Vendors like Hewlett-Packard, Dell, Acer, and Toshiba may dominate the worldwide PC market, but their efforts to turn those leads into smartphone success have failed, highlighted by HP's decision on Thursday to stop developing its WebOS-based products.
Of the four vendors, Toshiba was the most successful during the second quarter, but its market share was just 0.3 percent, according to Gartner. A strong brand in the PC sector and plenty of money -- HP spent $1.2 billion to buy Palm last April -- simply hasn't been enough to break into the highly competitive smartphone market, according to Francisco Jeronimo, research manager at IDC. "When established vendors like Nokia, Sony Ericsson, LG, and Research In Motion are struggling, it is difficult to see how the PC vendors can succeed," said Roberta Cozza, principal analyst at Gartner. One of the main problems for HP and the other vendors has been a lack of operator interest in their products. And operators, with their subsidies, play a very important role in smartphone sales. "They need to go through operators, and that is where their problems begin because they don't have the necessary partnerships in place," said Jeronimo. Without operators pushing the products, consumer use won't grow and operator interest will remain tepid. "It is a catch-22," said Cozza. PC vendors don't just have to contend with strong smartphone brands like Apple, Samsung, and HTC. ZTE, Huawei and other emerging Chinese vendors are extremely aggressive when it comes to winning market share with low-cost phones, according to Geoff Blaber, analyst at CCS Insight. The Chinese low-cost approach has already proved successful. ZTE passed Research In Motion to become the fifth largest phone maker in the world during the second quarter, according to Gartner. Huawei is the ninth largest phone maker, Gartner said. For vendors that don't want to be drawn into a price war with Huawei and ZTE, differentiation is key. And the established smartphone makers are making every effort to develop unique offerings. For example, last week, HTC invested in Beats Electronics, a U.S. headphones company, to help improve the audio on its devices. But the PC vendors have failed to differentiate their products in a meaningful way, according to Cozza. Jeronimo thinks other PC vendors will soon follow HP's path. If Acer doesn't improve its smartphone fortunes over the next few quarters it will also quit: "I don't see why Acer should continue investing when it has been in this segment for more than a year without any success." Many of the PC vendors are also trying to make a name for themselves in the burgeoning tablet market, but the chance for success isn't much greater, as shown by poor sales of HP's TouchPad. "Today, there isn't really a market beyond the iPad," said Cozza. Blaber agrees. "A huge number of players are getting their fingers burnt with tablets, and the reality is that expectations have been far too high for the tablet space," he said. HTC, which just announced it would stick with Google and keep running Android on its best smartphones even though Google just bought one of HTC's main competitors, continues the trend started by Samsung this week of needling Google by doing things that make it easier for people to mess with Android.
Samsung hired the founder and chief developer of the most popular developer of Android-modification firmware to work on its smartphone OS development team with the goal, he said in a Facebook update, of "making Android more awesome." Google has been trying to lock Android down more, lately, in addition to buying Motorola for reasons that are cloudy but might include the need to stave off potential patent-trolling from Motorola if Google didn't come through with some love. The acquisition is expected to produce a huge shift in the smartphone market, though no one is quite sure what that effect will be. Nokia put out an announcement yesterday predicting the Google/Motorola connection would drive customers to Windows Phone 7. That seems like a chancy prediction, however, considering the Windows Phone 7 experience is currently driving customers to other operating systems. While Samsung's gesture was a grand one, HTC is sticking with smaller ones that follow through on promises it made earlier in the year to deliver bootloader unlock tools for many of its most popular Android phones. The software allows owners to get access to the operating system and system software protected as firmware on the smartphones and allow them to modify both to their hearts' content. Most carriers lock down the operating system to keep customers from messing around with the OS, partly to reduce support costs and keep the smartphones' links to the cell network from being corrupted, but also to keep customers from adding software or services from third-party developers that the carriers would prefer to supply themselves -- at a premium price. Unlocked smartphones and user-installed software pose much higher risk of infection by malware or corruption of system software. Most bootloader unlock apps include either a method or reminder to users to back up system images of the smartphones to restore them more easily if necessary. HTC views unlocked OSes as a way to encourage both ISVs and owners to get more involved developing apps and mods for the phones, according to an interview in the WSJ with HTC CEO Peter Chou. HTC did investigate whether it should build its own operating system to compete with Android, as Samsung has done. It decided to stick with Android for the size and activity level of developers and owners already in the market. "I think there's a lot we can do...it's not the operating system, it's the ecosystem...so we think we can find a way to differentiate to add value, but at the same time leverage our partners, Google and Microsoft, since we have such a great relationship with them," Chou told Dow Jones Newsires during an interview. The first U.S. device that can use the bootloader is the EVO 3D. It only works on software version 2.08.651.2 and above, so some users may have to go through the carriers' process of firmware update before using it. EU versions of the HTC Sensation got the update earlier. The bootloader and HTC's detailed instructions for using it are posted at the HTC developer's site HTCDEV. |