Redefining wireless software

For all the talk about how smartphones could pull handset-makers out of their recession-induced slump, it's a term that is losing its meaning. All mobile handsets are becoming smarter and mobile-Internet capable, according to Forrester Research's latest report. Spurred on by Apple and Google, the smartphone design is working its way through to the lower tiers and even across other consumer electronic devices.

AT&T is one carrier counting on the smartphone distinction to set it apart. It lost the No. 1 carrier title in subscriber numbers after Verizon acquired Alltel, but it did manage to attract twice as many smartphone users than any other carrier, due primarily to the iPhone. Yet while AT&T is busy promoting its smartphone leadership in a new ad campaign, Forrester is recommending an entirely new way to classify smartphones based on three criteria.

The first is the extensibility and openness of the device -- or the ability to add on new features and services. Next is whether the device is optimized for consumption, like the iPhone, or creation, like Research In Motion's BlackBerrys. The answer should depend on the device-maker's target consumer profile. Lastly is the balance between entertainment and utility -- not the typical business versus consumer split -- said report author Ian Fogg.

Fogg offered advice for all the major handset-makers, as well as CE manufacturers, to adapt to the changing paradigms of wireless. The key for all of them is that software is becoming more important than hardware to define and differentiate a mobile phone. Even Apple can't rest on its hardware's ability to wow consumers. Fogg recommended that all players focus on aggressive software innovation and playing up the key strengths of each individual brand.

"What makes a device smart is what is deep inside, not its looks," Fogg wrote in the report. "The hardware helps devices win beauty awards, but they age fast. By contrast, the software takes years to develop and will deliver years of differentiation."

The same applies to CE device–makers faced with the decision to stand and fight the mobile ecosystem or embrace it and join in, as Fogg put it. In the short term, no category will be killed by the mobile ecosystem in the way that PDAs were in the early 2000s, he said, but all players in these markets must revise their consumer strategies. These companies -- whether it be personal navigation, video or handheld games -- need to pursue a mobile strategy that follows one of three paths: They can offer their apps or services on mobile handsets, like the Stanza eBook reader and Amazon Kindle; they can license technology to handset-makers; or they can add a mobile radio chip to their CE device for data connectivity.

The bottom line for all mobile players, including potential ones, is that the landscape is changing -- and it's being driven by software. The hardware of mobile phones will start to look similar going forward, but the software is where the competitive edge lies. 

"Internet brands, content and business models will continue to grow in the mobile market," Fogg wrote. "The Internet is a software game delivered across Web sites, Web services and downloadable applications. To play, mobile devices must have a strong software team that executes well. The mobile players that have the smartest software strategy will win out in the long run."

Email me at sreedy@telephonyonline.com.