We are seeing wireless history repeat itself. Just like in the 1990s when the leader in mobile phones suddenly changed, we are seeing the same thing happening today. Also, the entire lineup of companies changed over the last 10 years and we may be seeing the same thing starting to happen once again.
The wireless industry has been growing and evolving. Every few years it seems like it becomes a whole new space. In the 1990s, Motorola was number one and everyone else was fighting to catch up. Then the networks changed from analog to digital and Motorola wasn’t ready. They quickly lost their footing and a small company called Nokia took the lead with their digital devices. They have been growing and holding on to that advantage ever since.
There have been several changes since then and Nokia kept the number one spot. However, the wireless industry is in transition once again and although Nokia is still number one for now, it is struggling to keep up and remain relevant to customers in this new world of smartphones.
Since networks went digital, carriers like AT&T, Verizon, Sprint, and T-Mobile have tried to get customers to use digital apps. There were a few hundred and they were on smartphones. Smartphones were a small but growing segment of the market. However, the apps, which were a good idea, never caught on in any significant way.
Device makers like RIM with their Blackberry and Palm allowed customers to use apps, but there wasn’t much demand.
Then all of a sudden, Apple entered the wireless space with its iPhone a few years ago and changed everything. Suddenly millions of Apple customers were buzzing and interested in everything this new iPhone could do.
Suddenly, the app market jumped from a few hundred to around 150,000 in the last three and a half years. Suddenly, every smartphone maker is out there with their versions of devices that do more than traditional cordless phones. Suddenly the economy crashed and the only people still buying phones were smartphone customers.
Suddenly, the mobile phone business turned upside down.
Apps are suddenly important and growing very quickly. Suddenly, the demand for smartphones continues to rise. Suddenly traditional leaders like Nokia are struggling to matter as the market changes once again.
Don’t get me wrong, Nokia is still number one with about 40% of the market, and that’s huge, but with the current direction of the industry and your position in it, the question is for how long?
The same thing that happened to Motorola last decade could be set to happen to Nokia now. Back then, the market went from analog phones to digital phones and now from phones to smartphones.
In this new world, who will lead? We’ve seen non-wireless companies come in and they’ve done well so far. They are changing the wireless playing field. Companies like Apple and Google are already competing. Companies like Dell and Lenovo are entering. Others will follow.
Industry leaders are changing again.
Today it’s Nokia, Samsung, LG and all of a sudden Research in Motion is now number four, with Sony Ericsson in the number five position. Motorola isn’t even in the top five anymore even though they’ve done well recently with their Droid smartphones in partnership with Google. HTC is also there to round out the top seven.
This is different from just a few months ago. Suddenly smartphones are everything and in that world RIM is a player. Palm can be too and when they merge with HP they can try to prove it. I also expect Google to make it to the top of the list pretty quickly. Add to that the many others entering the space.
What will the list look like a year from now? I think it will look completely different in companies and order.
The question is what about the current leaders?
What about Nokia, Samsung and LG? There is real pressure on these cell phone manufacturers. Samsung and LG have actually grown on a healthy curve in recent years because they are solidly in the smartphone business and their brand says so.
Perhaps they face a threat as the market continues to transform. Perhaps if other non-cellular phone companies are as successful as Apple, they will push their way to the top over these more traditional carriers.
These are the questions we are wrestling with as the industry changes again.
Will these current leaders become leaders in the smartphone space? Will they update their brand so customers connect with them in that area? Or will they begin to fade from the dominant position they currently hold as traditional cell phones begin to fade and are replaced by smartphones?
It could go either way and it will be interesting to see how it plays out over the next year or so.
Stay tuned because the industry is in the midst of another big transformation and we don’t know the winners yet. One thing we do know is that the list of top phone makers may look very different a year from now and the devices and technologies certainly will.
