Smartphone operating systems (OS) have become arguably ‘the’ most critical factor in the mobile device market in recent times. Whilst obviously being crucial to the functional capabilities of a mobile device, they are now also seen as the cornerstone of its revenue potential. This has brought about a fascinating battle amongst the biggest names in the mobile and Internet markets, all looking to ensure their OS is the market leader. The result of this battle is likely to have a significant influence on who will dominate these markets during the next few years.

Phones with advanced operating systems now account for approximately 70% of the contract market in the UK*. This has led to a significant market share decline for Symbian, which has for some time been the most prevalent OS in the market, and increased competition amongst the four key operating systems at the higher end of the market – RIM’s BlackBerry OS, Apple’s iOS, Microsoft’s Windows Mobile, and the newest OS to the market, Google’s Android.

Android is an open platform, free for device makers to license and use. Google don’t make a penny selling the operating system, but are expecting the resulting revenue from their app store and their ability to control Internet search through these mobile devices to more than cover the outlay they have made in development.

The signs are that this is likely to be a successful strategy for Google. In May 2010 GfK Marketing Services reported that UK sales of Android phones had risen by more than 300% from the beginning of the year, with one in ten contract handsets sold in the UK running this operating system. As a result of this the Android share of the UK mobile contract market grew by 10.2 percentage points from 3% to 13.2%.*

Unsurprisingly, the evolution of the market and the rise of the Android OS have changed the competitive landscape. There are challenges both for those who have been leading the market, and those who are looking to make inroads.

Apple remains in a strong position. They have a major hold on the market, with their devices, app store, and consumer experience seen by many as second to none. The loyalty that this creates will carry them forward in the foreseeable future, but they must continue to innovate on hardware and software in order to retain their market position.

Similarly, RIM are also in a strong position with their penetration of the business market. However this is tempered by the growth in the number of devices that are able to offer a consumer friendly experience in conjunction with the tools needed for business communications. RIM realised this and announced the release of their BlackBerry 6 OS, which will be highly significant to the continued progress of RIM in the market.

Symbian should certainly not be forgotten, despite recent trends and a shrinking market share they remain the worldwide market leader. They face some significant barriers if they are to maintain this position, however the Symbian4 OS which is to be released in 2011 promises to be a simpler platform which will attract developers, and could ensure Symbian become a major presence in smart phones.

One current unknown is the impact Microsoft’s Windows Phone 7 will have on the market when it is released. Microsoft are widely perceived to have fallen behind their three key competitors in the market, and it’s possible that this release is coming a bit late; however they retain significant influence amongst consumers.

So who is likely to come out on top?

The early signs are that Apple is holding up well in response to the Android challenge. They are continuing to grow share in the mobile device market, no doubt bolstered by the recent release of the iPad. Data from GfK NOP indicates strong loyalty amongst Apple customers in the UK, with 59% saying they intend to stick with Apple for their next upgrade, and only 3% saying that they would be likely to switch to an Android phone the next time around. This was in contrast to Android users, of whom 49% are thinking about switching to a phone with a competing OS.**

For the time being, it is likely that the iOS and Android will grow share at the expense of their competitors rather than each other. Unless devices containing the Blackberry 6 OS, the launch of the Windows Phone 7, or the Symbian^3 OS, are particularly well received, this threatens to become a two-horse race.

* GfK Marketing Services May 2010
** Global online research was conducted by GfK Custom Research among a sample of mobile phone users in Brazil (1480), Germany (1001), Spain (1202), UK (1499), USA (883) and China (578). Fieldwork was conducted during October and November 2010

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Tags: Android, App Store, Apple, Blackberry, Consumer, Ecosystem, , Handsets, iOS, MeeGo, Mobile OS, Mobile Services & Apps, Nokia, Online Services, Operating System, Smartphones, Symbian, Windows Phone 7