Mobile OS Wars, Part 2 of 3 – Carrier Combat

Slalom Consultant Jeff Barber

Jeff Barber is a Seattle-based leader in Slalom Consulting’s mobility solutions practice. He's a mobile technology expert with deep experience helping clients “operationalize” mobile technologies.

Part two of this series will follow the theme of iPhone vs. Android into the heart of the battleground, where the war is and will be hard-fought by the few left standing, those carriers that survived the last decade plus of Telco and wireless merger mania.

In 2010, the United States wireless voice and data services markets are dominated by four carriers – AT&T Wireless, Sprint, T-Mobile USA, and Verizon Wireless – who collectively own an estimated 82.5% of the U.S. market. But let’s take a few steps back and review what has transpired over the last few years to get us here.

All four carriers share a legacy of core product offerings built on Blackberry, Palm, and Windows Mobile platforms with devices manufactured by the usual suspects: LG, Motorola, HTC, Palm, and Samsung (no disrespect intended to the likes of Nokia, Sanyo, Sharp, Sony Ericsson, and others; however, they do not have strong adoption across all U.S. carriers). Except for a rare risk on a new platform that pays off, such as T-Mobile’s success with the Sidekick, the carriers still tend to differentiate by marketing their network and service offering strengths and by negotiating exclusives for specific device models from the usual suspects.

It’s difficult to distill each carrier’s strengths into a single sentence, but for the purposes of this post I will attempt to do so.

  • AT&T Wireless – Rollover minutes, network quality, device and plan variety, multimedia
  • Sprint – Advanced network, multimedia, push-to-talk (via Nextel acquisition)
  • T-Mobile – Low price leader, innovative features, youth and family appeal, and top customer service
  • Verizon – Network reach and quality, multimedia, device and plan variety

In an industry where there are only a few key differentiators, the marketing aspects of the war result in series of entertaining TV commercials that make no-name actors into faces we recognize, build Hollywood celebrities’ bank accounts, and perpetuate price wars that benefit consumers.

However, given the ubiquity of the four carriers in most metro markets, I would argue that ultimately it comes down to who provided the best deal in the area where you live at the time when you bought your first phone, what your company standardizes on and/or your friends and family use, and whether or not the phone has the specific features and form factor you want.

I’d be curious to see a study that verifies or refutes my belief that, once you’ve made your initial choice of carrier, most people tend to stay with them because it’s easier than changing. For example, I stayed with Sprint for six years because they had a great deal that day at Costco, and their inexpensive and reliable data service beat the competition for years thereafter. There was not a compelling reason for me to switch. That is, until the iPhone came out.

Apple and the iPhone changed the game. By negotiating a market entry exclusive with AT&T, and offering the option to buy the iPhone from Apple or AT&T, Apple helped to propel AT&T to the #1 carrier by market share, and set a new standard for other device manufacturers and mobile OS developers to emulate. Millions of people like myself who otherwise would not have considered switching carriers switched to the iPhone because it offered a new and compelling experience, a convergence of mobile computing, multimedia, voice, and the web on a single device. The iPhone was the first mobile device, in my opinion, to make leaving the laptop behind an option.

Now that the iPhone is well-established, Apple is looking to break out of its U.S. carrier exclusive over the next several years, which will grow the market for the iPhone, and perhaps will make the carriers’ lives a little more interesting, but will be unlikely to change the fundamental design and core functionality of the iPhone OS. There is also plenty of innovation to come with only incremental OS changes, as the iPhone OS 3.x already has over 1,000 APIs and a wealth of new features that have yet to be fully realized by developers and accessory manufacturers.

With the iPhone now a maturing technology by mobile standards, this returns the spotlight on Google and Android as the next potential game-changer. T-Mobile earned early adopter successes with Android on the G1 and myTouch 3G devices, scoring near-iPhone levels of consumer satisfaction when they first came out, but those wins were quickly eclipsed by the wave of new devices that started to hit the market during the 2009 holiday season:

The stage is set for continuing carrier combat on a battleground that—several years from now—could provide consumers with a choice of iPhone and Android devices from all four carriers. In this battleground, who wins the mobile OS wars? Here’s a great blog post that states my point of view as eloquently as anything I could write myself.

The third and final post of this series will discuss mobile media, the mobile app phenomenon, and the capabilities and direction of the other mobile OS platforms compared to iPhone and Android.

- Jeff

Follow Jeff on Twitter: @jbarber_slalom

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About Jeff Barber
Jeff is a senior Business Analyst and Product / Program Manager, a leader in Slalom Consulting's Mobility Solutions practice with deep experience helping clients “productize” new technologies.

One Response to Mobile OS Wars, Part 2 of 3 – Carrier Combat

  1. troy johnson says:

    keep me posted of other posts!

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