Is Consolidation Needed in the Mobile Phone Market? For Smaller Businesses, Yes!Is Consolidation Needed in the Mobile Phone Market? For Smaller Businesses, Yes!

Arun Sarin, CEO of Vodafone, is annoyed with mobile handset suppliers. As the keynote speaker at the Mobile World Congress, he called for a consolidation among mobile operating systems, reducing the number from 30 to 40 now to three to five in the future.

Though self-serving, Sarin's comments raise an interesting point, one that bucks an industry trend. Recently, the number of mobile device operating systems has been growing. In addition to traditional market leaders, such as Microsoft's Windows Mobile, Symbian, and Research In Motion's BlackBerry, new competitors, such as Apple's iPhone and Google's Android, have emerged.

Google and Apple Shake Things Up
The latter two vendors shook up the mobile handset market. With its slick software, Apple challenged the traditional thinking of handset suppliers, who focused on functionality often at the price of usability. Initially, it was difficult for developers to add applications to the device, but recently the company opened things up with the release of a software development kit.

The other new arrival, Google, hopes to make its mark by taking a different approach: It is focused on making it easy for third parties to build compelling mobile Web applications. Google has released a software development kit for Android, an application framework built on a Linux base, and founded an industry group, Open Handset Alliance, to encourage its use. Several chipmakers have demonstrated prototype phones running Android, and Google hopes that handsets based on the software will be available later this year.

High growth has attracted the new market players. Smartphones now make up a relatively small portion of overall mobile phone sales -- about one of every 10 devices. However, shipments have been growing close to 100% per year, so in a few years, they're expected to become users' first choice.

Another reason for the proliferation of mobile phone operating systems is that, historically, handset suppliers needed to use their own proprietary code to make the best use of their phones' limited processing and memory resources. But that need has been dissipating as a growing number of high-end phones have as much computing power as low-end PCs.

Too Many Operating Systems = Problems for Smaller Businesses
While competition often has a positive influence on emerging markets, the variety of operating systems is creating problems for software developers, carriers, and small and midsize businesses. Software developers have to allocate resources to porting their products to different platforms, a requirement that drives up their overhead. That's because not all cell phones use the exact same implementation of an application processor engine to run their software, a digital signal processor to handle other tasks, and the countless other chips in a mobile phone. Each separate implementation often requires different drivers to make sure applications written for one operating system can run across other phones.

Carriers have historically tied their services to select handsets, such as the iPhone running on AT&T's network. To expand their base, carriers now want to enable a wider variety of devices to run on their networks. However, this desire does have a catch: Supporting a range of handsets can be time consuming and expensive. In addition, operators are gradually stepping aside from their role as gatekeepers and allowing more outside companies to offer phones and services to their customers, opening up new opportunities for software, hardware, and Web services companies. They cannot do this if there is a hodgepodge of handsets connected to their networks.

The wide variety creates headaches for small and midsize businesses. Employees have become comfortable with mixing and matching software on their PCs and are beginning to expect the same level of interoperability with their mobile devices. However, these devices fall short of delivering such functionality, so in many cases, users are not able to download content unless it has been specially designed for the smaller devices. To make content mobile friendly requires significant up-front and ongoing IT investments. Most small and midsize businesses are sitting it out and waiting for the vendors to solve the problem.

They probably will be waiting for a while. While Vodafone's Sarin would like to see operating system consolidation as soon as possible, the whittling process will take time, at least a couple more years. The established companies have sufficient customer bases to remain competitive in the short term. Many of the small startups have some more venture capital to burn through. Apple and Google are still putting the building blocks in place for their third-party campaigns, so time will pass before they siphon off third party-resources. So, for the moment at least, there are more handset operating systems than are needed -- and mobile software development will continue to lag behind what's found on the desktop.

Paul Korzeniowski is a Sudbury, Mass.-based freelance writer who has been writing about networking issues for two decades. His work has appeared in Business 2.0, Entrepreneur, Investors Business Daily, Newsweek, and information.