Google, Apple not unassailable in smartphone race

PARIS Thu May 19, 2011 4:30am EDT

Android mascots are lined up in the demonstration area at the Google I/O Developers Conference in the Moscone Center in San Francisco, California, May 10, 2011.

Android mascots are lined up in the demonstration area at the Google I/O Developers Conference in the Moscone Center in San Francisco, California, May 10, 2011.

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PARIS (Reuters) - Microsoft and some smaller software vendors still have a shot in the fast-changing smartphone race even though Google and Apple are pulling rapidly ahead, industry executives said.

Helped by interest from manufacturers, operators and consumers, Google's Android platform has become the leading mobile operating system, with Google and Apple together controlling more than half of the market in the first quarter, according to research firm Canalys.

"Those are the two horses that are out in front today," Neil Rimer, co-founder of Index Ventures, said at the Reuters Global Technology Summit in Paris this week.

The number of Android phones and iPhones sold, and the many applications available on both platforms, will make it harder for competitors to catch up.

"The barriers for others than Microsoft have increased," said Magnus Jern, chief executive of mobile software house Golden Gekko. "A lot of people in Germany, Scandinavia see Apple and Android as the only platforms."

But Jern and several other industry executives said other platforms like Windows Phone, webOS, bada and MeeGo -- which fall well behind Android and Apple -- should not be written off as they have owners with deep pockets.

Hewlett-Packard is pushing devices with its webOS platform, Samsung Electronics invests into its bada platform and Intel has MeeGo. Also Nokia plans to sell 150 million more smartphones running its old Symbian platform.

While executives said it was not possible to guarantee success with cash, they could offer incentives to developers to create apps for their own platforms.

"You can do it by changing the game -- giving 95 percent to developers could change it," Jern said. As a rule, application stores give 70 percent of sales prices to developers.

Rimer said even a new competitor could enter the market.

Analysts expect Android to control around 40 percent of the market this year and the share to rise further beyond 50 percent in the years ahead, but some executives suggested network operators -- such as Vodafone and Telefonica -- would likely try to cap Android's market share growth.

MICROSOFT OPPORTUNITY

HTC, the Taiwanese manufacturer that makes smartphones running both Android and Windows Phone, said it expects both of its platforms to grow, especially after Nokia tied its fortunes to Microsoft's Windows Phone.

Microsoft's mobile platform has rapidly lost appeal among consumers who have instead picked iPhones, BlackBerrys and phones running on Android platform. It now controls only around 3 percent of the smartphone market.

"I think that Windows Mobile will play a stronger role than it does today in the future," said Florian Seiche, President of HTC Europe, at the summit.

"The long-term opportunity with Nokia entering will definitely bring Windows back to critical mass, and Microsoft has a lot of assets to bring to the platform," he said.

Chipmaker Intel, which has been unable to crack the mobile market, could also resurrect its MeeGo operating system, dumped by former partner Nokia when it embraced Microsoft.

"First initial feedback we were getting was some of the other (phone makers) were showing interest in it after Nokia lowered their ownership," said Jon von Tetzchner, co-founder of browser firm Opera Software.

(Reporting by Paul Sandle and Tarmo Virki. Editing by Jane Merriman)

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