Mobile World 2013: will Firefox OS and Tizen dethrone Android and iOS? [Interview]



A huge amount of the buzz around the Mobile World Congress 2013 (which is winding down today) was about operating systems. There was Tizen (Samsung), Jolla (a Finnish startup with ex-Nokians), Canonical (Ubuntu) and especially Firefox OS , which came out of the gate with very strong support from 18 mobile operators – Telefonica and Deutsche Telecom foremost among them.

Reports indicate that Firefox OS and Tizen both have some way to go, both in terms of functionality, user experience and market share. But with the strong support of the carriers, it’s clear that they will have a significant impact on both device makers and app builders.

And add consumers to that too. As we wrote earlier, according to research 100 % of the consumers know which operating system they are using. Which means that people are very aware of the high switching costs between the operating systems. Also, developers indicate that they’re getting tired of having to develop for different systems. Will these new entrants in the market just mean more fragmentation, or is it the first sign of a post-ecosystem world? 

We called mobile consultant, author (and Nokia CEO Stephen Elop’s worst nightmare) Tomi Ahonen for some insights on the new operating system landscape.

It looks like it could go two ways: either developers will pick a winner and stop developing for smaller systems. Or all the systems become interoperable, which means they’re no longer closed gardens.

Tomi Ahonen: Yes, and I think we’re already seeing the first signs of that evolution. Now that Tizen and Firefox are arriving – both Linux-based – the operators will come at the point where they say: we don’t want five operating systems based on Linux, bring it all together. Developers will definitely not be interested in developing for operating systems that have a market share of 2 percent.

Other than Apple, who will keep being Apple, I can see everyone sort of agreeing to that. That means that the closed garden approach is basically history. And at that point the huge variation of Linux and HTML5-based operating systems becomes just a waste of time and money. Some of them will die, others will merge or be forced to come together. I think the more open and standards based the operating systems are, the more viable they will be.

Of course, the big question is if Google will agree to play nice from the Android side – they’re the kingmakers who can still drive big decisions. But the manufacturers made it clear that they won’t accept a Google dominated market.

Stephen Elop has been saying for some time that the operators wanted to get rid of the duopoly Apple-Android. Why are operators now throwing their support behind Firefox OS rather than Windows Phone?

Tomi Ahonen: Microsoft always wanted Windows to become the third ecosystem. It made sense from their perspective – Microsoft owned the desktop, but they lost the leadership in the smartphone space. They wanted to keep their strong position on the desktop, and extend it in the smartphone market.

The carriers agreed with that philosophy of needing a third system – but they never agreed that Microsoft would become that third ecosystem.

It’s always been Nokia’s and Windows’ hope, but it just didn’t happen. They’ve been pushing Windows Phone for 2 years now, trying to make it a frontrunner. And their market share is 2,5 percent. I think we can agree that they failed. Samsung with Bada and Blackberry are selling more than the Nokia-Windows partnership. The carriers essentially said: we like the idea. We just don’t like you. We’ll find someone else.

So Samsung developed Tizen, and they got a number of vendors and operators to come along like NTT Docomo, Orange, Vodafone. Tizen is not so much for the high end market, where they use Android, but more for their mass market product.

The Firefox OS group built a Linux based, HTML based sister or cousin to Android, if you wil. They lined up the carriers and the handset makers – they have a Huawei, ZTE, LG, and several carriers supporting it – with Telefonica as the biggest supporter.

As an aside: why is Samsung not using Android for its entire range? 

Tomi Ahonen: Oh, because they’ve always been very open to what the operators want. They do Windows, Symbian, Tizen. If a carrier says: I want this phone, but with that configuration, they just build it.

What will Firefox and Tizen mean in the long term?

Tomi Ahonen: I think it puts pressure on two players. And it’s not Apple – Apple is immune. They have a fanatic fan base, and they’ll keep 15 or 20 or 25 percent of the market, because people with an iPhone are so devoted, there’s no real threat there. All they have to do is keep them happy.

Blackberry is also relatively safe. They hit bottom last year, when everyone was waiting for BB10 to come out. The huge corporations, which buy thousands of smartphones at once, just waited for this new model to be released. They won’t become a big player, but they will stabilize.

What happens to Android is another story – they have a 70 % market share today. I think we may see an erosion there. If Huawei offers Firefox and Tizen, and Samsung offers Tizen, and the numbers 3, 5 and 6 choose one of both sides – that will erode Android.

And: it will erode what remainds of non-Nokia Windows Phone sales. Why would Samsung or HTC or Huawei bother to release anything on Windows if the carriers say: we don’t want that, give me my own platform.

And then there’s some little guys – like the guys from Jolla with Sailfish, and Ubuntu doing a low cost Linux-based OS for the African market. Interestingly, there’s also LG who bought the Palm Web OS from HP – I could very well see them release an LG phone with Web OS. And if HP wanted to move into the smartphone space, I’m sure there’s a clause in the contract that allows them to use Web OS. 

Can you explain why do the operators hate Windows Phone? On your blog you suggest that it’s because they bundle it with Skype – which you call “the biggest threat to operators”?

Tomi Ahonen: Not because they bundle it. Because they own it.

Over the top services like Whatsapp, Blackberry messenger, Skype, Facebook: those are threats to the very survival of the the telecom operator business model. Voice calls amount to 80 percent of the revenues and 90 percent of the profits of the operators. If you threaten 90 percent of their profits, they’ll hate you. If you’re the biggest threat, they’ll hate you the most.

Whatsapp is not the biggest threat. But Skype, owned by Microsoft, with billions to support it. That’s life threatening, because Microsoft can bankroll Skype indefinitely. And let’s not forget, it’s installed on 1 billion desktops. They are much bigger than any single operator. Currently, Skype is handling a third of all international telecom traffic. That used to be a huge profit center for the telecoms. Skype just wiped that out.

So that’s why the telecoms will prefer anything – anyone, even Facebook – to the guy that owns Skype. This is no secret, by the way. Microsoft bought Skype somewhere around the last week of May 2011. Within two weeks, carriers were abandoning Windows products. Salespeople simply refused to show you a Windows Phone. And that’s a global phenomenon. A tech site in the US recently tested it by sending people to phone shops owned by the carriers, specifically asking for a Windows Phone. And everywhere, they got the answer: we don’t have that in stock now, would you like to see an Android phone?

So they’ll take the money from Windows and Nokia, and put the posters in the windows, and buy the newspaper ads. But in the store, they’ll tell you to buy an Android phone. They just plain refuse to sell Windows Phones. And with the arrival of Tizen and Firefox, I see no sane operator putting any marketing effort to support the most dangerous platform. I think any opening Microsoft had to become an ecosystem, is closing in 2013.

It helps that Firefox allows the carriers to operate their own “app store”?

Tomi Ahonen: Yes. Instead of being a “dumb pipe”, they can now run their own app store. And this also allows – whether immediately or over time – carrier billing. This means: you buy an app and you pay with one click through your phone. No credit card required, no Paypal. Just click and it’s on your phone bill.

It’s also very attractive for developers, because it takes away friction. Of course, the carriers will have to split the revenue with Firefox and Tizen, but they get a larger slice than they do on the Android store and the App Store. And obviously, they’ll have the customers in their own store, rather than sending them to Apple’s or Google’s store.

So essentially, Firefox and Tizen – and later, a move to open or at least standardized operating systems – will allow the carriers to escape the fate of becoming “dumb pipes”?

Tomi Ahonen: Yes, but they never lost that, I think.

Some people thought they lost it, but I don’t think they ever did. They always had these opportunities to offer premium services. Voting for stuff like American Idol: that’s a 20 billion dollar business. That’s HUGE. MMS services, advertising, news – 70 percent of the Chinese mobile consumers pay for premium news services by MMS or SMS.

Premium ringback tones using real music is worth billions. And the music industry loves it, because you can’t pirate it. They make more money for the music industry than any other kind of digital music.

People kind of lost the focus, or were distracted by this 30 percent commission that Apple took. But this advantage of the carriers never went away. They are now studying very hard how to differentiate. And I think their key advantage is that they can do things that no app can do, while protecting the privacy of the consumer.

Let’s study the Japanese model of NTT Docomo: they offer mobile wallets, but also something called iConcierge – a premium service that anticipates what consumers want. When this works, it’s like magic. Consumers love it – “like it reads my mind”, they say.

When mobile becomes our money, our assistant, when it anticipates our needs based on our behavior: that’s like magic. And the only one who can really do that is the operator. Google wants to do it – with their application middleware – but the operator gets so much closer to the consumer, because there’s a lot of information on a phone that an app can’t get to. Sim cards, contacts.

I think the operator has the most ability to service the consumer, but they just don’t realise it fully yet. But they’re learning. 

Ars Technica writer Peter Bright said both Jolla and Canonical were “quietly rubbishing” Mozilla’s HTML5-only strategy. Do you see any weaknesses for Firefox OS?

 

 

Tomi Ahonen: Not really. There’s a strong consensus in the tech industry that HTML 5 will power most of the digital space by the end of the decade and into the next decade. Whether in apps, semi-analog or cellular, we will migrate to hmtl5. Many platforms are already more or less compliant.

UPDATE: Peter Bright reacted to the interview on Twitter:

How do you feel about Jolla? They’re facing an enormous challenge in this market dominated by huge players.

Tomi Ahonen: First: I’m Finnish, so I will buy that phone because it’s a historical phone for Finland – the next new phone company. And with their background working at Nokia, I’m sure they’ll make an amazing phone. Something Nokia would have done. But I’m cautious and worried and sceptical, because from the looks of it they will release a very high end phone and if so, that is a very contested market with big players. It’s very demanding to differentiate from the iPhone 5 or Samsung Galaxy. They made the most amazing phone in the world with the N9, but to do that again. That’s quite a challenge.

It can be done, I think. They don’t need to sell huge amounts if they sell a high margin, high end phone. I would position it above the iPhone. Let’s say the iPhone is a Porsche – it’s incredibly high quality, and they all look the same, and some people will drive nothing else. My advice to Jolla would be: make a Ferrari, or Lamborghini or Aston Martin. Something awesome, for people for whom money is no object.

The kind of phone that you take out in a meeting, and people say: is that the Jolla? Like people used to do with the first iPhones, remember?

Then they don’t need to sell that many of them. They have a dealership in China, a carrier in Finland. And they’ll sell enough of them in Finland, because of national pride. People will say: let’s help this company on its feet and buy this phone.

How will they differentiate? Nokia seems to think the way to do it is to talk about cameras.

Tomi Ahonen: That’s because for Nokia buyers, the camera is very important. The number of people for whom the camera is the number one reason to buy a phone might be 15 or 20 percent, but it’s a large part. It might actually be the single biggest issue for consumers, and if it’s not, it’s certainly in the top three.

But it will become hard to compete there. I don’t expect Jolla to have a lousy camera, based on their background. But in Japan, we’re now moving from 13 megapixel cameras to 16 megapixel. That’s the kind of resolution that we currently see on top range professional camera’s from Canon – priced at $ 7000 or so. Of course, the sensor is smaller and the quality isn’t the same, but still: due to the volume and Moore’s law, smartphone cameras are matching top pro cameras today.

Maybe Jolla should do a device with a Qwerty keyboard slider. There’s a strong userbase which loves keyboards. Nokia sold 28 million of them! Nokia knows this, but they don’t want to offer one for fear of looking like the “old fashioned, nineties era” Nokia.

I don’t know. If price isn’t an object, maybe Jolla can include a pico projector and a 13 megapixel camera, and that would put them way ahead of Nokia.

Talking of Nokia: you recently did a Twitter bet on the exact date that Elop would be fired. How’s that going? 

Tomi Ahonen: (laughs) You know, when he came in, I really wished him well. He was taking over at exactly the right time, and he had the coolest job in the world! The worst cuts were made, Nokia was set for a rebound. He was stepping in to be the savior of Nokia. And I actually thought it would be good for Nokia to have a non-Finnish CEO, to speak American to the Americans. Until he made that crazy Windows Phone decision. I still hoped for the best, but when Microsoft bought Skype, I knew it was over.

They get return rates – 17 out of 20 people who move from Symbian to Lumia refuse to use it. And of the 3 that adopt it, 2 won’t buy it again. Ok, Windows Phone 8 is getting better, but it’s still a rubbish platform. So I think the evidence is mounting that he did a poor job, the strategy was wrong and it was poorly executed. I mean: they now offer a worse camera than on the N8.

But wasn’t Elop right to predict that Samsung would become too dominant in the Android space? Even Google is saying it this week.

Tomi Ahonen: Oh, I wouldn’t make too much of that. Samsung is selling 40 % of all Android phones. When HTC sold 55 %, no one complained, did they? And Samsung is diminishing now, because so many other device makers are getting in on the rce. That’s not domination – 80 percent would be domination. 40 percent: that’s a strong presence.

It’s just one of those silly statements of Elop. I mean, he has to say something.

But why is Google saying it too, if it’s silly?

Tomi Ahonen: I think Google, at this point, mostly wants to be careful and not upset the Android world. Also note that they are releasing a laptop with Motorola. Not a smartphone, which would be a threat to their Android partners. So they’re both playing nice with their smartphone partners AND extending Android on the PC space, where they can fight Microsoft. I think they’re trying very hard to show that they are the “do no evil” Google.

I guess they just want to prepare for when Samsung launches Tizen and there will be less Samsung Android phones – then they can say: “yes, we’re selling less Android phones, but it’s for the best – the Android ecosystem is more balanced now”.

You’ll also see Google switching into a higher gear this year, with all these competitors. They pursue mobile rigorously, they have a beatiful mobile vision, which includes augmented reality with their Google Glass. They’re not like Microsoft, which does mobile more as a hobby – this week mobile is “the most important thing”, but next week it’s Office, or the Xbox. For Google, it’s mobile, mobile, mobile.

At this time, Android is still the safest bet for the biggest player 5 years from now.

[Photo: MWC13 Firefox booth, MozillaEU, Flickr]

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Raf Weverbergh

Editor of whiteboard. Raf Weverbergh was a magazine journalist whose work appeared in magazines like Rolling Stone, Playboy, Mail on Sunday, Publico and South China Morning Post. He is the co-founder of FINN, a corporate communications agency where he advises startups and multinationals on their PR and Mustr, the easiest media database for PR professionals. You can contact him on Twitter, Linkedin or Skype (rafweverbergh).

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