The platform-based smartphone competition is moving at a fast pace and a lot of recent events are changing and shaping the competitive environment. We have seen several platform victims: Symbian,  MeeGo (maybe),  Windows Mobile, Kin.

The latest victim is WebOS, in the Third Quarter 2011 Results, HP press release states:

• “..shutting down operations for webOS devices and exploring strategic alternatives for webOS software”

Adding: HP will discontinue operations for webOS devices, specifically the TouchPad and webOS phones. The devices have not met internal milestones and financial targets. HP will continue to explore options to optimize the value of webOS software going forward.

It was April 28 2010, when HP acquired Palm for $1.2 Billion and this is the press release:

The combination of HP’s global scale and financial strength with Palm’s unparalleled webOS platform will enhance HP’s ability to participate more aggressively in the fast-growing, highly profitable smartphone and connected mobile device markets. Palm’s unique webOS will allow HP to take advantage of features such as true multitasking and always up-to-date information sharing across applications.

And just a few days ago, August 15 2011 Larry Page, Google’s CEO writes Supercharging Android: Google to Acquire Motorola Mobility. Google, an Internet company acquires a smartphone HW company. The article on the NYT Google to Buy Motorola Mobility for $12.5 Billion.

There are some interesting questions. Is the modular platform approach offered by Google with Android inferior to the integrated approach used by Apple? Android has been a great success story and it is basically dominating the smartphone space in terms of market share. It is hard to argue that is not successful. However, Horace Dediu in one of his articles (appeared on HBR Google’s Strategic Mistakes Drove Motorola Buy) writes that some cracks started to appear in the Android strategy.

The mistakes mentioned in the article are:

• Issues with intellectual property in Android caused some licensees to have to pay royalties to patent holders, increasing the cost.
• Fragmentation took hold where some versions of the software were used by some licensees on some products without the option or incentive to upgrade
• Finally, some vendors modified the software resulting in missing features or inconsistent user experiences — even to the extent that Google’s own services were omitted.

At the moment is not really clear Google’s motivations behind the acquisition. Is Google entering the HW business, or is just interested in Motorola’s patents, or maybe a combination of both?  Certainly, being a licensor and a licensee is not really a good thing, and if we can learn from history, this was one of the problems with Symbian.

Horace Dediu at asymco.com comments the acquisition in the HBR article and in a podcast , The Critical Path Acquisitions Episode #4.

Another well written piece on the acquisition is Michael Mace Google and Motorola: What the #@!*%?

So, is vertical integration the way to go in the mobile industry? GigaOM writes Now common in 5 of 6 mobile platforms: total control “The mobile market is shifting away from the platform licensing model as the top companies are instead looking to replicate Apple’s business model”.

At the moment 3 mobile platforms come from a single company controlling the full integration of HW and SW. Apple iOS, RIM BlackBerryOS  (and later with QNX), Samsung (Bada). Nokia  will replace Symbian with Windows Phone.  HP  with WebOS has just given up the battle.  And 2 other mobile platforms are modular, and are Android and Windows Phone.

The FT writes Vertical Success requires more than just Motorola:

““Verticalisation” is an ungainly word for what has become a highly fashionable trend in the tech world. With Google slapping down $12.5bn in cash this week to buy Motorola Mobility, the idea just received another big boost. But like many business fashions, there is a risk that this one is about to become an uncontrollable bandwagon – with unhappy consequences.

..

Nor has a vertically integrated approach proved to be a panacea in the smartphone business. Palm’s stumbles over the years, and the troubles of BlackBerry maker Research in Motion, point to the difficulty of mastering all the skills needed to create a hit product. Even Microsoft dabbled in going vertical as it struggled to catch up with the iPod, and later the iPhone – but all it could come up with were marginal products like the Zune music player and short lived Kin phone.”

And Nokia with Symbian..

It is not really clear what’s the successful path to smartphone platform competitive advantage. Vertical integration provides advantages, but as the industry mature, the theory says that the modular approach is the way to go.

For a theoretical back ground on vertical integration, see my the older posts:

• Vertical integration and vertical disintegration
• Vertical integration and vertical disintegration II

In this smartphone highly competitive environment, everything can happen and in a very short time. Nokia is exiting the software business, Google is (probably) entering hardware business and HP is exiting the hardware business. What’s the next?