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Genuity Research on Mobile World Congress 2010

Let’s face it, visitng Spain is probably more fun than snowy Virginia this week, but you go wherever the deals take you in our business.

In the meantime, thanks to the good work at Genuity Capital Markets, we have been able to stay on top of this year’s hot developments — and hotter promises — in the mobile space. Here’s their summary note on 3GSM:

More about positioning than innovation – Last week we attended the Mobile World Congress (MWC) show in Barcelona, Spain. While the show was better attended than last year’s event, we believe the pace of innovation has slowed somewhat. Given the hyper-speed at which the industry has been evolving, there was not much that was particularly new. However, we feel the industry is at a point where the major players are trying to strengthen their positions, or reposition (in the case of Microsoft).

  • OS landscape is fragmenting; Developer mindshare is narrowing – Much of the disruption and innovation is coming from the software side, specifically from players Google and Apple. The influence of Google with Android over the industry, especially considering its relatively short tenure, cannot be underestimated. However, instead of consolidating the platforms/operating systems, the new entrants – at least initially – are causing the landscape to fragment as new and old vendors try to stake their claim to the market. We can now count at least nine mobile operating systems in the market. That said, we found that developer mindshare is narrowing to Apple’s iPhone, RIM’s BlackBerry and Google’s Android. Developers are taking a “wait and see” approach with Microsoft’s new Windows Mobile 7.
  • Microsoft makes noise, but issues left to resolve – Microsoft gained the largest attention at MWC with the launch of Windows Mobile 7. The offering looks much stronger than its previous platforms; however, the question remains: is it enough? Given that its launch is not slated until holiday 2010, there is considerable concern whether it will be too late. Considering that Google has launched three iterations of its OS in less than a year, Microsoft’s development cycles are considerably longer. That said, with global smartphone penetration expected to be less than 15% by year end, we do not believe it is too late. More than anything, the OS appeared very consumer-centric, like Google’s Android platform with its integration of social messaging services like Facebook and Twitter, music services like Zune and gaming services like Xbox Live. It appears that the platform offers little for the high-end enterprise market. To some degree, it appears that Microsoft will struggle to garner mindshare versus Google’s Android, especially because it is trying to control the look and feel of the hardware and software user interface. With Android, hardware OEMs have complete control of the hardware and software stack. We also heard developers are grumbling as Windows Mobile 6.5 applications will not work on the new platform.
  • Other topics – The other big issues coming out of the show included carrier congestion, the push of carrier application stores and Android proliferation.
  • RIM update – We believe the most important takeaway from the show is that RIM remains the only major smartphone vendor that is taking a carrier-centric approach towards the market. Carriers are increasingly fearful that they are becoming “dumb pipes” to the cloud computing services of Google, Apple and now Microsoft. This is good for RIM. With respect to its much-anticipated new Webkit browser, the company showed a quick video preview during its keynote speech by Co-CEO Mike Lazaridis. While the video demo showed improved rendering and speed, we cannot really make any determinations – good or bad – until we use the software. True to form, RIM did indicate that it will be up to 3x more efficient than other browsers. Our sources indicate that RIM is targeting for a summer launch; however, timing is fluid.

MRM

 
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