Apple loses sauce, BlackBerry squashed and Microsoft, er, WinsPhones (Nokia's)
2013... in mobile
There are really two Androids. In the West, Android is Google's data collection service - but in China it's the vanilla OS that enables Chinese to buy $35 devices sold by "backpackmen", pedlars who go from village to village with a bag of smartphones. Thanks to that enormous quantity of sub-$150 devices, Android takes 80 per cent of the global market share - but in China a mere seven per cent of app installations in China are via Google's Play store, and 73 per cent from third-party stores.
Yet in the West only Samsung makes money from selling Android - even after spending the budget of the London Olympics each year on marketing. HTC has been hit hardest by Samsung's inexorable growth, despite producing what many felt was the smartest design of the year, the HTC One (check out the Reg review). HTC sales fell to NT $47bn in Q3 ($1.57bn, £951m), a far cry from the NT $136bn ($4.4bn, £2.75bn) it booked in one quarter two years ago. Profits have vanished.
The truth is: competing is grim, thankless and profitless if you're not Apple or Samsung. Perhaps recognising this, Google sought to inject some life into the market. 2013 was the year Google sought to take control over Android - corralling developers into its Play APIs and designing some excellent handsets itself, both in-house (the Nexus 5) and via its Motorola subsidiary (the Motorola G). Neither come encumbered with the OEM "enhancements" such as TouchWiz.
Google's reasons for ramping up its presence in the device business are rational: it fears mighty the Samsung seizing control of Android (it already duplicates every major Google function except search) and it doesn't want the platform to become synonymous with Landfill Android™, which is what happened in the commodity PC business. By injecting quality into the market, it gives ODMs like Sony and HTC a chance to compete. If the gambit fails, then Samsung becomes dominant and phones sell purely on price: and the results will look like the PC market - the backpackman will come West.
But the first whispers of vulnerability could be heard. The new Sailfish OS (a modern Meego) and BB10 are to varying degrees "Android-compatible”. It's the first sign that third parties can piggy-back on the popularity of Android as an app standard without needing Android the OS. I thought BlackBerry's trick, which will go public in the New Year, is particularly clever.
The wild card with Google and Facebook remains: how much data-gathering can they conduct before consumers are repelled? Or simply figure out that they're getting skinned? The KitKat dialler in Android now calls home. Google is subtly steering users to Google Now.
Jaron Lanier proposes that we charge the Facebooks and Googles and Amazons - whom he calls "Siren Servers" - for the data they use. After all, it's extremely valuable to them. Why carry a Creepyphone?
Microsoft may not be ultimately successful in its Scroogled campaign, which draws attention to the one-way data grab - it's a sleeper that may take a scandal to awaken. But unless the technology industry supports consumer demands for consumer sovereignty, acknowledging that we actually own our own data, the squeeze will continue.
The Rest part I: Nokia
The biggest stories of the year outside the Samsung/Apple duopoly were the sale of Nokia's mobile phone business to Microsoft and the woes of BlackBerry.
But just six years ago, these two fallen giants had their best growth years ahead of them.
Nokia's sale of its mobile phones division, which employed 32,000 people and was the market No.1 for over a decade, felt "both inevitable and shocking at the same time", I wrote back in September, reflecting the weird feeling people expressed across the industry. "Shocking" because an industry leader that had both brains (engineering and design talent, and foresight) and brawn (brand and distribution) couldn't prosper as the market shifted. Nokia was not only Europe's biggest technology company but a symbol of Finnish pride.
And it was harsh on CEO Stephen Elop. After a dreadful 2012, the Board took the decision early in the year that Nokia couldn't afford the Windows strategy, and sounded out Microsoft over Elop's head. By the time a deal was struck, Nokia had rebounded, thanks to excellent low-cost handsets, in particular the Lumia 520 (our review here). It had reached 10 per cent in some markets, re-establishing itself as a medium-sized brand - and the app store was gaining long-absent essentials like Instagram.
So, having waited too long to jettison Elop's predecessor Olli-Pekka Kallasvuo, it was arguably too hasty in jettisoning the entire division. Microsoft didn't need much persuading to buy the division, as a volte-face by the company to Android would have been catastrophic for Windows Phone's credibility.
Having done well with low-cost devices, there was a worrying lack of traction for Nokia's now very decent high end. The Lumia 1020 (review here), with its 41MP sensor, a technical marvel, arguably launched too early. Nokia has a strong pipeline for 2014 but what's in store then?
Elop gave the company focus, improved its product development cycles and execution, and instilled personal responsibility throughout the organisation. At Microsoft all three are conspicuously absent. Strategy has to be inferred using something akin to Kremlinology, or perhaps ESP. In-fighting continues, and the marketing is fuzzy. "What is RT really about?" is a question that's hard to answer. The new CEO - when Microsoft eventually gets round to appointing one - should leave the unit well alone, and treat it as a well-funded but distant subsidiary.
(Nokia Oyj continues as an important technology company, with its network equipment and maps... And patent licensing, of course).
The Rest Part II: BlackBerry
BlackBerry had an agonising year and suffered one of the most spectacular consumer collapses in history.
In the past decade, the BlackBerry bundle (of server software and proprietary client devices) propelled RIM to a spectacularly fast rise. Messaging wasn't as good anywhere else, provided you bought both ends. But once this bundle was unravelled, the same dynamic worked against the company, which meant a faster collapse. IT shops could conclude: there’s no reason to buy a BlackBerry client if you're not using BlackBerry Enterprise Server to manage your corporate devices. And why buy BES if you’re not a BlackBerry shop? These underlying trends were in play when BB10 finally rolled out in January, RIM changing its name along the way to its best-known consumer product.
An ominous silence - after which the CEO disappeared from public view - was followed by a full-blown retreat: taking an inventory charge of $934m on Z10s, the all-touch flagship. Sales had been stricken by the announcement in August that BlackBerry was looking for help. And couldn't find it. In November it announced a withdrawal from the consumer market, and a cash injection.
Could it all have been different? It didn’t help that BB10 came out distinctly undercooked - and with an eccentric UI. QWERTY devotees who expected a smooth upgrade to a more modern device discovered it was far harder to work with - they missed their trackpads, their shortcuts and the instant responsiveness. And BlackBerry had left it too late to re-enter the consumer market, as Microsoft and Nokia had discovered: it's harder to dislodge users from a smartphone platform once they're on one, than it is to lure featurephone users to your smartphone platform.
Ominously, the new interim CEO Chen didn’t mention BB10 when he listed BlackBerry's assets. Even though BB10 now does Android. This hints at BlackBerry switching to "Android-Berry" for enterprise users. It turned out the company had rejected former co-CEO Jim Balsillie's plan to make BBM an industry standard. (BBM did eventually appear cross-platform; its growth was one of the few bright spots of a terrible year). Expect to see the polished and impressive BES10 prosper, though: enterprises have never needed security more.
The Rest Part III: The rest of the rest
Mobile World Congress in Barcelona saw an impressive show from the Mozilla Foundation as it launched yet another new smartphone platform. It could afford it. Mozilla is flush with Google's cash (almost all of its $311m comes from the Chocolate Factory, a thank-you for the traffic Mozilla's desktop browser sends Google's way). Cutely, the Foundation calls this revenue "royalties". Yet when the first Mozilla OS phone arrived, it landed with a squelch. Our Neil McAllister found that the first Mozilla OS device, from ZTE, was cheaply made and sluggish.
It's embarrassing to sit on so much money and produce so little each year. This isn't a luxury Canonical enjoys. Mark Shuttleworth launched a crowdsourcing appeal to fund an Ubuntu-branded Linux phone, seeking £32m. Which is either too little or too much, depending on how you look at it. Either way, it fell far short, reaching only two-fifths of the target. Nevertheless, Ubuntu claimed "victory" - that the stunt was actually a success because it had featured in The Telegraph.
One less cynical Linux venture did get airborne in 2013 - and it's a nice story. A startup Jolla picked up the burning platform abandoned by Nokia in 2011 and many of the Nokia engineers who wrote it, and showed off Sailfish OS to the world. It looks very nice indeed - see here and here.
Trends for 2014? Chinese giants Huawei and Alcatel Mobile Phones(the old French brand's hndset business is a joint venture with TCL Communication of China) start to make an impact on mature Western markets. Mind you, I said that this year. A mad, desperate scramble to hype gimmicks like smartwatches - as Sony and HTC try to find a market that actually makes money, unlike the killing fields of Android. And the European Commission's competition chief Joaquín Almunia is already shaking his stick at Nokia for its IP policy. Eurocrats get noisy when it's a EU election year. ®