When it starts to be clear, it changes

This article was authored by Jouko Ahvenainen, and was originally posted on telecomasia.net.

Strategies are interesting to analyze, but it’s not easy to predict the future based on the past. Last time I wrote about telco strategies, and now AT&T’s Time Warner acquisition is an interesting new move. It is a marriage of local (US market that has global visibility) content, cable and mobile that I have mentioned as an option, but at a much larger scale than seen earlier. But now we can also wonder about the strategies of mobile devices and operating systems, especially after Google’s latest launch.

Apple is starting to have a tough time, when most manufacturers use Android. Microsoft failed with its own (and Nokia cooperation) strategy. Google failed with Motorola. Amazon failed with its phones. Blackberry first gave up with its own OS and now also with its hardware. So, it started to be clear that mobile devices are moving towards the ‘Windows PC’ model – one dominating operating system and many hardware manufacturers – and it doesn’t make sense for software companies to make their own hardware.

Now Google has developed its own flagship phone. Many reviews say it is the best Android phone on the market. And comments say it’s the phone to challenge the iPhone. The interesting part is not only the reviews and market reactions, but this especially indicates that Google wants to enter hardware business seriously.

An old story tells about TV strategies in the US.  There are times the cable companies that ‘own’ customers start to dominate market and they can control distribution and production companies in the value chain. But then a distributor gets deals to best production and cable companies, and can control the value chain. And then a production company makes such popular content and everyone wants to get it, and they can start to dominate the value chain. And then it turns around again.

We can witness similar changes in telco and mobile business strategies. We might just been in a turning point of the mobile device and ecosystem strategies. Some key players are making a new push with their own ecosystems to dominate the market more.

Why would Google like to seriously enter the hardware business? Maybe one reason is that they really need a flagship product that can demonstrate an Android phone can be as good or better than an iOS phone. But it is also that other manufacturers have failed to make these kinds of phones. Samsung has been the market leader, but it tries also to bring its own software components that mainly cause harm to users. And Motorola or third party Nexus phones haven’t been real successes either.

Samsung is now weaker with its serious safety problems in the latest devices. At the same time Samsung has launched, for example, Samsung Pay that is a kind of step to the ecosystem territory, where Google wants to dominate in Android systems. Google has probably wanted to demonstrate, Android is really the leading mobile ecosystem and Android’s user experience can be really smooth.

Maybe it is not a coincidence that Google is at the same time strongly pushing Android Pay too. It plans to roll it out to over 20 countries soon and also get it into Chrome. Google is also behind Apple and Amazon in content services. In those services the user experience and seamless cooperation of all system components are crucial. Google probably saw it needs a better device where it can manage the whole system to boost its whole ecosystem.

Payments, content and mobile as the user interface to all personal services are shaping up to be the next big battle. Both Google and Apple have pole positions for this race. Some larger carriers can participate into this race with local acquisitions or partnerships, for example, with local content companies and banks. Smaller manufacturers must focus to make standard Android phones. Samsung is in a challenging position, its own ecosystem components are too weak, but it doesn’t want to be a pure hardware company. So, in this way the game positions start to be clear. Until someone changes them again.

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Categories: Mergers and Acquisitions · Other Posts · Wireless