The death of mobile innovation?
Comment I’ve written before about the demise of competition in the Old Kent Road/Mediterranean Avenue end of the mobile market, but I’ve always thought that the Park Lane/Park Place and Mayfair/Boardwalk end was safe. We’ve got Symbian, Windows Mobile, more flavours of Linux than Ben and Jerry could dream of, Palm with two OSes and more - but the portfolio of Android devices seems to mean that there will be a winner.
The same is happening in the processor market; while once there was STM, NXP and EMP there is now only ST-Ericsson. TI seems to be a spent force, no one cares about Freescale or Broadcom, and Infineon is only a supplier to the impoverished and maverick Apple. The winner is Qualcomm.
Even Nokia has kissed and made up with Qualcomm, so that makes a clean sweep. Sony Ericsson is a Qualcomm customer with the X1, Samsung and LG have always been Qualcomm customers and of course Sanjay Jha’s Motorola is more enthusiastic than anyone about Android on Qualcomm. Start adding in the PC to mobile companies like Dell, Acer and Asus, add a dash of HTC and the entire industry is using the same recipe.
Nokia might be looking to Qualcomm’s ramping up of its Symbian skills with a European software team, but everyone else is going Android on Qualcomm like There Is No Alternative. They are egged on to do this by the operators, all of whom have Android as one of the things they would like to see on a manufacturer’s roadmap.
This is very dangerous. It means that operators will think that they have the handset manufacturers right where they want them: making homogeneous devices where the operator can make changes to the OS to give a unique end user experience and tie customers into that network.
The handset manufacturers have picked up the same stick by the other end and see it as a platform on which to innovate but still meet the operators' ill-thought-out and demanding requirements.
Meanwhile Qualcomm is grinning into its evil genius cloak while the world gets hooked on its chips. Qualcomm is not a nice company - it seems to regards litigation as a profit center. It doesn’t use any monopoly power for the growth of the industry in the way ARM does, everything is geared to return for shareholders, those fickle creatures who are always looking for the next industry and the next big profits. Creatures who will jump from investing in mobile to web to green tech to pharmaceuticals without a second thought.
Once the world is hooked on the Qualcomm/Android recipe it will stop dropping prices as we’ve grown to expect from Moore's Law. There will be none of the reduced royalty rates that made GSM such a success.
The twin pressures of Qualcomm holding price and operators playing the field to drive price down will lead to a fatality: innovation will die.