Smartphones Look to Dominate Handset Sales –
Which OS will Thrive, Which will Fail?
Todd Day, Industry Analyst
Mobile & Wireless Communications
October 27, 2009

Focus Points
North American Mobile Operating System Profiles
Global Smartphone Forecasts
North American Smartphone OS Forecasts
Smartphone Challenges and Drivers
Smartphone Key Trends and Suggestions
Hot Topics
Industry Participants
Conclusion
2

Android – Google Inc.
Developed by Google, the Android Operating System is completely open, allowing developers to use any
of the phones core functionality from an application, including placing calls, sending SMS or MMS
messages, capturing pictures or video, and utilizing GPS coordinates for Location Based Services (LBS).
While the license is free for the OS, Google plans to drive advertising through the platform via mobile
search.
Pros: Notes:
Cost – Android is distributed under an open Although HTC is the only manufacturer with Android
source license, meaning that the cost to use it is powered devices currently on the market,
free. Samsung, LG, and Motorola have all announced
Application performance – Android was built to plans to have Android powered phones out by the
allow equal access and performance to any and all end of 2009.
applications for a device.
In the U.S., T-Mobile is the only carrier that has an
Android powered phone available. However Sprint,
Cons: Verizon, and AT&T have all been pursuing Android
Security – Because Android is an open source devices as well. Sprint is expected to be the next
operating system, unlocking, hacking, and viruses carrier with an Android device available to
could pose more of a threat than it would to a customers some time in late 2009 or early 2010.
closed operating system.
3

iPhone OS – Apple Inc.
Developed by Apple, the iPhone Operating System is a proprietary operating system only used on
Apple’s own iPhone and iPod Touch devices. Although early on, the iPhone OS was closed to
developers, it is now open to registered iPhone developers.
Pros: Notes:
Applications – The iPhone store has The iPhone OS runs on four abstract layers: Core
approximately 85,000 applications available for OS layer, Core Services layer, Media layer, and
download on its application store – which has Cocoa Touch layer. These layers allow the iPhone
accumulated over one billion downloads to date. to handle multiple tasks simultaneously, providing a
Performance – Equipped with a full web browser, better user experience.
rich media, fast processor, and plenty of memory,
the iPhone is one of the top phones in the industry. The iPhone OS is only manufactured on Apple
Ease of Use – One of the biggest contributing devices which reduces the speed at which the
factors in the success of the iPhone is that iPhone OS can be adopted, however, it also helps
consumers have been able to use the device to keep the quality of the applications and the user
easily. experience high.
Cons:
Availability – Currently, the iPhone is available in
the U.S. only on AT&T’s network. This is limiting
the adoption rate of the product.
Closed Architecture – Apple acts as a censor on
applications that are allowed.
4

Blackberry OS – Research In Motion (RIM)
Developed by Research In Motion (RIM), the Blackberry Operating System is a proprietary operating
system only used on RIM’s own Blackberry devices. RIM became the kings of email when their first
Blackberry products came out. Their OS provides security and enterprise integration that has helped
make Blackberry the most widely used Enterprise mobility product on the planet.
Pros: Notes:
Security – The Blackberry OS was designed for In recent years – after the success of the
security in an enterprise environment. Although Blackberry Pearl, RIM has been focusing on the
today, that same security is nice to have for consumer side since that segment has been
consumers as well. showing the most growth.
Enterprise Connectivity – Email, Mobile Web,
Mobile Resource Management (MRM), and The Blackberry OS is only manufactured on RIM
Location Based Services (LBS) all work very well devices which reduces the variety of the available
with the Blackberry OS. products, however, it also helps to keep the quality
of the applications and performance high.
Cons:
Variety – Although RIM has recently been more
focused on providing more variety in the product
lines, most of the Blackberry products have a
similar look and feel.
Poor Ease-of-Use – Although it shines in other
areas, RIM needs to do a better job of creating a
more simplistic interface for consumers.
5

webOS – Palm
The webOS developed by Palm is a new product just released in 2009 along side Palm’s new Palm Pre
smartphone. The webOS is a closed source operating system with some components of it open source.
The webOS was designed to make use of web technologies like CSS, HTML 5, JavaScript, etc.
Pros: Notes:
Usability – The webOS was designed to function Palm has stood firm to the idea of continuing to
efficiently and yet effectively. The OS interacts develop its webOS and future products internally.
with the web directly, allowing the web servers to Ultimately, the best part about the Palm Pre is the
handle the transactions and thus requiring less operating system. Palm will likely change their
processing power. This in turn always saves on mind if they don’t start gaining market share fast
battery life (the holy grail of the wireless industry). though.
Synergy – This feature integrates data from
multiple web sources into one screen or
application area in order to create a very
sophisticated user experience.
Cons:
Still New – Since the webOS from Palm is still
fairly new to the market, there aren’t as many
applications, and bugs are still having to be
worked out.
6

Symbian OS – Symbian Ltd.
Symbian OS has the largest market share worldwide. Much of this is attributed to the connection
between Symbian Ltd. and Nokia. Although, Symbian is also used by companies such as LG, Motorola,
Samsung, and Sony Ericsson.
Pros: Notes:
Economies of Scale – Because of the large Nokia, once Symbian’s largest customer bought
number of devices running Symbian OS, it reduces Symbian in 2008. However, Nokia turned over the
the costs significantly to use it. Although licensing intellectual property to the Symbian Foundation in
costs don’t come into play much, the research & order to ensure the further development of the OS.
development costs associated with manufacturing
a new device on a new OS can increase. The Symbian Foundation has a stated goal of
opening up the Symbian OS within two years.
Cons: Once that happens, it could change the landscape
Enterprise Support – Applications that run on a of the mobile OS market.
mobile phone powered by the Symbian OS have to
be signed. Furthermore, Nokia has been
unsuccessful in the Enterprise area in the past. As
a result, Symbian has been unable to become a
widely spread OS due to the limitations in
functionality for Enterprise Applications.
7

Windows Mobile – Microsoft
Windows Mobile is currently up to Windows Mobile 6.5. The mobile operating system developed by
Microsoft was long thought to be the future of the smartphone OS. However, licensing fees and
performance problems have caused Windows Mobile to have a decreased market share in recent years.
Pros: Notes:
Microsoft Connectivity – With many enterprises Windows Mobile still has the 3rd largest market
using Microsoft products like Windows, Outlook, share of the global smartphone market. If the
Exchange Server, Windows Server, etc., there is a licensing model changes soon, Microsoft could see
Microsoft connectivity advantage built into OS that a resurgence in manufacturers using their Windows
many enterprise customers find advantageous. Mobile OS. If it doesn’t, they will likely find
themselves dropping to 5th behind Google and
Cons: Apple.
Licensing Fees – Sticking with the classic
Microsoft licensing fee model has proven
troublesome for the adoption rate of Windows
Mobile. Unless this model is changed, Windows
Mobile is expected to continue to see a loss in
market share.
User Interface – Microsoft has had a problem with
the user interface that will likely continue unless
they rework their approach.
8

Global Mobile Device Forecast
Device growth remains steady.
Global device growth continues to remain
steady with a compound annual growth
rate of 4.29 percent through 2014.
Growth should exceed 1.5 billion
devices.
Devices are continuing to be created to utilize
the full potential of mobility for
governments, global enterprises, and
individual consumers alike. As the world
continues to evolve into the mobile age,
its no surprise that mobile devices are at
the forefront of all electronics sales.
Having already exceeded the one billion
device mark, by 2014, the world should
see 1.5 billion devices.
Source: Frost & Sullivan
Smartphones are expected to provide the most opportunity in the device market.
There is no doubt that smartphones are leading the way for growth in the mobile device market. Unlike the
4% CAGR for the overall device market, smartphones should grow at a compound annual growth rate of
nearly 26% through 2014.
Smartphones market grows to 4 times its current size.
Already having reached the 100 million smartphone mark – 139.3 million smartphones in 2008, smartphones
should grow to over 550 million by 2014. This will be growth of 4 times its current size over the next 5 years.
Furthermore, this is an increase from 11% to 36% of the overall device market.
9

North American Smartphone Operating System Forecast
Android is expected to become
the second largest smartphone
OS in North America by 2014.
Trailing RIM, Android should grow to
over 30 million devices by 2014 –
sustaining a 77% CAGR.
Palm WebOS is still too early to
tell.
The Palm WebOS should grow at a
fairly quick pace, however, with Palm
deciding not to license their OS to
other device manufacturers, it will likely
make up a small (around 2%) portion
of the market.
RIM should hit sales milestones
in North America by 2014.
With an already strong foothold on the
North American smartphone market,
RIM should continue steady growth,
hitting the 30 million device mark by
2012, and exceed 40 million by 2014.
10

North American Mobile Operating System Market Share
Despite a likely decline in market share, RIM and the rest of the smartphone
companies should have record growth over the next 5 years.
With 57% of the North American smartphone market share, RIM has faired very well in the North
American smartphone market. Although Apple has been successful with it’s iPhone product, it hasn’t
been able to gain on the breadth of RIM’s blackberry product line. Windows Mobile has been limited by
licensing fees and underperformance. However, with the introduction of Android and Palm WebOS,
competition and products will be coming from all angles. This competition should provide the variety in the
North American smartphone market that is likely to fuel the growth of the market as a whole – making
everyone a winner.
Chart 3.2: North America Smartphone OS Market Share Forecasts
North American Mobile Operating System Market North American Mobile Operating System Market
Share (2008) Share Forecast (2014)
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Market Challenges
Lack of Variation in Pricing Models.
With the U.S. and Canada carriers maintaining smaller amounts of carrier competition than Europe,
pricing flexibility by the carriers is very slight. This creates less choice to customers.
Ease-of-use Concerns.
Consumers are often intimidated by a smartphone. Ease-of-use helps to create an environment that
should allow users to try new products and services. The iPhone is an example of how this has
helped.
Getting Applications to the End Users Without Compromising the User Experience.
As applications have become one of the key areas of interest for consumers, they have also become a
key headache for carriers and manufacturers alike. Ensuring that applications installed through
application stores and side loading do not affect the performance of the device will be crucial for both
the carriers and the manufacturers alike.
Security Awareness.
Many consumers will have personal data used on their smartphone, similar to the way personal
information is stored on a computer. Security features and awareness for devices will be important to
maintaining a customer base.
Continual Performance.
With multiple connections, applications, networks, and devices available, a key challenge for the industry
will be creating an environment which provides consistent performance levels during the entire user
process.
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Market Drivers
Figure 1.1: North American Smartphones Market:
Market Drivers Ranked in Order of Impact (U.S.), 2008-2014
Rank Market Drivers 1 – 2 Years 3 – 4 Years 5 – 6 Years
1 Rapid Adoption of Smartphones by Consumers. High High High
Lower Price Points for Smartphones Creates a Closer
2 Comparison to Feature Phones High High High
Convergence of Mobile Devices in the Mobile
3 Industry Will Continue to Shift All Devices Toward High High Medium
Running Mobile Operating Systems
Lower Costs for Data Service Plans Due to Increased
4 Competition Amongst U.S. and Canadian Wireless Medium High High
Carriers
Increasing Number of Applications, and Application
5 Stores for Smartphone Devices Provides Greater Medium High High
Benefits to End Users
Carriers Creating an Environment That is More Open
6 for Consumer and Enterprise Applications Will Medium Low Low
Increase Adoption
Source: Frost & Sullivan
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Smartphone Key Trends
Camera/Video Phones
A key feature for mobile end users is the ability to capture still images and video alike. Originally, the camera
feature was seen in primarily feature phones. However, with changing demand and a very strong crossover
between enterprise and consumer devices, over 70% of smartphones being manufactured today have
cameras built into their design.
Dual SIM Card Phones
Dual SIM card phones are a newer feature that is still in the testing stages. Some devices have already been
manufactured that have this feature, however, it is yet to be determined if the feature will gain much traction
amongst customers. Some advantages to a dual SIM card design would be multiple profiles for end users who
use their device for both work and personal use (one card is used during work hours, the other is used outside
of work hours). Another possible use would be for international travelers. A traveler could have a US carrier
card for use while in the US, but then a T-Mobile card for use when traveling to Europe. The disadvantage to
this would be the engineering costs associated with the new design and spacing requirements of the phone.
Wi-Fi Enabled Phones
Wi-Fi has quickly been adopted as a quick and secure wireless standard for connecting to the internet. There are
hundreds of thousands of hot spot locations from airports to coffee shops all over the world. As data traffic
continues to increase, end users are looking to Wi-Fi enabled devices as a faster and less expensive way to
connect to the internet using their phone. Furthermore, the wide spread adoption of Wi-Fi has led to very
favorable pricing on the chips, making it a fairly inexpensive feature for manufacturers to include in their phone
designs. Looking forward, internet sharing will likely become an included feature for many smartphones,
allowing the end user to use their cellular data connection (3G or 4G) on their phone as a broadband gateway
for other phones and/or Wi-Fi enabled devices like notebooks.
Integrated GPS and Assisted GPS (A-GPS)
Integrated GPS (Global Positioning System) is rapidly becoming a must have feature on nearly all smartphones.
Assisted GPS enhances startup performance of a GPS system allowing for quicker location tracking. The
most compelling part of an integrated GPS smartphone is the ability to use Location Based Services (LBS) and
Mobile Resource Management (MRM) products and services. These services include personalized weather,
location-based games, tracking enterprise resources such as work vans and equipment, maps, directions, etc.
14

Smartphone Suggestions
Mobile Industry Remains Strong
Although the economy has been putting a damper on many industries, the mobile industry has remained
relatively strong. Although forecasts were adjusted down slightly by many companies, most are still
making profits and continuing to grow their business’.
Cosmetics is the Key
If there is one thing that the industry should have learned throughout the last year, it’s that the look and feel
of a device are just as important as the functionality of the device. With the advancements of touch
screen technology, Wi-Fi, LBS, etc., most smartphones are being equipped with the works. The key for
manufacturers is to take all of the current features that are wanted, then create a design that looks and
feels like an elegant accessory. Consumers are ruling the smartphone market now, and they care
about the look of their phone the same way that they do about their purse or watch.
Applications, Applications, Applications
Applications has been one of the largest contributing factor in the success of the iPhone over the last two
years. In order for any smartphone OS or device manufacturer to be successful, consumers have to
have access to applications that both empower them as a customer.
Open Source Operating Systems Will Reign Supreme
With products like Android and webOS finally on the scene, ultimately, the mobile operating systems that
provide open access for development of applications, and features that truly utilize the full capabilities
of the device will likely end up being successful. The operating systems that do not will likely fail.
15

Hot Topics
Nokia’s Interest in Buying Palm
iPhone vs. Android
RIM to launch Storm 2 with Verizon
Clearwire and 4G WiMAX
AT&T and Verizon 4G LTE
Satellite Technologies: TerreStar
16

Major Industry Participants
• Apple • Nokia
• AT&T • Palm
• Clearwire • Research In Motion (RIM)
• Google • Samsung
• HTC • Sprint
• LG • T-Mobile
• Microsoft • Verizon Wireless
• Motorola
17

Conclusion
Mobile devices have grown in number more significantly in recent years than computers and
televisions combined. With feature phones being the primary market of recent years, smartphones
are emerging as the dominant device in the mobile industry.
Smartphones will make up a large portion of the growth in the overall Key Market Items
mobile device market.
Market Driver:
In order to drive the
Feature-rich smartphones will be the driving force behind successful smartphone market in North
smartphone products. Camera/video, WiFi, and Location Based America, carriers will have to
Services (LBS) will likely become mandatory. create a more open, and more
effective environment.
Symbian and Nokia are expected to continue losing market share to
Android and iPhone OS, and companies like HTC, Samsung, and LG Market Restraint:
who will likely be putting marketing muscle behind the Android OS and Smartphone pricing needs to
a new line of smartphone products. stay close to the $100 mark in
order to really penetrate the
market.
Research in Motion (RIM) will continue to hold both the number 2 spot
in the global smartphone market and the top spot in the North American
smartphone market. Market Challenge:
With multiple devices and
applications available, finding a
Android is expected to grow exponentially through 2014, gaining the 3rd way to provide consistent
largest share of the smartphone OS market globally, and the 2nd largest performance will be crucial.
share in North America.
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