Software Side of Mobile Phones

Brand name cellphone makers are finally beginning to realize that if they need to survive falling cell phone prices and declining margins, they need to start focusing on software and services. Motorola, Nokia and Sony Ericsson, all made moves last week, taking further steps in this direction.

Motorola bought Good Technology, a Silicon Valley based company that is a RIM competitor, and had raised $200 million or so in venture capital. Nokia is rumored to have bought Ryze, a social networking start-up, and Sony Ericsson snapped up UIQ, the Symbian derivative OS maker.

These moves come in the wake of news that Vodafone was going to standardize on three platforms – Linux, Symbian and Microsoft. Any handset maker who wants to sell through their channel in the future will have to serve up the most interesting package of applications on their handset. Which means software, a business where handset makers are not particularly good at. Hence the buying frenzy.

We had written about this shift from hardware to user interface and software nearly a year ago, after talks with handset makers. But we all know that the mobile business is not quick to change gears. Nokia in particular has been aware of this shift, and has been making moves to better position itself. It has bought Loudeye, Intellisync, and Gate5 – all to cram their phones with additional features.

Vodafone and other carriers are increasingly selling white label phones, with their own branding. Motorola, Nokia and others will have to fight for consumers attention if they want to sell their handsets, especially the more expensive ones. I bet they will start acquiring some of the cooler app makers next. Shozu comes to mind!

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