As the war for Internet supremacy goes mobile, the world's biggest tech companies are jockeying for position. And the battle lines are clear at the Mobile World Congress in Barcelona, Spain, where nearly every wireless combatant is in attendance. Google (GOOG), Microsoft (MSFT), Intel (INTC), Nokia (NOK), Verizon (VZ) and others are vying to unplug computing from your desktop machine, disconnect media from your home entertainment system -- and make Web-based content available to you anywhere.Unlike desktop software and Web search, where Microsoft and Google, respectively, dominate, the mobile operating system market is like the old Wild West, with no clear leader and a fiercely competitive showdown on the horizon.
On Monday, Microsoft wooed the industry figures assembled in Barcelona with an ambitious new mobile operating system -- the software giant's first new mobile offering in three years. Dubbed Windows Phone 7, it's designed to attack Apple's dominant iPhone and Google's insurgent Android platform, which has been adopted by an ever-growing roster of wireless providers.
No Hard Feelings?
Also on Monday, Intel and Nokia unveiled an impressive new, Linux-based platform. And a top Google executive, Vic Gundotra, downplayed his company's friction with iPhone-maker Apple (AAPL), which is physically absent from the show, as usual. But its presence is felt everywhere. Relations between the two Silicon Valley titans have frayed as Google has forged into the mobile phone market. Last fall, Google CEO Eric Schmidt stepped down as an Apple board member, leading to louder talk of increasing conflicts between the companies.
"Apple is a very close and valuable partner, and we're very excited about the relationship we have with them today. We have no reason to believe that's going to change," Gundotra told the Reuters wire service.
On Tuesday, BlackBerry-maker Research in Motion (RIMM) is scheduled to announce a new operating system of its own, designed to expand its customer base beyond its traditional stronghold, corporate clients. As Apple's iPhone has gobbled up market share, RIM has been seeking ways to expand its market footprint.
No Big Acquisition for Microsoft
These tech giants are jostling over the explosively growing smartphone market. Soon you'll be watching streaming news on your phone, video-chatting with your friends and tracking your life on a device that fits in your pocket. When you get home at night, you'll connect it to a networked home media system with all your files viewable on multiple, low-price flat-screen monitors.
It's the fiercest competitive landscape ever for would-be mobile tech giants.
Microsoft CEO Steve Ballmer used the conference to shoot down rumors that the software leader would buy a hardware company like Nokia or RIM. "The word 'ever' is a big word, but I certainly don't feel like that's the right strategy for us today, Ballmer told Reuters in Barcelona. Microsoft remains primarily a software company, not a hardware manufacturer. Still, it has branched into music players with its Zune and video-game consoles with the Xbox 360. Also, Microsoft is sitting on $40 billion in cash, so a strategic acquisition is well within its wheelhouse.
Clearly relishing the perceived tension between his enemies Apple and Google, Ballmer "smiled," Reuters reported, as he declined to comment on Google's increasingly fractious relationship with Apple.
A Mobile Software Also-Ran, So Far
Thus far, Microsoft takes credit for the show-stopper, unveiling its long-awaited new mobile operating system on Monday -- the brand-challenged "Windows Phone 7 Series." But name aside, the new system, modeled on Microsoft's "popular" Zune music player, gained quick accolades Monday. Gizmodo called it "the most groundbreaking phone since the iPhone."
Microsoft is a money-making software juggernaut, but in the mobile market, it's just one company in a nascent but highly competitive business. It dominates the desktop-PC market -- Microsoft software runs on 500 million computers worldwide -- but it has yet to see a truly big breakthrough in the mobile phones.
Microsoft has watched arch-nemesis Apple bask in the glory of the iPhone -- and leverage that success into other markets. Today, Apple controls over two-thirds of the legal online music market, and it has fused that dominance with its wildly popular phones and forthcoming iPad tablet computer. As my colleague Michael Fitzhugh notes, Microsoft places a distant third in the mobile operating system market, claiming only an 18% share. That's well behind RIM and Apple, which have 41.6% and 25.3% shares, respectively.
Google's Nexus One Stumbles
And Google has been working furiously to spread its Android mobile operating system far and wide. Already, Verizon Wireless (VZ) and Sprint Nextel (S) have had success with Google's Android-powered phones, which now claim over 5% of the mobile OS market. But after a round of publicity following Verizon's strong Droid launch, Google stumbled with its own Nexus One phone.
Always experimenting, the company tried marketing its new phone on the Web. But that attempt backfired after Google got slammed with customer complaints over shoddy 3G service, and software developers panned the lack of tools for building new applications to run on the phone's Android 2.1 operating system.
In 2010, it's clear that the major battles in the war for over the Internet will be waged on the mobile front. Apple's iPhone has been remarkably successful and has made life extremely uncomfortable for RIM. Google is moving aggressively. And now, after three years on the sidelines, Microsoft has rejoined the fray. Let the games begin.
Take the first steps to building your portfolio.View Course »