The Mobile Handset Market … Actors and Interactions (part I)
Thomas Menguy | February 23, 2006Here is a high level presentation of the mobile handset industry channel….from what I’ve understood, and from my own Open-Plug/Texas Instrument perspective.
This is by no way a yet-again-prediction-about-the-mobile-phones-market: no I won’t say here that the next big thing are Ultra Low Cost handsets …more than very high end smartphones
First the main actors of this drama (ok, I do my best to mimic the gfx of the great schemas from the Kathy Sierra’s blog):
In nearly square boxes, the companies that are part of the flow, from the handset idea till the real device in customer hands:
- OEM (Original Equipment Manufacturer: wikipedia definition): In this industry the OEM term is perverted a little, the OEM are the companies with Brand Name (in fact value added reseller or VAR), like Nokia, Sony-Ericsson, Siemens, Philips etc. More and more they are outsourcing handset design to ODMs and production to an EMS (that can be the selected ODM itself).
- ODM (Original Design Manufacturer: wikipedia definition): Design House that are technically creating the device, based on OEM requirements, or in other models directly from operators requirements, or from their own to sell their design to OEM/operators. Well known ODM are HTC, Compal, Wiz4com, Cellon, Foxconn, BenQ (Chinese and Taiwanese companies for the most).
- EMS (Electronics Manufacturing Services: wikipedia definition): The factories that are actually building the devices…and and we are in a 400 millions units market… those are BIG factories.
- Operator/Carrier (did you say telco?): Another kind of beast for the handset part of the mobile industry equation. They can be either the key driver for handset specification (see Docomo), or a simple distributor.
- Distributor : retail shops that can sell “unbranded/unlocked” headsets that can be used with any service provider (operator), or directly resell operator branded phones with a service plan.
On the supplier part of the flow:
- Platform Vendors : Here is the main hardware supplier of the chain (Ok I’ve intentionally omitted all the zillion of different other hardware suppliers involved: flash, screen, boards, plastic, etc), the one that sells the heart of an headset, its chipset. This chip is comprised of the CPU and the associated RF/Analog baseband/Digital Baseband. In this area the undisputed leader is Texas Instrument (used a lot by Nokia, Sony-Ericsson, Motorola and many ODM), followed by Philips Semi Conductor (main client: Samsung, and many other OEM/ODM). Many other platforms like ADI, Infineon, etc. are also represented. Nearly all those platforms are now backed by an ARM CPU.
And now the most interesting (hehe, ok at least for me) SOFTWARE! which is now the undisputed … bottleneck of the industry. Traditionally the Platform Vendor were integrating all the needed parts of the software…without making any money from it. But with the explosion of the number of functionalities, software actors are becoming more and more prevalent.
- Integration House: A first answer to those integration issues was to outsource it to other companies with large and dedicated software resources.
- IP vendors: We spoke about features…Here are the backers of those features. Need a Java VM? asks Esmertec, a wap browser? Openwave, Jataayu, Teleca, An predictive input text method? AOL/T9 or Izi.
- OS/FWK vendors : The hardware part being so heteroclite, and the time to market so hampered by software IP integration, this new kind of players are emerging, becoming a key enabler for IP vendors by reducing their integration and porting efforts, thus the time to market. On the OS side, Symbian, Microsoft and Palm are the leaders of the … little market of the smartphones (forecast are, in the best case, around 15% of the market). On the framework side (for all the other phones) key players here are TTPcom, OpenWave, Teleca (obigo) plus some new comers like SkyMobile Media … and of course Open-Plug .
So after the presentation of the actors…here are their interactions!
We will present here some of the main channels that are best describing the process of designing and selling a mobile phone.
- OEM oriented: the OEM is pushing its ideas/designs till the distribution channel.
- ODM oriented: ODM are selling their designs to OEMs.
- Operator oriented: Operator is defining the device design/requirements.
- A: The “historical” channel. An OEM is making its devices form A to Z, from design to production, using only platform vendors for their silicon factories, providing their own hardware design and not using “standard” platforms. Nokia is perhaps one of the last of its kind (but recently outsourced some handset to Foxlink if I remember well).
- B: An OEM specifies a handset and then go shopping to get an ODM which will be able to design the handset an produce it (perhaps via an EMS).
- C: In that case an ODM designs an handset and sells the design to an OEM that will simply stamps its brand on it (HTC is working like that).
In those channels the operator is only seen as a distribution channel, only able to validate or not an handset. Anyway more and more Carriers are asking for branding and customization…and it’s not so easy to convince Nokia to replace its brand by a Vodaphone or Orange one.
- D: Very similar to B, but this time the carrier specifies itself the handset and is feeling strong enough to get ride of and replace a big handset brand name (OEM), see the HTC operator branded phones (orange, O2).
- E: The Operator is “fully” specifying the handset, like in D but will associate its branding with an OEM one (that itself will most of the time outsource the design and production to an ODM/EMS).
Keeping all that in mind, a next post will describe the software flow and what are the impact and implications of those channels, the eco-systems around hardware platforms, and the various software strategies deployed in the industry
I keep wondering why big guys like Microsoft are only
Sergiu | March 14, 2006I keep wondering why big guys like Microsoft are only on a 15% of the OS market and don’t try to enter in the other part ?!
...I think they are trying, but the market seems not
Thomas | March 14, 2006…I think they are trying, but the market seems not so mature and too fragmented for them … and Big Guys are still the master of this market and don’t wan’t to see their hardware commoditized.
Plus in this area, nobody (consummer perspective) care about the OS their phone is using, they only care about function, form factor … and above all cost! I think it’s why we don’t see a big software player emerging…
Good synthesis, thanks
anonymous | May 19, 2006Good synthesis, thanks
Thanks for the comment, I hope it was usefull to
Thomas Menguy | May 21, 2006Thanks for the comment, I hope it was usefull to you.
no wonder all of our devices are so archaic, the
Andrew M | October 16, 2006no wonder all of our devices are so archaic, the carriers would rather name call instead of innovate and there isnt a standard anywhere to be found.
we really needa global company to take all of this in house and make some waves for the dinosaurs of bad business.
thanks for the run down !
In fact at the end of the day, I'm not
tmenguy | October 16, 2006In fact at the end of the day, I’m not sure the operators are the good one to specify a phone … look at a Vodaphone UI , or worse some Linux/Moto phones in the US… It’s not by locking/adding some non user friendly application that they will force users to use their services. Let the market, and the real service providers found the application and services that people will want!
My kinda story! Couldn't agree more, also to your last
DJ | October 18, 2006My kinda story! Couldn’t agree more, also to your last comment (knowing both VF and Moto inside out, hehehe). But, doesn’t Moto normally use Freescale (used to be part of Moto) as chipset and not TI????
Moto uses TI also :-)
tmenguy | October 18, 2006Moto uses TI also
Excellent Article. Can we have Mobile App framework comparison of
Alex | August 14, 2007Excellent Article.
Can we have Mobile App framework comparison of the key players like Sky Mobile , Sasken, Open-plug, AJAR, iWoW etc.. ?
Hi Alex, Thanks for your comment. Hum this comparison is not so
tmenguy | August 21, 2007Hi Alex,
Thanks for your comment.
Hum this comparison is not so easy to be done, because the information for each framework is really difficult to get …or when I have it, I’ll be under NDA of course I can comment much more about Open-Plug that the other ones, but making a good “head to head” comparison would be a very biased task
Thomas
Thank you for your site. I have found here much
Jonn | August 28, 2007Thank you for your site. I have found here much useful information.
sum sum
sum | September 8, 2007sum
sum
Hey, Brilliant work! Who's the author of this blog? I need
Anshu Bathla | September 11, 2007Hey, Brilliant work!
Who’s the author of this blog? I need more information on this industry, being involved in a related research project.
Thus, would appreciate if you can just drop a line at: ab1906@soton.ac.uk
Cheers!!!
@nshu…
Thanks Anshu, If you need more precision feel free to look
tmenguy | September 12, 2007Thanks Anshu,
If you need more precision feel free to look here in my blog, or many other great ones.
Check at the bottom of the page their is an “Email me” link
Thomas
[...] to the Carnival this week is Everything and the
Mobile Opportunity - News And Views from Google MO » Blog Archive » Carnival of the Mobilists #49 | May 24, 2008[...] to the Carnival this week is Everything and the Mobile Software Universe. Thomas submitted an article that explains the whole ecosystem for building a mobile phone. It’s surprisingly complex. If [...]
Thomas, Thank you so much for this post - it saved
Lyuba | July 15, 2008Thomas,
Thank you so much for this post – it saved me hours of searching for the same information on the Internet. There’s only one more detail that I really need to know, and I’m not sure if you might know the answer to this as well.
Once a headset is manufactured, it has to be packaged. Do you happen to know which of the players you mentioned in your post makes the decision of what kind of packaging to buy and where to buy it?
If you can answer this, I will owe you big-time!
Lyuba from China
Oh, and where is this "email me" link you speak
Lyuba | July 15, 2008Oh, and where is this “email me” link you speak of? I don’t see it at the bottom of the page.
Sorry ...no info about packaging :-)
Thomas Menguy | July 22, 2008Sorry …no info about packaging
Excellent article! Part II available? where? Thanks!!
jou smith | March 16, 2009Excellent article! Part II available? where? Thanks!!
[...] long (see my article about the industry ecosystem) OEM
Nokia stops using ODMs … Where the ODM market is going? | Everything and the Mobile Software Universe... | March 30, 2009[...] long (see my article about the industry ecosystem) OEM have heavily relied on ODM for production and many times design of their phones…except Nokia [...]
[...] long (see my article about the industry ecosystem) OEM
Nokia stops using ODMs … Where the ODM market is going? | Everything and the Mobile Software Universe... | March 30, 2009[...] long (see my article about the industry ecosystem) OEM have heavily relied on ODM for production and many times design of their phones…except Nokia [...]