Future of the mobile phone industry: OS as the basis of competition

Abstract

The worldwide mobile phone industry has grown tremendously over the past decade. The penetration of the mobile phones into newer market segments has also increased. The growth in the mobile phone market has mainly been fuelled by the boom in the smartphone category. With the popularisation of the smartphones the operating systems have gained a lot of importance. Most of the customer purchase decisions are based on the OS features of the smartphones. So it is not only a competition among the OEMs but also a competition of the operating systems. The current scenario tells us that there is a high degree of fragmentation in the mobile OS segment. There are three or four major players that control the market. This is in contrast to the PC segment where Windows is a clear market leader with over 90% of share. The differences in the two segments are attributable to the network effects that exist in the particular segment. The evolution and the competition have been quite dissimilar in the two segments. The first mover advantage in the OS is very difficult to maintain due to the evolving technology and market. Looking at the recent developments and the characteristics of the handset OS market it is quite unlikely that a dominant market leader will emerge in the future. All the stakeholders – OEMs, mobile network providers, application developers have a major role to play in retaining the diversification and the competition in the handset space. Two of the most important factors for the sustainability of the OS and its emergence as a market leader are – standardisation of the hardware & the degree of consolidation. Depending upon whether the hardware standardise or whether the competitors consolidate we can actually predict the future scenario of the OS market segment. At the end of our study we have proposed a framework for the same.