A little over two years ago now, in the summer of 2011, there was balance in the smartphone industry.
Two of the biggest companies selling phones at the time took an integrated approach to their user experience. Apple, who was still growing at a seemingly unstoppable rate, and RIM, whose days were starting to look numbered, developed and manufactured both their own hardware and software. Apple with the iPhone, and RIM with numerous BlackBerrys.
On the opposite side of the spectrum were Google and Microsoft. Both companies were handing out their mobile OSes, Android and Windows Phone, to hardware manufacturers far and wide with allegiances to no one. Similar to Apple and RIM, one of those companies was enjoying massive surges in market share, while the other floundered.
Both approaches had contenders in the high- and low-end of the market share war.
It was in August of 2011 when we first saw signs that balance was shifting. Google had just announced they were going to purchase Motorola, and despite claims that the two companies would operate with a firewall between them, we knew it couldn’t be completely true. Here we are, two years later in August of 2013, and we’ve finally seen the end result out of the two merged companies.
Manufacturers like Samsung and HTC don’t have anything to fear, yet, but the Moto X is good. Word has it both companies are already looking for an alternative to Android to supplement their current lineup and protect themselves against the future. And that was before last night’s bombshell announcement that Microsoft is absorbing Nokia.
The balance that existed in 2011 is nearly nonexistent today. Third-party hardware vendors have a lot to worry about. BlackBerry (RIP RIM) is on its deathbed. Which leaves the three biggest companies in the smartphone industry, Apple, Google and Microsoft, with near complete control of the market. All three of those companies make their own hardware now, putting strictly hardware manufacturers in a tight spot.
Neither Google or Microsoft are going to stop making their OSes available to third-party manufacturers, but you have to imagine it makes them nervous. In 2011, few would have imagined that in just two short years, Google and Microsoft would control their very own hardware manufacturers. If I’m sitting on the board at Samsung, Sony or HTC, I’m taking comfort in the amount of money Google makes on my products, but I’m secretly having a panic attack thinking about what could happen another two years from now.
If I’m sitting on the board at Samsung, Sony or HTC, I’m thinking simply making hardware for other companies, companies that have their very own hardware manufacturers and don’t really need me, is not a sustainable business anymore. I need to ensure my future, and the future of my company. Should I fork Android and take the Amazon route? Look to Mozilla? Develop my own operating system? What do I do?!
It will take awhile to see the full repercussions of Microsoft’s Nokia acquisition, but this could very well be the turning point. Another two years from now in the summer of 2015, when Samsung releases the Galaxy S 6 running Samsung Galaxy OS complete with the Samsung app store and Samsung entertainment hub, remember this moment. The moment when being just a hardware vendor first started to look like a bad idea.
The scales of balance haven’t been completely tipped over yet, but from my perspective it looks like they’re on their way. Especially since, in this case, fear, uncertainty and doubt are most definitely not weightless.