Creative destruction at the Mobile World Congress

Barcelona played host to big beasts of the phone world

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The mobile device and infrastructure industries continued their familiar yet increasingly complex dance at this week's Mobile World Congress in Barcelona: Consumers and enterprises receive ever more devices to choose from, while carriers scramble to figure out how to support, deploy and make money off the mix.

New devices with yet more operating systems are aimed at creating a class of inexpensive smartphones designed for those still vast audiences that are not using either a BlackBerry, an iPhone or an Android-based handset.


At the intersection of soaring mobile Internet traffic, enabled by ever more sophisticated client devices, and of rising infrastructure investments, in both enhanced 3G and powerful 4G networks, is an industrywide experiment to create new services along with new revenue models.

"Right now, the service landscape [from which] mobile operators actually are gaining revenue in mobile data is very thin, with most of the revenues coming from data service subscriptions that are flat fees," says Bettina Tratz-Ryan, a research vice president with Gartner Deutschland. "So, in order to justify the LTE deployments, which need more cells than in a 3G network to build out to higher bandwidths, mobile operators need to build out services with greater customer experiences. Those can be defined for instance in terms of quality, flexibility, and blended with social media for consumers or with unified communications for business users."

Windows Phone: risen from the dead?

On the device side, the biggest story out of MWC was Microsoft's radically redesigned Windows Phone 7 mobile operating system. The demonstration was only that – showing the new user interface – but it deftly blends typography and minimalist icon design in an easily navigable arrangement; applications, content, and information clustered in "hubs" that have common organization and navigation themes.

Microsoft deflected all questions about the kernel, new developer tools, Silverlight support, what kind of browser it has, or anything else deemed to be part of the "platform."

Nonetheless, the user interface impressed observers. "[T]his was the radical change for which consumers have been waiting in order to reengage with Microsoft," writes Avi Greengart, an analyst with Current Analysis, a technology advisory firm, assessing the news in an online post. "Windows Phone 7 series is competitive across the board – for entertainment, enterprise use, and personal productivity."

Microsoft didn't directly address changes or improvements aimed at enterprise users. But the demonstration showed the "Office Hub" for the Microsoft Office Suite, including the OneNote notewriting application, and important access to SharePoint, Microsoft's enterprise collaboration, workflow, and document management system.

But there's still skepticism about whether the OS can catch up to Apple, RIM, and, increasingly, Android. Veteran Microsoft watcher Joe Wilcox wrote in a post that Windows Phone 7 was "dead on arrival." Microsoft has lost too much market share and mindshare, and faces too much successful competition from Apple and Google Android to resuscitate its mobile offering, he argues.

Both ZTE Corporation and High Tech Computer (HTC) unveiled lower-cost smartphones, making use of Qualcomm's silicon and its recently introduced Brew Mobile Platform (Brew MP) operating system, which incorporates its Brew application framework. Among other things, it supports Adobe Flash. Both companies continue to roll out Windows Mobile and Android phones.

The ZTE Bingo will connect via HSDPA, with 7.2Mbps download speeds, has a variety of built-in popular web services and applications, a 3-megapixel camera, a 3.2-inch touch screen, and A-GPS. The HTC Smart will use HTC's Sense user interface, has a 300MHz processor, the same camera resolution, a slightly smaller screen. Via Brew MP, both can support Adobe Flash. No prices were announced by German mobile carrier Telefonica. The carrier said it will offer HTC Smart "at less than half the cost of smartphones today," according to a company executive.

Carriers coping with change

The device innovation highlights the struggles mobile carriers continue to have in a rapidly changing industry. Google CEO Eric Schmidt told his MWC audience that Google software engineers now focus development first on mobile platforms, and secondarily the desktop. The reason for that shift points to the tectonic changes taking place in the mobile industry.

With its aggressive expansion of mobile search and applications, and linking these with location services and mobile advertizing, Google has the potential to recreate the mobile industry in its own image, where services are free to the end user and paid for by advertising, according to Jagdish Rebello, director and principal analyst at iSuppli.

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