in the market – iOS and Android, or the recently released Windows Mobile 7. Will a newly reinvigorated WebOS (with Ari Jaaksi at the helm) challenge it for the mantle of the exciting new upstart? In short, is it any good? And will operators, handset manufacturers, application developers and users adopt it?

User experience

Since we do not yet have a MeeGo handset device available, it is very difficult to accurately judge the user experience at this time. It is possible to install MeeGo on the Nokia N900 and use it as a phone, using Nokia’s proprietary drivers to enable the hardware, but a lot of basic functionality is missing at present. In my tests, the camera, GPS, battery indicator, network signal strength indicator and WiFi did not work correctly. Features which do work can be slow, or have stability issues. Basic functionality like reading contact details off a SIM card, or unlocking the SIM card on boot, are still missing.

A MeeGo device getting to the market will undoubtedly have pristine hardware integration using 3rd party drivers, and a considerable amount of fit-and-finish which the basic MeeGo stack does not yet have.

The MeeGo handset user experience is still in transition. Maemo 5, the platform’s predecessor, was created using GTK+ and Clutter, while the MeeGo user interface has been built from the ground up using Qt. By all accounts, there are still a number of stability and quality issues with the stack, which we can expect to be addressed in a release shipping on a device.

At this time, the MeeGo Handset UX is not intended for anyone but developers. It is too early to be able to tell how the final product will compare to iOS or Android.

The Developer story

At the time of its announcement, one of the key advantages held up to developers was the potential to use a single toolkit, Qt, to build native applications which will be portable across Windows, Linux and Symbian. Nokia has been investing heavily in RAD tools like Qt Quick to allow developers to get up and running quickly. In addition, their as-yet unavailable Web Run Time promises to allow developers to easily integrate web applications.

The developer tools are in development, and do not yet compare favourably with the equivalent Android offering, which includes easy tools for building, testing and deploying applications using Eclipse. In addition, since the project is still in relatively early stages, there is a marked lack of entry-level documentation to help developers get started.

It is still unclear what software distribution channels or app stores will be available for application developers on a MeeGo device. Ovi Store will be available on Nokia devices for commercial applications, and there may be a community distribution channel made available for community-built applications, but what form this channel might take, and to what extent it will integrate with the MeeGo user experience is still unclear. Presumably other handset manufacturers, should MeeGo gain wider adoption, will provide their own application stores, further fragmenting the application developer story.

MeeGo certification ensures that it will be possible to build applications which work across all vendors, but at this point the jury is still out on how useful “MeeGo Compliant” will be to application developers. There is a possibility of considerable fragmentation among non-core APIs when MeeGo devices from several vendors are available.

From the point of view of tools, documentation and software distribution channels, MeeGo is undoubtedly behind its primary competitors – but for such a young project, this is to be expected. The success of the project among application developers and the free software community will depend to a large extent on the project’s ability to fill these gaps and provide developers with an excellent development experience.

For platform developers, the story is much more encouraging. The source code to the entire MeeGo stack is available, and anyone can download images built daily. Images built for ARM and Intel Atom can be installed and tested on a range of developer devices, including the Nokia N900, TI’s BeagleBoard or PandaBoard, or the Aava Mobile developer kit.

On the other hand, there has been a tendency of the platform architects to reduce the range of hardware and software supported by the basic MeeGo stack. There is limited support for non-Intel x86 chipsets, and support for only a subset of ARM chips. Kernel modules have been aggressively trimmed, sometimes arbitrarily, to disable functionality such as NFS.

Community and governance

MeeGo development is all happening in a public git repository, most discussions are on public mailing lists, and there are a large number of experienced free software developers among the community development team, which is ensuring that any communication or transparency problems are identified and addressed swiftly. In the mobile platform development world, it is fair to say that MeeGo is second to none in terms of its open development model.

This contrasts sharply with Android which is primarily developed behind closed doors by Google, and iOS which is a completely proprietary platform. If there is a key differentiator for MeeGo in the hand-held market, this is it. It remains to be seen whether the open development model will be a selling point which will tip the balance when manufacturers are choosing a platform for a device.

The MeeGo community is made up of members of the Maemo and Moblin communities, and in the case of Maemo, there have been a number of contributors who have decided not to contribute to the MeeGo project. The move to MeeGo represents the third major change in the project in two years (after the move to GTK+/Clutter in Maemo 5 and the announcement that Qt would be the only supported application toolkit) and has left some shell-shocked.

The Moblin community, on the other hand, did not develop a large platform developer community, partly since the project did not offer a distribution channel for application developers. It seems like all those who were productively contributing to moblin have followed the project move to MeeGo.

OEMs and operator support

One of the key differentiators between traditional handset manufacturers and the young guns (iOS and Android) which have taken the market by storm, is that both Android and iOS have concentrated on the user and application developer experience to the detriment of their relationship with OEMs and operators. It is widely argued that Apple’s iPhone has reduced the role of the operator to that of a bandwidth and infrastructure provider. In turn Google takes a take-it-or-leave-it approach with handset manufacturers; unless manufacturers comply with Android’s compatibility definitions (CTS and CDD), they can’t have access to the Android trademark, Android Market’s 100,000+ application, Google Maps and several other closed source applications.

Nokia has a more traditional approach of putting handset manufacturers and network operators ahead of developers. This shows through in many of the architecture decisions in MeeGo. The platform has been built with operator and OEM customisation and integration in mind from the start.

A primary concern for OEMs with MeeGo is the time required to integrate the platform into a specific device and ship to market. With the time to market for Android handsets dropping to 4-5 months from project to production, it will be very hard for MeeGo to compete, even with the MeeGo 1.2 release, due in the first half of 2011.

Still a long way to go

It does not feel fair at this point to compare MeeGo, a project which came into being 8 months ago, with iOS or Android, but this is the yardstick which will be used when the first MeeGo smartphone comes on the market. The project has come a long way since its inception, in particular in working towards an open and transparent development model. There is still some way to go but improvements have been happening daily.

However, to succeed as a platform, the application developer story and the user experience are vital. There is a lot of work to be done in these areas for MeeGo to gain serious traction outside of the small community of Finnish handset designers. Nokia still has a long way to go.

– Dave

[Dave Neary is the docmaster at maemo.org and a long-standing member of the GNOME Foundation. He has worked in the IT industry for more than 10 years, leading software projects and organising open source communities,  He’s passionate about technology, and free software in particular.]

Smart < feature phones = the unbalanced equation (100 Million Club series)

[Smartphones get all the media attention, but it’s feature phones that are still driving the mobile industry. Marketing Manager Matos Kapetanakis examines this unbalanced equation and makes sense of the numbers published in the latest 100 Million Club]

100 Million Club - Smart < feature phones: the unbalanced equation

Welcome back to the 100 Million Club. This 6th edition of our watchlist tracking successful mobile software companies debunks the smartphone myth and paints a detailed picture behind the 34 software products – from BREW to Webkit  – which have shipped in more than 100 million handsets as of the end of H1 2010. Click here to download the watchlist.

Key insights
– Despite the hype, smartphone platforms account for less than 20 percent of the 620+ million handsets shipped globally in Q1 and Q2 of 2010. More than 80 percent of total shipments are driven by feature phones, the majority of which use proprietary software platforms.

– BlackBerry is now the second smartphone platform, after Symbian, to break the 100M handset barrier. As of the end of June 2010, RIM has sold more than 100 million BlackBerry devices.

– A total of 350M handsets have shipped with a WebKit-powered mobile browser up to the end of 2Q10. The biggest contributors to shipments of the open source browser engine are the Series 40 and Symbian OSs, while the steep rise of Android will play a bigger role in WebKit going forward.

– Only a handful of mobile software products were shipped in more than 100 million devices during the first half of 2010. Among them are the T9/XT9 text input engines by Nuance, the vRapid Mobile software update engine by Red Bend and the Nucleus real-time OS by Mentor Graphics.

– Symbian alone has more shipments in H1 2010 than iOS and Android combined. Moreover, when combined, the Google and Apple mobile operating systems make up less than 20% of Series 40 shipments in Q1 and Q2 2010.

What’s new in the Club?
In this 6th edition of the 100 Million Club we ‘ve introduced a dedicated watchlist tracking mobile platform shipments.

The watchlist comprises of 10 application environment software products, OSs and RTOSs with more than 100 million installations. Our latest members in these categories are the BlackBerry OS by Research in Motion and ThreadX by Express Logic. We have also added media favourites Android, iOS and Windows Phone 7, for comparative purposes, since they are well below the 100 million mark.

The Embedded Software Shipments watchlist features 24 products that have been pre-installed in more than 100 million handsets. This latestedition of the club sees the addition of the Media EXP, an audio/video codec and frameworks suite by Aricent and MSIP, a mobile analytics software agent, by Carrier IQ.

100 Million Club - 1H10 - Mobile Platform Shipments
Click on the image to download the full pdf

The smart vs. ‘dumb’ phone equation
The impact of smartphones to the industry is way overrated. It’s a little-told secret that smartphones account for only 20% of worldwide handset shipments, a fact we tend to forget in the face of the one-sided media storm that surrounds smartphones. A key observation from the 100 Million Club is that the ‘proprietary’ Nokia’s Series 40 and Qualcomm BREW are shipped in many times more handsets than Android, iOS, BlackBerry even the older Windows Mobile and Symbian OSs. In fact, with 638 million cumulative shipments by the end of Q2 2010, BREW is the most widely deployed licensable mobile operating system. If one considers real-time OSes for application and baseband processors, then the shipments scale to the billions of phones.

OS, RTOS shipments H1 2010
Click on the image to download the full watchlist

So, is Nokia’s Series 40 the most successful OS ever? Not exactly; the handset market is very much dependent on internal OEM platforms, which power more than 45% of total handset shipments for H1 2010. Samsung and LG, ranking 2nd and 3rd in the top-five handset OEM leaderboard, are largely responsible for proprietary platform shipments. Samsung has heavily ramped up smartphone shipments starting in Q2 2010 (which should become visible in H2 results) and is investing in its home-grown Bada platform, a C++ layer on top of its proprietary SHP operating system. LG also hopes to get a larger piece of the smartphone pie, by releasing 20 new smartphone models in 2H10.

The 20% share of smartphone shipments is set to grow rapidly driven by two phenomena; firstly the growth of Internet-borne platforms, namely iOS and Android. Secondly, the carrier drive to commission and subsidise smartphone handsets as a differentiating strategy, which is driving the carrier-happy tier-1 OEMs (Motorola, Sony Ericsson, Samsung and LG) to bend over backwards and ramp-up smartphone production. This is unprecedented growth in share of smartphone sales, which was neighbouring at 10 percent back in 2007.

The shift of attention of traditional handset OEMs towards smartphones, coupled with the rise of smartphone-only vendors, seems to indicate a balance shift in the smartphone vs. feature phone balance. It might seem a foregone conclusion that that pretty soon we’ll have a majority of smartphones flooding the global market. However, that is not going to happen overnight, i.e. not in the next 3-4 years. Smartphone shipments of traditional OEMs are but a fraction of their overall shipments, while Apple, RIM, HTC and ZTE cannot yet hope to meet the demand of huge, feature phone-dependant, price-sensitive markets, like India and China.

Clash of the platform titans
In the clash between the more familiar platforms, Symbian and BlackBerry rule over newcomers Android and iPhone’s iOS, in terms of cumulative shipments. But the picture is quite different in terms of growth, where Android has been the clear winner, growing by leaps and bounds (from 100K activations a day in May 2010, to 160K a month later and 200K in August – activations are not the same as sales, but the growth is still impressive). RIM and Apple have seen a healthy increase in their handset sales, while Symbian has suffered a small (~3-4%) decrease in market share between H2 2009 and H1 2010, despite Nokia’s growth in the handset market. However, Symbian’s market share is bound to drop even more, considering the recent decision by Samsung and Sony Ericsson to drop Symbian altogether, as well as Nokia’s choice of MeeGo over Symbian^3 for their latest N-series. Symbian is fast becoming a Nokia-only OS so we should expect the end of the line for the Symbian Foundation within the next few months as well.

Where are MeeGo, Chrome OS and webOS in this picture? The short answer is that they are nowhere to be found in mobile devices in the first half of 2010. MeeGo is rumoured to be appearing in Q2 2010 in the market, with Nokia targeting to make first impressions last while facing delays in Qt integration and the departure of key personnel. Chrome OS will most likely be shipped solely in tablets and netbooks, while HP aims at delivering new webOS devices in early 2011.

Last but certainly not least, we should not ignore Microsoft’s latest bid for dominance in the mobile industry: Windows Phone 7. The newly released OS has been completely redesigned to offer iPhone-style margins with an Android-style business model, while targeting untapped pockets of Xbox and PC developers instead of making up with Windows Mobile developers who were left with a bitter aftertaste (see our Developer Economics research). Windows Phone 7 already seems to be building momentum, with 9 new models coming to the market in Q4, $500 million in marketing budgets and a tightly integrated hardware and software platform (see our earlier article on Windows Phone for a detailed strategic analysis).

Not museum material…yet
In summary, smartphones captivate our minds, but it’s still ‘dumb’ phones that we carry around with us. Someday in the foreseeable future, non-touch screen phones will take their place in a telecoms museum (right next to the old, ‘brick’ mobile phones), but that day is not as close as mainstream media have us think.

– Matos

How to save Nokia (from itself)

[Who can save Nokia from a tumbling market valuation, declining margins and product failures? Guest author Thucydides Sigs deconstructs Nokia’s culture and explains why an acquisition would be the best next step for Nokia]

How to save Nokia (from itself)

When CEO Olli-Pekka Kallasvuo took control of Nokia in 2006, the stock was at $25 per share. In late July 2010, the stock was around $8, the same level as in the late nineties. Ouch. In just four years, two thirds of shareholder equity is gone.

 

If  we go a step further, and compare market cap and sales by number of units, we observe an even more disturbing picture: Nokia’s valuation was at $33B on sales of 125M handsets last quarter; the same figures for Motorola were $17B on 12M handsets and for RIM $31B on 10.6M handsets. The math is pretty simple: Nokia is valued almost as much as RIM, but ships 10 times fewer MORE handsets.

The trend is not looking good for Nokia. No wonder that we have seen news reports of the board finally looking for a new CEO. Is a CEO change what it takes to fix Nokia? Will it make a difference if a foreigner takes over the proud Finnish company? Is Nokia beyond fixing – a dinosaur who can’t survive the climate change – or is there something that can be done to transform the company?

I don’t think Nokia is unfixable. Nokia has a huge potential: amazing global consumer brand, a very strong IP war chest and deep understanding of where the market is heading.

Yes, Nokia does know where the market is going and it always has known. From launching the Nokia Communicator in 1996… and attempting to expand into services (Ovi is the latest strategic attempt), Nokia has known where it wanted and needed to go. But the problem has been and still is the execution. The Finnish giant just fails to move and adapt fast enough to the chaotic, rapidly evolving software and internet market.

What is holding the execution back? More than anything, it’s the company’s culture. And before I dive into it the details, I have to preemptively apologize; like any discussion of a large corporation or a regional culture, one has to use generalizations. Yes, there are always exceptions, but if we want to analyze the culture we need to resort to generalizations. Some readers might find this offensive. Don’t say you haven’t been warned.

Nokia takes great pride in being “Smart, Cold Blooded Vikings.” Thoughtful and tough, strategic and careful, they don’t take chances. They calculate, analyze and think before they react. And “if it takes time, that’s fine”. This is an admirable approach. But as Google’s Shona Brown pointed out in “Competing on the Edge: Strategy as Structured Chaos“, if you try to analyze and manage chaos (or any environment which is rapidly changing in multiple dimensions), that might take a while. Plus, if your analysis takes longer than the rate of change, you are actually moving backward. In the age of fast moving internet and web, the best strategies are coming from the bottom up, and are best developed through experimentation rather than long analytical cycles.

This is the antithesis to what the Nokia culture is all about. And to a large extent, the culture goes beyond Nokia; it is deeply rooted in the Finnish way of living. Nokia is a Finnish company and I would argue that you can’t take the Finnish out of Nokia. Yes, some Nokians – especially those who spent parts of their careers in the US – know how to, and often do, operate differently. And in the last re-org some good “Nokia 2.0” people have moved upward.

But overall, Nokia is a reflection of the Finnish culture: “Smart, cold blooded”, strategic, cautious, Vikings. This should not reflect as a negative comment on Finns: Just like a camel can’t survive in the arctic and a polar bear will die in the desert, a culture makes a company best suited to a specific kind of environment. Nokia has a great tradition of excellence in manufacturing and mastering logistics through process. This DNA is different – and I argue that it is the anti-thesis – of the Internet & Services culture.

The recent rumors about Nokia looking for an outsider, non Finnish CEO are interesting – and a move in the right direction. But will it be enough? I doubt it; either the strong existing culture will change the CEO, or the CEO will leave within a few years.

So, is it possible to change Nokia’s culture and save the company? In my opinion, to change such a deeply ingrained culture, a shock treatment is needed. Three things need to happen.

First, Nokia needs to be acquired by a foreign entity (Chinese? American?) or a private equity group. With a market cap of $33B, it is a bargain. Just turning it into another Motorola will double the value. And if whoever acquires Nokia succeeds in generating service revenues from those 500M handsets sold each year (and one interesting direction they should explore is mobile payments) the valuation will be in the hundreds of billions.

If Nokia were to be acquired it would cause a shock wave throughout the organization, the kind of shockwave that can induce a rapid cultural change. Yes, there will be a lot of resentment among the old-guard Nokians, many of whom will leave, but these are exactly the people who should work in industries that are not as fast paced. And many of the newer Nokians – what we call the Nokia 2.0 execs – who suffer under the existing culture might actually appreciate and support such a move.

Second, for Meego (Nokia’s live-or-die bet on a software platform) to become a viable alternative to Android, the Meego executive leadership must physically relocate to Silicon Valley. We hate to admit it, but when it comes to rapid development of software and services, this is where the right culture exists and right talent can be sourced. This physical change will lead to an attitude change that will impact every decision Nokia makes, and all else will follow.  By relocating to the Valley, MeeGo will become more independent from its Finnish roots and will be able to work more effectively with Intel. It would also give the Silicon Valley team something to rally around, and a clear ambitious goal they can focus on – which is how you build effective teams and why all of Nokia’s previous attempts to build high caliber teams in the Valley have failed. Yes, you can have satellite offices in other countries (just like Android does) but there is only one place where the software & services brains should be placed, and it is in Silicon Valley.

Third, Nokia’s handset development efforts need to be transformed from a mammoth machine into small, fast moving (9-12 month development cycle) commando units of integrated software, hardware, mechanical and design specialists. The economics of the CE space have changed, and it is now possible to test and create prototypes much faster and cheaper than it used to be. Forget the 24-month planning cycle… let multiple teams come up with contrasting ideas, prototype those and then cherry pick the best ones for market testing and production. It will build a constructive competitive culture that will push everybody forward. Samsung does that today. The Taiwan ODMs do that today. Nokia can and should match up.

Nokia is a great company with great assets and some great people working for it. It can be saved from becoming the cold-blooded 21st century dinosaur. For whoever saves Nokia – if they manage to change the culture – a big reward lies ahead.

So who will buy Nokia? Comment with your best guess below…

-TS

[Thucydides Sigs – a pseudonym – has many years of experience juggling computing constraints, mobile software and consumers needs. With that said, imagine listening to a violin sonata not know who the artist is or who composed it. You end up having to listen more carefully in order to make a judgment. He can be reached at thucydides /dot/ sigs [at] gmail [dot] com]

Mobile Virtualization – Coming to a Smartphone Near You

[mobile virtualisation is an underhyped yet far-reaching technology. Guest author Steve Subar looks at virtualisation and how the technology will be elemental in enabling mass-market smartphones]


Imagine one phone with two personalities – one to fit your personal life, the other for business.  Instead of carrying around two or more devices, you’d be able to access multiple virtual phones on a single handset.

This article introduces mobile virtualization and the range of its use cases, with implications that span from silicon to smartphones to shrink-wrapped software to operator services.  It also expands upon two key applications: building mass-market smartphones, and enabling secure mobile services.

What is Mobile Virtualization?
Virtualization is new to mobile, but established in the data center, fundamental in cloud computing and increasingly popular on the desktop.

Mobile Virtualization lets handset OEMs, operators/carriers and end-users get more out of mobile hardware.  It decouples mobile OSes and applications from the hardware they run on, enabling secure applications and services on less expensive devices today and deployment on advanced hardware tomorrow.

Virtualization provides a secure, isolated environment for operating systems that is indistinguishable from “bare” hardware. This environment is called a virtual machine (VM), and acts as a container for guest software. A software layer called a hypervisor provides the virtual machine environment and manages virtual machine resources.

Resources and performance of mobile devices differ markedly from data center blades and desktops. So do business requirements. Mobile virtualization is different from virtualization used in enterprise and personal computing in several ways:
Hardware Support: mobile virtualization focuses on silicon deployed in mobile handsets, primarily ARM architecture CPUs.  By contrast, most enterprise and desktop-hosted virtualization targets versions of the Intel Architecture.  Moreover, Intel and AMD augment server and desktop CPUs with virtualization support functions, in contrast to silicon in phones that does not (yet) include these capabilities
Guest Software: Data center and Cloud virtualization usually hosts multiple instances of a single guest OS:  thousands of Windows or Linux VMs.  Desktop-hosted virtualization usually invokes just one.  Mobile virtualization involves running multiple, diverse guest platforms: applications OSes (Android, Linux or Symbian), low-level RTOSes for baseband processing and other system chores, and also lightweight environments for specialized processing (shared device drivers, security code, etc.).
Performance: enterprise virtualization strives for maximum throughput for guest software loads.  Mobile virtualization must also enable real-time response for latency-sensitive baseband and multimedia processing on resource-constrained mobile silicon.
Suppliers: enterprise virtualization is dominated by offerings from VMware, Microsoft, IBM and Citrix and supported by open source projects like Xen and KVM.  VMware and Parallels supply the desktop-hosted market.  While several vendors field embedded virtualization technology (Wind River, Greenhills) only a few focus on mobile virtualization – VirtualLogix, Trango (now part of VMware) and Open Kernel Labs.

Use Cases
Mobile virtualization is a flexible technology with a range of use cases:
– BYOD: lets you Bring Your Own Device to work, and switch among multiple virtualized environments, isolating personal and corporate applications and data.
– Chipset Consolidation: merging multiple CPUs into a single processor running application and baseband stacks, to reduce BOM costs and simplify design. Lower BOM costs could enable a new wave of mass-market smartphones, shipping in greater numbers and driving growth in data traffic and ARPUs.
– Legacy Software Support: in a new handset design, running unmodified, previous-generation software (e.g., a pre-certified baseband stack) in its own virtual machine
– Security: using multiple VMs to isolate software stacks from one another, e.g., securing mobile payments or protecting programs used to access business-critical enterprise assets from untrusted open OSes and software
– Multicore Support: managing available processor cores and mapping physical CPU resources onto “virtual CPUs” running actual software loads
– Energy Management: shutting down CPU cores when they are not needed and migrating running guests to remaining core(s)
– MNO Branded Services – using secured VMs to host operator-branded services
– Mobile-to-Enterprise Virtualization (M2E): – using secured VMs to host enterprise applications and provide access to business-critical corporate assets, e.g., hosting the Citrix Connector to access a virtual enterprise desktop
– Rapid Deployment: let OEMs and operators/carriers launch new versions of existing devices and rollout new services offerings on existing mobile hardware

Most mobile OEMs and operators/carriers look to mobile virtualization to address a combination of use cases.  Let’s examine two of particular interest:  mass-market smartphones and secure services:

Mass-Market Smartphones
Smartphones increasingly drive the global mobile ecosystem. According to Gartner, total mobile phone shipments in 2009 surpassed 1.2 billion, of which 172.4 million units were smartphones, an uptick of 23.8% over 2008.

Smartphones are critical to the fortunes of mobile OEMS, MNOs, chipset suppliers, and providers of applications and services – they drive data traffic, improve hardware margins, expand silicon design-wins, and drive software sales through app stores to increase post-load revenues.  However, broader adoption of smartphones has been slowed by retail pricing of smart handsets and cost of accompanying data plans.

A mass-market smartphone offers smartphone capabilities at a feature-phone price point. To deliver such a high-functioning yet low-cost device, OEMs must deploy a full-featured open OS and applications on more modest mobile hardware.

Current smartphones utilize high-end chipsets with dedicated CPUs for application and baseband processing. This approach contrasts with featurephones, where both stacks run on a single CPU and simpler embedded OS (Real-time operating system – RTOS).

Virtualization enables OEMs to build smartphones with less expensive single-core chipsets (see figure).  Such chipsets can also enable using lower-cost components for other functions (display, battery, etc.) not compatible with high-end mobile silicon.

The mass-market smartphone is more than just a concept touted by visionaries. Real devices have been delivered, such the Motorola Evoke QA4, with more to come.

Secure Services
Mobile virtualization also facilitates a range secure services, enabling enterprise-grade security on standard handsets. Virtualization can help secure mobile platforms, applications, and services by keeping trusted software to a bare minimum – the hypervisor itself and carefully chosen additional components – and then isolating them from threats arising from vulnerabilities and faults existing in today’s complex software stacks.
Virtual machines, containing a bare minimum of essential software, can be dedicated to secure services. A single phone could contain a virtual machine optimized for execution of secure services, deployed side-by-side with other mobile software, with practically no incremental BOM costs.

Secure service examples include:
– Isolating software for mobile payments and banking
– Hosting secure access to private medical records
– Providing a platform for secure access to business-critical corporate data (as in BYOD and M2E above)
– Enabling secure voice calling by isolating VoIP stacks from open OSes

Building mass-market smartphones and deploying secure services with virtualization are complementary use cases and emphasize doing more with less:  virtualization enables deployment of smartphone capabilities on lower-cost hardware; it also makes possible the introduction of new secure services on currently-available mobile devices.

Overcoming Challenges to Adoption
As illustrated above, mobile virtualization offers a flexible solution to many design and deployment issues for devices and services on them.  Despite its many use cases and successful deployment in products shipping in volume, mobile virtualization faces systemic challenges to even broader use:
– Perception of the technology as a viable alternative to legacy solutions, e.g,. a software solution to delivering lower BOM costs or to providing security
– Concerns about performance overhead
– The need to integrate mobile hypervisor as pre-load software, on a per-device basis (as opposed to post-load, application-style deployment)

These challenges are gradually being overcome;  mobile OEMs and operators/carriers are increasingly attracted to the use of virtualization to bring down the cost of Android devices, while recent performance benchmarks at key OEMs have tempered concerns about the performance overheads.

Mobile virtualization has been shipping in mobile phones since 2009. Despite challenges to adoption, the mobile/wireless ecosystem is turning its attention to this flexible technology, especially to bring down the cost of building and buying smartphones.  Coupled with emerging needs to provide secure services on mobile devices, mobile virtualization should play a key role in the deployment of the next 500 million phones.

– Steve

[Steve Subar is the President and CEO of Open Kernel Labs, a mobile virtualization firm]