The big three

Smartphones have long commanded the majority of investment and development in the mobile phone industry, since they represent the most advanced sub-sector of the market. But more recently the devices have fallen under the wing of the PC industry, with firms such as Dell, Microsoft and Acer all pouring cash into their respective projects, alongside other mobile platforms.

This represents a change in dynamic from how the PC market has traditionally evolved. Rather than a constant arms race to get faster and more powerful equipment out as quick as possible, the focus in this area tends to be about transposing existing PC functionality into as small a package as possible.

Nokia, which before the influx of smartphones sat comfortably astride the mobile phone industry in Europe, now has reason to fear Apple, HTC and RIM, all of which are gaining ground with their smartphone offerings. The firm has therefore allied itself with the two biggest names in the PC industry – Intel and Microsoft.

Microsoft and Nokia have just launched the first formal product of their alliance, which is essentially a communications platform exclusively developed for Nokia phones. Called Microsoft Communicator Mobile, the software aggregates and streamlines different ways of getting in touch with your contacts. It’s not groundbreaking in itself – the HTC Sense software does a similar job and includes social networking sites – however, it is the opening volley, and promises to be the first product of many.

“Our engineering teams are hard at work together, as this client shows, and we will have much more coming down the line,” comments Jacob Jaffe, information worker business group lead at Microsoft UK. “Our marketing teams across the globe are also engaged and working together in profiling the benefits of our market solutions. We also share a vision for the future of mobile working with Nokia, and we both want to bring the best productivity experiences to more people across the globe and deliver ground-breaking, enterprise-grade solutions for mobile working that address the current and future needs of mobile professionals.”

Intel has been working with Nokia for sometime on a ‘new class’ of mobile device, taking advantage of the chip giant’s proprietary architecture. More recently, the two firms announced MeeGo, which combines Intel’s Moblin and Nokia’s Maemo projects into one software platform. The idea is to generate a common, open-source development framework that will ensure applications developed are compatible across a range of devices – a major part of the project appears to be to better port the functionality of PCs to phones.

“Personal high-performance mobile devices is where we are heading. And accessing the same content from a variety of devices is what we aim to facilitate,” says Rod O’Shea, EMEA ESG sales director at Intel. “We call it the ‘Computing Continuum’. Our focus is on the smartphone market, with the emphasis on ‘smart’. Processing power and building the ‘brains’ of today’s computing devices is what we excel at – we have a long history to prove that.

“As smartphones increasingly become handheld PCs we find ourselves in our ‘comfort zone’ and able to provide what is needed to move this sector forward, in terms of innovation and performance. Users have come to expect a PC-like experience when they access Flash-based content on the internet; this requires both performance and compatibility that we can offer. Obviously we cannot do this alone, but we have good allies in the market.”

Through these strategic alliances, Nokia is looking to leverage the experience Intel and Microsoft have in PCs and attempt to better incorporate it into its phones. The alliance of these three firms – as well as further agreements with Yahoo – also serves as a useful metaphor of just how intertwined the two industries now are. It wasn’t too long ago that they had barely anything at all to do with each other – now, when Carphone Warehouse is one of the biggest laptop retailers in the country and a computer vendor (Apple) is manufacturing the most successful smartphone in the world, its tough to see the dividing lines.

Nokia itself believes it’s the evergrowing demand for constant access to the internet that has fused these two markets together. “The mobile industry has always been a very dynamic business, one which Nokia has been involved in and leading for a very long time,” notes Robert Andersson, head of corporate alliances and business development at Nokia.

“A significant change has come recently with the growth of mobile internet and the emergence of the US – particularly Silicon Valley – as a hub for innovation. The most obvious change is what people are demanding from their device, and the growth of the smartphone.

“We are offering a number of different solutions for the large number of people across the globe, looking to ‘democratize’ the smartphone and push it to more attractive price points with Symbian, and really offer the ultimate mobile computing devices with MeeGo. The internet is driven by mobility at the moment, and the mobile and PC industries are converging.”

The fact that so much investment in the tech industry seems to be swinging in favour of mobile phones and other smaller devices rather than more traditional PCs could cause some disruption to the current business model, which has always been about reaching for the next, more powerful product, rather than the most mobile. Not all see this as having a catastrophic effect, however.

“Yes, [PC firms] are increasing the focus on mobility but I do not see this as detrimental to their computer offering but as an extension of that offering as we move more and more towards a world where we will see little difference between a smartphone, a netbook and a notebook, other than hardware form factor,” suggests Carolina Milanesi, Gartner’s research VP for mobile devices technology and service provider research.

With so much emphasis being placed on smartphones, not everyone will be so confident that the PC business will come out unaffected. Eugene Kaspersky, CEO and founder of security firm Kaspersky Labs said to us earlier this year that he sees a future in which all computers will essentially be mobile phones, which plug into dumb ports scattered around the planet when a larger screen is needed.

Not everyone will be anticipating a world in which PCs as we know them disappear completely either, but if the top tech firms in the PC and mobile phone sectors continue to integrate their businesses and we do see less of an emphasis on traditional PCs, then just like Microsoft and Intel, the rest of the industry will have to re-evaluate how and with whom it earns its money.