 |
| |
 |
| |
 |
| |
 |
| |
 |
| |
 |
Breaking News -
Commentary and
Analysis
Commentary and
Analysis
| All Contents Copyright 2005-09 J.Gold Associates, LLC All rights reserved |
Commentary and Analysis
Timely Analysis of Industry Events
February 16, 2010
BlackBerry’s Free-Style Server
Today Research In Motion announced a new platform strategy for its industry leading BlackBerry smart phone for
business users. It has decided to make a version of its BlackBerry Enterprise Server (BES) available for free. The BES
Express version will become available in March for download from RIM, and will eliminate the costs associated with
the full version of BES ($2999 per server and $99 per CAL). Further, it will work with any BlackBerry on any data plan
(BES currently requires an enterprise data plan). BES Express will have some features and functions disabled that are
available on the full version, but for many organizations, BES Express will provide all they need to deploy and manage
a fleet of BlackBerries for their end users. We see this as a very important move to solidify and enhance BlackBerry’s
lead in the expanding and increasingly competitive smart phone market.
The smart phone market is changing. Many vendors are now competing for business users (e.g., iPhone, Android,
Palm/WebOS, Nokia/Symbian) and most have licensed ActiveSync from Microsoft to allow connection to email and
PIM functions on Exchange. Further many organizations now allow their end users to personally select a smart phone
rather than standardizing on a single device for everyone. We expect to see 25%-35% of enterprise smart phones
become personally liable devices within 1-2 years, with numbers even higher in SMB. With the expansion of smart
phones and the need to control costs, many organizations are avoiding the traditional ways to connect to corporate
email and choosing to deploy the “free-style” way of doing things – utilizing the embedded push email from Exchange
to any ActiveSync enabled device. This has put BlackBerry at a cost disadvantage, even though its premium BES has
far more management and security capabilities than free-style services. Enterprises value BES’s extensive capabilities
especially for high-value mission-critical worker applications, but not all businesses do. This is especially true in mid-
tier and smaller organizations where the benefits of a full IT staff to manage the capabilities of BES are often not
present, where usage is primarily or exclusively for email, where costs are not easily amortized across many users, and
where outsourcing the services may not be attractive. Companies often view the full features of a BES as overkill. BES
Express levels the playing field by eliminating most costs, and providing a convenient way to include BlackBerry’s into
the mix of devices for those companies/users who want one.
But Express has some limitations. In its current version, it connects to Exchange email (both full Exchange and Small
Business Server versions), but not Notes/Domino or GroupWise. Further, it has a small subset of policies (35+ vs. 450+
for BES). It does not allow Over the Air provisioning (OTA) of devices, which BES does allow. Companies may run
Express on the same server as Exchange, with a limitation of 75 users, or it can be run on a stand alone server and
scale to support thousands of users. But Express will not support add-on functionality. Many of the newer social
networking and voice applications (e.g., MVS, SNAP) require being added to a full version of BES.
BES Express solves two very important challenges for continuing BlackBerry’s market strength. First, with BlackBerry’s
leading share of smart devices in the market, it must be seen as competing on TCO and not just purchase price.
Companies view BES as an additional cost of using BlackBerry. And with a move by many organizations to allow user
liable device selection and a more open environment, the infrastructure investment required for BES means
companies who make the investment often restrict device choice. Companies don’t want to invest in new systems (e.g.
BES) if only a fraction of their users will utilize it. But making Express free allows those companies who avoided
deploying BlackBerries due to the cost of BES to do so now in their free-style environment. This also allows end users
to select BlackBerry as their device of choice, even though the company has not.
RIM makes most of its revenues in selling BlackBerry devices and through its Network Operations Center (NOC). Giving
a modified version of BES away for free will not cause them major financial hardship, and we expect only limited
cannibalization of its BES revenue base. Further, it may allow them to sell more devices to mid-tier and small
companies that have steered away from BlackBerry in the past due to the BES requirement. And it allows RIM to show
that while free-style email proponents have often pointed to BlackBerry as too costly, RIM has now removed that
barrier. Finally, RIM hopes that running Express besides free-style email systems will highlight the benefits the
BlackBerry system and thereby increase deployments over time. BlackBerry-only shops are becoming rarer these days.
And those companies that are not currently BlackBerry shops hesitate to add the cost of BES to their operations. By
eliminating the cost of deploying a BES with the Express version, RIM has now removed a cost barrier for organizations
that were minimal users and for those organizations where BlackBerry was frowned upon due to the requirement to add
BES to their infrastructure.
Bottom Line: This announcement is good news for those companies with modest BlackBerry needs and/or those who
are driven by cost over features. It is a good step for RIM as more of its revenues are now being driven by device sales
and recurring NOC fees, and BES licenses are becoming a less important revenue stream. Giving Express away to
increase the number of BlackBerry units sold is a good strategy. With Express, RIM shows it is substantially ahead of
both iPhone and Android in manageability and security, which are important considerations for many companies. It
will dispel the notion that free-style is good enough (i.e., Exchange and ActiveSync which are the overwhelming share
of the email/PIM market), and make BlackBerry more appealing to mid-tier companies where cost is important, and
where all of the rich features of BES may not be a compelling reason to deploy what would become a new product for
many. We believe this will expand RIM’s market base and provide a way to sell upgrades and added services.
February 15, 2010
Microsoft: on Windows Phone 7 Series they Rested
Today Microsoft announced the much anticipated successor to its Windows Mobile Operating System for smartphones.
Windows Mobile (WinMo) has been losing significant market share over the past couple of years, as it has not aged
gracefully, especially when compared to a slew of more modern mobile OSes (e.g., iPhone, Android, WebOS,
BlackBerry). Even its most ardent fans, those deploying apps in the enterprise, have largely abandoned it or are in the
process of doing so. For this reason, we expected Microsoft to do something dramatic. And although the new OS won’t
be available until late 2010, it looks like they have exceeded expectations.
For this version of the OS, Microsoft has abandoned it philosophy of concentrating (and convincing users) on the
richness of the underlying OS, and has instead sought to modernize the way users interact with the device. Key to this
is the notion of “Tiles” and “Hubs”, five of which are available with the first release. These Hubs are basically mini-
containers for actions and connections (e.g., Office hub for email and Office functions, People hub for connecting via
Facebook, SMS, etc.). This is a sleek and promising technology wrapper that essentially removes the user from the
underlying complexity of clicks and points prevalent in the old OS-oriented approach. It effectively utilizes the multi-
touch capabilities of the phone interface. However, it appears that Microsoft intends to keep the Hub closely to itself
and its preferred partners. When asked if users and/or app providers could create Hubs, Microsoft stated that currently it
will only allow Hub creation in collaboration with itself and a primary partner (e.g., a carrier for
personalization/differentiation). This is troubling as we can see many ISVs and corporate needs that could easily be
served by the Hub approach, and a Hub-based ecosystem could easily emerge. Hopefully Microsoft will evolve this
approach over time.
Microsoft has further deferred talking about the deployment and development environment for Windows Phone 7 (WP7)
until a later date. But it is fairly clear from the early demonstrations that this OS shares little with its older siblings. It is
therefore highly unlikely that there will be a compatibility mode for older apps built for WinMo and that ISVs and
enterprises wishing to deploy apps will need to redesign and/or recode those apps. The one exception will be cloud-
based apps. WP7 does include a browser that is compatible with Internet Explorer, using components from the desktop
versions, but modified to increases performance. It seems likely that future development environments will be
integrated into the highly popular Visual Studio range of products used by many corporate and ISV developers. This
should be announced in the next few weeks.
One thing that Microsoft has done with WP7 that we believe highly advantageous, is that it will now require a minimum
and consistent platform, a reference platform if you will, from its device vendors. In past WinMo devices, the vendor
could pick and chose its components, and build products using lower performance parts, which often made for a
frustrating user experience. Microsoft has wisely (finally) decided all device vendors must meet minimum HW and SW
resource requirements before their devices will be certified. This should make for a greatly enhanced user experience,
although it will prevent some vendors (e.g., HTC) from creating their own layered UI on top of the OS to make their
devices unique (Microsoft no doubt sees this as the place where Hubs will be utilized). And although Microsoft won’t
discuss this, it is highly likely that WP7 will be a true Multi-threaded OS to allow lots of background tasks to go on
transparently to the end user (e.g., push updating of various contacts and content). This may give it an edge with
highly interactive apps compared to single threaded OS designs (e.g., iPhone). However, this poses potential security
issues, and Microsoft has not yet spoken about the security model of WP7 – a subject of key importance to many users,
especially in business.
Microsoft announced that is has worked closely with Qualcomm on WP7. This almost surely means that it will be
targeted at Qualcomm’s SnapDragon, ARM-based chipset. It’s likely a reference platform/design will be announced to
include this chipset. It appears therefore, that at least for now, Intel and its Atom chips will not have a place in the
WP7 ecosystem. This is more reason, in our opinion, for Intel to become more closely aligned with the MeeGo (with
Nokia) and Android (with Google) ecosystems. Also announcing support and commitment to WP7 are carriers AT&T
and Orange who both say they will launch devices as soon as they become available – and likely with some
customization features to differentiate themselves and their services.
WP7 does support traditional office features and email (via ActiveSync and Exchange connectivity) that business users
have come to expect. But it’s not clear that business users who were originally drawn to Windows Mobile for its affinity
to Windows and the Microsoft app ecosystem it supported will be compelled to standardize on this new OS. Those
business users that use the device primarily for email may find the new features and functions (e.g., Zune media, Xbox
Live, social connectivity, etc.) attractive. But those organizations faced with re-building existing corporate apps (e.g.,
CRM, SFA) from earlier versions of Windows Mobile may look at this as an opportunity to explore the wider world, and
rethink their locked-in strategy. This should be a short term advantage for iPhone, BlackBerry, Android, etc., all of
which have been picking up market share at Microsoft’s expense. Nevertheless, we believe despite this risk, Microsoft
had to do something dramatic and compelling and replacing the aging WinMo with WP7 is a gamble it had to take.
This is likely Microsoft’s last chance to get it right.
Bottom Line: Microsoft had to take aggressive action as its Windows Mobile OS was dying a rapid death in the
marketplace. And the changes it has made might get it some notice, although the field is much more crowded now
than it once was and notice will be harder to get. But the change will not endear Microsoft to its existing base of
corporate users who will have to redesign and redeploy their apps if they are to utilize this new platform. We don’t think
Microsoft can count on many enterprises making such a transition/upgrade, and most organizations will likely stay with
older WinMo versions (especially those using ruggedized devices, e.g., Symbol, or those with apps that can’t easily be
ported). Traditional WinMo corporate device suppliers (e.g. HP, HTC) will likely find other platforms/OSes attractive,
and enterprise users should start evaluating end of life strategies for existing WinMo devices. We expect WP7 to be
more attractive to SMB users than to larger corporations – a substantial market that Microsoft would do well to capture.
February 15, 2010
Intel and Nokia Become A-MeeGo’s
Are Intel and Nokia learning to speak the same language? Both realize that the world is converging. Intel’s strength in
the PC world and Nokia’s strength in the phone market are driving them to meet in the middle as the two platforms
converge into super smartphones, netbooks and assorted network personal information appliances that share the need
to connect to the Internet and utilize the cloud. The two companies have already announced partnerships in the
design of chips that connect wirelessly (Intel has licensed Nokia’s extensive wireless IP). Now the two are extending
their alliance and unifying their individual Linux kernel based OSes – Mobiln and Maemo – into a single open source
OS called MeeGo (to be available Q2 2010), with Nokia’s Qt development environment for creation of “write once run
almost anywhere” apps for most OSes, including Windows, and Symbian (and potentially Android?). We see this as a
positive step for both companies, and a direct assault on the emerging dominance of Google’s Android/Chrome OS
(from Nokia’s perspective) and ARM’s chip architecture (from Intel’s perspective) in the smart phone and smart personal
appliance marketplace. Is this “NokIntel” alliance set to surpass in the mobile and personal appliance space what the
dominance of the Wintel alliance accomplished in the PC space?
Challenge to Android
Nokia uses Symbian to power the majority of its mobile devices (with a few high end devices running Maemo). But
Nokia is also the single biggest user of Symbian by far, with many vendors dropping support for the OS going forward.
Currently Android has far more momentum than almost any other Open Source mobile OS, and is set to challenge
Symbian in the next few years in the smartphone market. But Symbian may be hitting a “glass ceiling” as it tries to
move up into smarter and more compute intensive devices, even though a new version with a more modern feature set
will come to market late this year. Most developers agree that Symbian is difficult to develop for and maintain. And the
development of apps across multiple platforms is becoming a big impediment to ISVs who are forced to pick and
choose a limited number of platforms to develop for (e.g., iPhone, BlackBerry, Android). Nokia required a new
approach, and although it won’t abandon Symbian in the short term, its desire to move to smarter, more feature-rich
devices across multiple form factors (e.g., smartphones, tablets, personal Internet appliances) requires that Nokia seek
an alternative. And since its unlikely Nokia will support Android or its sister OS Chrome, MeeGo provides that
alternative.
Challenge to ARM
Intel is used to dominating markets, and has done so in the PC space for years with its Intel Architecture (IA) based
chips. However, the sheer number and increasing capability of high end smartphone and personal appliances, most of
which run on a different architecture (e.g., ARM, which currently powers nearly all the smart phones in the market),
threatens to impact shipments of PCs, and therefore Intel’s business. ARM is already making its way upstream to directly
confront Intel’s dominance by powering several netbooks. Further, ARM’s advantage in cost and low power over IA has
been compelling. But Intel understands that ultimately, far more smart device chips will be sold than PC chips, and
therefore developed Atom to compete directly with ARM. If Atom is to be successful, it must be able to attack ARM in
its heartland – the smart device market for net based devices and high end smartphones where huge volumes of
devices are being designed. Next generation Atom chips (2010/11) will achieve close to parity with ARM in low power,
and will run existing Windows and Android OSes. And with MeeGo, Nokia gains the option of moving to Atom-based
systems to enhance their device performance and take advantage of the IA platform for both high end smartphones
and enhanced personal appliances.
Who needs another OS?
Both Intel and Nokia realize they don’t really want to be in the OS business long term. Intel after developing Moblin,
made it open source. Nokia did the same with Symbian after acquiring the OS, and developed Maemo as a pure Linux-
kernel based alternative for its tablets and specialty devices. But so far the momentum for their respective
implementations has been limited. Nokia needs to find a high end replacement for Symbian, while Intel needs an OS
well tuned to its Atom. The marketplace needs a way to develop once for multiple platforms. Combining Moblin and
Maemo with Qt as a front end UI and development environment makes sense as the market is looking for more
convergence, not divergence of OSes. But Qt only solves part of the problem as it currently doesn’t support iPhone,
BlackBerry or Android directly (it is unlikely to support either iPhone or BlackBerry, but Android is a possibility). MeeGo
provides Intel with an optimized OS to showcase the capabilities of Atom and fight off ARM’s assault. And it provides
Nokia with much needed “head room” for its efforts.
Potential Pitfalls
But success for this joint venture is not assured. Market acceptance could falter if Qt becomes too Nokia/MeeGo
centric and short changes competing OSes, or if MeeGo is seen as too Nokia/Intel centric and is therefore not
compelling to ISVs. Recruiting ISVs to develop apps will be critical as the lack of compelling apps will doom the OS
and its devices to second class status (Nokia’s Ovi app store and Intel’s AppUp Center may help). And finally, in support
of Intel’s efforts to establish Atom as the premiere personal Internet appliance chip architecture, it could be disastrous
if Intel is seen as too focused on MeeGo and not fully supporting Android, Chrome and Windows, which could cost it
the loss of many deign wins. Atom must ultimately be “OS Agnostic” for Intel to maximize its success.
Bottom Line: NokIntel and MeeGo have the potential to propel both companies into the top spot in their respective
markets (Nokia for smart devices, Intel for the Atom-based CPUs powering them). If successful, this joint effort will
increase competition in the emerging market for smart devices, create a consolidated development environment that
will foster cross-platform innovation, and create an enhanced ability for enterprises to diversify the installed base of
devices – enabling “user liable” device selection to a more equal playing field than before, and relegating closed
OSes to a second tier status. It remains to be seen if anyone besides Intel and Nokia will embrace MeeGo, how well it
will perform, how effective Qt is as a development environment, and how much cross-platform capability MeeGo will
ultimately have.
Timely Analysis of Industry Events
February 16, 2010
BlackBerry’s Free-Style Server
Today Research In Motion announced a new platform strategy for its industry leading BlackBerry smart phone for
business users. It has decided to make a version of its BlackBerry Enterprise Server (BES) available for free. The BES
Express version will become available in March for download from RIM, and will eliminate the costs associated with
the full version of BES ($2999 per server and $99 per CAL). Further, it will work with any BlackBerry on any data plan
(BES currently requires an enterprise data plan). BES Express will have some features and functions disabled that are
available on the full version, but for many organizations, BES Express will provide all they need to deploy and manage
a fleet of BlackBerries for their end users. We see this as a very important move to solidify and enhance BlackBerry’s
lead in the expanding and increasingly competitive smart phone market.
The smart phone market is changing. Many vendors are now competing for business users (e.g., iPhone, Android,
Palm/WebOS, Nokia/Symbian) and most have licensed ActiveSync from Microsoft to allow connection to email and
PIM functions on Exchange. Further many organizations now allow their end users to personally select a smart phone
rather than standardizing on a single device for everyone. We expect to see 25%-35% of enterprise smart phones
become personally liable devices within 1-2 years, with numbers even higher in SMB. With the expansion of smart
phones and the need to control costs, many organizations are avoiding the traditional ways to connect to corporate
email and choosing to deploy the “free-style” way of doing things – utilizing the embedded push email from Exchange
to any ActiveSync enabled device. This has put BlackBerry at a cost disadvantage, even though its premium BES has
far more management and security capabilities than free-style services. Enterprises value BES’s extensive capabilities
especially for high-value mission-critical worker applications, but not all businesses do. This is especially true in mid-
tier and smaller organizations where the benefits of a full IT staff to manage the capabilities of BES are often not
present, where usage is primarily or exclusively for email, where costs are not easily amortized across many users, and
where outsourcing the services may not be attractive. Companies often view the full features of a BES as overkill. BES
Express levels the playing field by eliminating most costs, and providing a convenient way to include BlackBerry’s into
the mix of devices for those companies/users who want one.
But Express has some limitations. In its current version, it connects to Exchange email (both full Exchange and Small
Business Server versions), but not Notes/Domino or GroupWise. Further, it has a small subset of policies (35+ vs. 450+
for BES). It does not allow Over the Air provisioning (OTA) of devices, which BES does allow. Companies may run
Express on the same server as Exchange, with a limitation of 75 users, or it can be run on a stand alone server and
scale to support thousands of users. But Express will not support add-on functionality. Many of the newer social
networking and voice applications (e.g., MVS, SNAP) require being added to a full version of BES.
BES Express solves two very important challenges for continuing BlackBerry’s market strength. First, with BlackBerry’s
leading share of smart devices in the market, it must be seen as competing on TCO and not just purchase price.
Companies view BES as an additional cost of using BlackBerry. And with a move by many organizations to allow user
liable device selection and a more open environment, the infrastructure investment required for BES means
companies who make the investment often restrict device choice. Companies don’t want to invest in new systems (e.g.
BES) if only a fraction of their users will utilize it. But making Express free allows those companies who avoided
deploying BlackBerries due to the cost of BES to do so now in their free-style environment. This also allows end users
to select BlackBerry as their device of choice, even though the company has not.
RIM makes most of its revenues in selling BlackBerry devices and through its Network Operations Center (NOC). Giving
a modified version of BES away for free will not cause them major financial hardship, and we expect only limited
cannibalization of its BES revenue base. Further, it may allow them to sell more devices to mid-tier and small
companies that have steered away from BlackBerry in the past due to the BES requirement. And it allows RIM to show
that while free-style email proponents have often pointed to BlackBerry as too costly, RIM has now removed that
barrier. Finally, RIM hopes that running Express besides free-style email systems will highlight the benefits the
BlackBerry system and thereby increase deployments over time. BlackBerry-only shops are becoming rarer these days.
And those companies that are not currently BlackBerry shops hesitate to add the cost of BES to their operations. By
eliminating the cost of deploying a BES with the Express version, RIM has now removed a cost barrier for organizations
that were minimal users and for those organizations where BlackBerry was frowned upon due to the requirement to add
BES to their infrastructure.
Bottom Line: This announcement is good news for those companies with modest BlackBerry needs and/or those who
are driven by cost over features. It is a good step for RIM as more of its revenues are now being driven by device sales
and recurring NOC fees, and BES licenses are becoming a less important revenue stream. Giving Express away to
increase the number of BlackBerry units sold is a good strategy. With Express, RIM shows it is substantially ahead of
both iPhone and Android in manageability and security, which are important considerations for many companies. It
will dispel the notion that free-style is good enough (i.e., Exchange and ActiveSync which are the overwhelming share
of the email/PIM market), and make BlackBerry more appealing to mid-tier companies where cost is important, and
where all of the rich features of BES may not be a compelling reason to deploy what would become a new product for
many. We believe this will expand RIM’s market base and provide a way to sell upgrades and added services.
February 15, 2010
Microsoft: on Windows Phone 7 Series they Rested
Today Microsoft announced the much anticipated successor to its Windows Mobile Operating System for smartphones.
Windows Mobile (WinMo) has been losing significant market share over the past couple of years, as it has not aged
gracefully, especially when compared to a slew of more modern mobile OSes (e.g., iPhone, Android, WebOS,
BlackBerry). Even its most ardent fans, those deploying apps in the enterprise, have largely abandoned it or are in the
process of doing so. For this reason, we expected Microsoft to do something dramatic. And although the new OS won’t
be available until late 2010, it looks like they have exceeded expectations.
For this version of the OS, Microsoft has abandoned it philosophy of concentrating (and convincing users) on the
richness of the underlying OS, and has instead sought to modernize the way users interact with the device. Key to this
is the notion of “Tiles” and “Hubs”, five of which are available with the first release. These Hubs are basically mini-
containers for actions and connections (e.g., Office hub for email and Office functions, People hub for connecting via
Facebook, SMS, etc.). This is a sleek and promising technology wrapper that essentially removes the user from the
underlying complexity of clicks and points prevalent in the old OS-oriented approach. It effectively utilizes the multi-
touch capabilities of the phone interface. However, it appears that Microsoft intends to keep the Hub closely to itself
and its preferred partners. When asked if users and/or app providers could create Hubs, Microsoft stated that currently it
will only allow Hub creation in collaboration with itself and a primary partner (e.g., a carrier for
personalization/differentiation). This is troubling as we can see many ISVs and corporate needs that could easily be
served by the Hub approach, and a Hub-based ecosystem could easily emerge. Hopefully Microsoft will evolve this
approach over time.
Microsoft has further deferred talking about the deployment and development environment for Windows Phone 7 (WP7)
until a later date. But it is fairly clear from the early demonstrations that this OS shares little with its older siblings. It is
therefore highly unlikely that there will be a compatibility mode for older apps built for WinMo and that ISVs and
enterprises wishing to deploy apps will need to redesign and/or recode those apps. The one exception will be cloud-
based apps. WP7 does include a browser that is compatible with Internet Explorer, using components from the desktop
versions, but modified to increases performance. It seems likely that future development environments will be
integrated into the highly popular Visual Studio range of products used by many corporate and ISV developers. This
should be announced in the next few weeks.
One thing that Microsoft has done with WP7 that we believe highly advantageous, is that it will now require a minimum
and consistent platform, a reference platform if you will, from its device vendors. In past WinMo devices, the vendor
could pick and chose its components, and build products using lower performance parts, which often made for a
frustrating user experience. Microsoft has wisely (finally) decided all device vendors must meet minimum HW and SW
resource requirements before their devices will be certified. This should make for a greatly enhanced user experience,
although it will prevent some vendors (e.g., HTC) from creating their own layered UI on top of the OS to make their
devices unique (Microsoft no doubt sees this as the place where Hubs will be utilized). And although Microsoft won’t
discuss this, it is highly likely that WP7 will be a true Multi-threaded OS to allow lots of background tasks to go on
transparently to the end user (e.g., push updating of various contacts and content). This may give it an edge with
highly interactive apps compared to single threaded OS designs (e.g., iPhone). However, this poses potential security
issues, and Microsoft has not yet spoken about the security model of WP7 – a subject of key importance to many users,
especially in business.
Microsoft announced that is has worked closely with Qualcomm on WP7. This almost surely means that it will be
targeted at Qualcomm’s SnapDragon, ARM-based chipset. It’s likely a reference platform/design will be announced to
include this chipset. It appears therefore, that at least for now, Intel and its Atom chips will not have a place in the
WP7 ecosystem. This is more reason, in our opinion, for Intel to become more closely aligned with the MeeGo (with
Nokia) and Android (with Google) ecosystems. Also announcing support and commitment to WP7 are carriers AT&T
and Orange who both say they will launch devices as soon as they become available – and likely with some
customization features to differentiate themselves and their services.
WP7 does support traditional office features and email (via ActiveSync and Exchange connectivity) that business users
have come to expect. But it’s not clear that business users who were originally drawn to Windows Mobile for its affinity
to Windows and the Microsoft app ecosystem it supported will be compelled to standardize on this new OS. Those
business users that use the device primarily for email may find the new features and functions (e.g., Zune media, Xbox
Live, social connectivity, etc.) attractive. But those organizations faced with re-building existing corporate apps (e.g.,
CRM, SFA) from earlier versions of Windows Mobile may look at this as an opportunity to explore the wider world, and
rethink their locked-in strategy. This should be a short term advantage for iPhone, BlackBerry, Android, etc., all of
which have been picking up market share at Microsoft’s expense. Nevertheless, we believe despite this risk, Microsoft
had to do something dramatic and compelling and replacing the aging WinMo with WP7 is a gamble it had to take.
This is likely Microsoft’s last chance to get it right.
Bottom Line: Microsoft had to take aggressive action as its Windows Mobile OS was dying a rapid death in the
marketplace. And the changes it has made might get it some notice, although the field is much more crowded now
than it once was and notice will be harder to get. But the change will not endear Microsoft to its existing base of
corporate users who will have to redesign and redeploy their apps if they are to utilize this new platform. We don’t think
Microsoft can count on many enterprises making such a transition/upgrade, and most organizations will likely stay with
older WinMo versions (especially those using ruggedized devices, e.g., Symbol, or those with apps that can’t easily be
ported). Traditional WinMo corporate device suppliers (e.g. HP, HTC) will likely find other platforms/OSes attractive,
and enterprise users should start evaluating end of life strategies for existing WinMo devices. We expect WP7 to be
more attractive to SMB users than to larger corporations – a substantial market that Microsoft would do well to capture.
February 15, 2010
Intel and Nokia Become A-MeeGo’s
Are Intel and Nokia learning to speak the same language? Both realize that the world is converging. Intel’s strength in
the PC world and Nokia’s strength in the phone market are driving them to meet in the middle as the two platforms
converge into super smartphones, netbooks and assorted network personal information appliances that share the need
to connect to the Internet and utilize the cloud. The two companies have already announced partnerships in the
design of chips that connect wirelessly (Intel has licensed Nokia’s extensive wireless IP). Now the two are extending
their alliance and unifying their individual Linux kernel based OSes – Mobiln and Maemo – into a single open source
OS called MeeGo (to be available Q2 2010), with Nokia’s Qt development environment for creation of “write once run
almost anywhere” apps for most OSes, including Windows, and Symbian (and potentially Android?). We see this as a
positive step for both companies, and a direct assault on the emerging dominance of Google’s Android/Chrome OS
(from Nokia’s perspective) and ARM’s chip architecture (from Intel’s perspective) in the smart phone and smart personal
appliance marketplace. Is this “NokIntel” alliance set to surpass in the mobile and personal appliance space what the
dominance of the Wintel alliance accomplished in the PC space?
Challenge to Android
Nokia uses Symbian to power the majority of its mobile devices (with a few high end devices running Maemo). But
Nokia is also the single biggest user of Symbian by far, with many vendors dropping support for the OS going forward.
Currently Android has far more momentum than almost any other Open Source mobile OS, and is set to challenge
Symbian in the next few years in the smartphone market. But Symbian may be hitting a “glass ceiling” as it tries to
move up into smarter and more compute intensive devices, even though a new version with a more modern feature set
will come to market late this year. Most developers agree that Symbian is difficult to develop for and maintain. And the
development of apps across multiple platforms is becoming a big impediment to ISVs who are forced to pick and
choose a limited number of platforms to develop for (e.g., iPhone, BlackBerry, Android). Nokia required a new
approach, and although it won’t abandon Symbian in the short term, its desire to move to smarter, more feature-rich
devices across multiple form factors (e.g., smartphones, tablets, personal Internet appliances) requires that Nokia seek
an alternative. And since its unlikely Nokia will support Android or its sister OS Chrome, MeeGo provides that
alternative.
Challenge to ARM
Intel is used to dominating markets, and has done so in the PC space for years with its Intel Architecture (IA) based
chips. However, the sheer number and increasing capability of high end smartphone and personal appliances, most of
which run on a different architecture (e.g., ARM, which currently powers nearly all the smart phones in the market),
threatens to impact shipments of PCs, and therefore Intel’s business. ARM is already making its way upstream to directly
confront Intel’s dominance by powering several netbooks. Further, ARM’s advantage in cost and low power over IA has
been compelling. But Intel understands that ultimately, far more smart device chips will be sold than PC chips, and
therefore developed Atom to compete directly with ARM. If Atom is to be successful, it must be able to attack ARM in
its heartland – the smart device market for net based devices and high end smartphones where huge volumes of
devices are being designed. Next generation Atom chips (2010/11) will achieve close to parity with ARM in low power,
and will run existing Windows and Android OSes. And with MeeGo, Nokia gains the option of moving to Atom-based
systems to enhance their device performance and take advantage of the IA platform for both high end smartphones
and enhanced personal appliances.
Who needs another OS?
Both Intel and Nokia realize they don’t really want to be in the OS business long term. Intel after developing Moblin,
made it open source. Nokia did the same with Symbian after acquiring the OS, and developed Maemo as a pure Linux-
kernel based alternative for its tablets and specialty devices. But so far the momentum for their respective
implementations has been limited. Nokia needs to find a high end replacement for Symbian, while Intel needs an OS
well tuned to its Atom. The marketplace needs a way to develop once for multiple platforms. Combining Moblin and
Maemo with Qt as a front end UI and development environment makes sense as the market is looking for more
convergence, not divergence of OSes. But Qt only solves part of the problem as it currently doesn’t support iPhone,
BlackBerry or Android directly (it is unlikely to support either iPhone or BlackBerry, but Android is a possibility). MeeGo
provides Intel with an optimized OS to showcase the capabilities of Atom and fight off ARM’s assault. And it provides
Nokia with much needed “head room” for its efforts.
Potential Pitfalls
But success for this joint venture is not assured. Market acceptance could falter if Qt becomes too Nokia/MeeGo
centric and short changes competing OSes, or if MeeGo is seen as too Nokia/Intel centric and is therefore not
compelling to ISVs. Recruiting ISVs to develop apps will be critical as the lack of compelling apps will doom the OS
and its devices to second class status (Nokia’s Ovi app store and Intel’s AppUp Center may help). And finally, in support
of Intel’s efforts to establish Atom as the premiere personal Internet appliance chip architecture, it could be disastrous
if Intel is seen as too focused on MeeGo and not fully supporting Android, Chrome and Windows, which could cost it
the loss of many deign wins. Atom must ultimately be “OS Agnostic” for Intel to maximize its success.
Bottom Line: NokIntel and MeeGo have the potential to propel both companies into the top spot in their respective
markets (Nokia for smart devices, Intel for the Atom-based CPUs powering them). If successful, this joint effort will
increase competition in the emerging market for smart devices, create a consolidated development environment that
will foster cross-platform innovation, and create an enhanced ability for enterprises to diversify the installed base of
devices – enabling “user liable” device selection to a more equal playing field than before, and relegating closed
OSes to a second tier status. It remains to be seen if anyone besides Intel and Nokia will embrace MeeGo, how well it
will perform, how effective Qt is as a development environment, and how much cross-platform capability MeeGo will
ultimately have.