Gate One: VML's Strategy and Innovation Group

Microsoft and RIM, two of the big hitters in the mobile OS space, are set to release new versions of their mobile operating system this year.  We’re no strangers to articles and blog posts on the matter, as both anticipated OS releases have created quite the media buzz.  In fact, we’ve never watched the smartphone space so closely.  Today, smartphones encompass nearly a quarter of the mobile phone market in the U.S, a number that continues to grow at an astonishing pace from year to year.  That reach and accessibility has created a battle of the Titans.  It has become a race to supremacy, and everyone wants to sit at the cool kids’ table.

As both RIM and Microsoft prepare (and hope) to dazzle consumers with their platforms new features and interfaces, we observe examples of two completely different strategies.  Although both companies ideally wish to deliver a superior product and increase their market share in the smartphone space, their current position is the key to their differing approaches. RIM’s early lead in the space puts them in the unique position of having to watch their back.  It’s all about what the other guys are doing.  On the flipside, Microsoft’s fourth place position in the smartphone sales race (after RIM, Android, and Apple) forces the platform to differentiate itself from the pack.  In either case, it’s imitation versus innovation.

RIM may be the current frontrunner in the smartphone market, but its Goliath status in the space has slowly diminished as competing OS platforms have snatched up chunks of Blackberry’s once-held market share.  In fact, recent numbers published by the NPD Group show Android (33%) beating out RIM (28%) in Q2 smartphone sales.  A Nielsen report published earlier this week contradicted NPD’s figures (reporting that RIM accounted for 33% versus Android’s 27%); either way, the numbers are getting too close for comfort at RIM.  However, their established presence limits their mobility as a platform.  RIM must walk a thin line – don’t let the other players completely outdo you in regards to innovation, while staying true to the form and utility that originally attracted your established user base.

For a while, RIM stuck to their guns and remained true to form, while Android and Apple’s platforms made strides in the mobile OS space.  This stagnation on RIM’s part did cost them dearly; before they knew it, the other cool kids were stepping all over their turf.  RIM evenly lost some of its executive-exclusive appeal.  Five to ten years ago, having a Blackberry was a status symbol – it meant you were somebody.  As the smartphone space evolved (smartphone plans became more consumer friendly, unlimited plans came into play, and the price point of handsets dropped), smartphones weren’t exclusive to c-level execs anymore.  Now, any teenager that can convince mom and dad that BBM saves them money on texting has one.  This shift has been a double-edged sword for RIM.  So what now?  Does Blackberry target the smartphone mass market or try to zero-in on the niche that got them their business-focused reputation.

From the looks of the upcoming Blackberry OS 6 platform, RIM has decided to appeal to the mass market by playing the “me too” game.  Universal search, “enhanced” media interface (think coverflow), richer web browser, and multitouch would all be innovative if the cool kids haven’t already been doing all of that for a year or two now.  They also incorporate social feeds into the package – yeah, there’s an app for that (like 500 of them)!

On the other hand, we have Microsoft, who is also geared to release a new mobile OS this year – Windows Phone 7.  Sure, it’s not the sexiest name on the market, but it may very well be the sexiest interface and user experience combination to hit the space in years.  This platform has already made quite the splash, and I feel that as an industry, we’ve only touched the surface.  Up until this point, it has been a game of “we can do that too/we can do that better” among the major platforms.  Microsoft is, in essence, rewriting the smartphone experience through their upcoming OS.

Windows Phone 7 is changing the way we navigate through our smartphone devices with the introduction of Hubs.  On Windows Phone 7, our entire user experience revolves around what we use our smartphones for most.  Windows has identified these factors and created hubs around each one, these are: people, pictures, music + video, games, marketplace, and office.  By regrouping in this manner, Microsoft has managed to recreate the smartphone experience in a minimalist fashion.  All of a sudden, we do not need to speak geek to understand our way around smartphone devices.  Microsoft simplifies the experience and interface, without compromising utility.  Let’s not forget that Microsoft is a major player in the smartphone space with huge offerings across plenty of other channels.  Beyond simplifying and recreating the smartphone experience, Microsoft is stepping it up with brand synergy – essentially bringing many of its services (Bing, X-Box Live, Zune, etc.) into one cohesive package.  This synergy goes further when you consider the wireless syncing capabilities of Windows Phone 7.  It syncs wirelessly to Zune software and the upcoming Windows Phone Live website.

One of the perks of fourth place is that you can go beyond imitation because innovation has been force upon you.  Not necessarily a bad thing, as Microsoft proves.  Fourth place gives you the freedom to veer off the path, and try the new and exciting things that might be too risky for first or second.  Windows Phone 7 is already receiving support from a wide array handset manufacturers eager to develop devices for the platform, including: Asus, Dell, HTC, Samsung, and LG.

Imitation versus innovation is the name of the development game.  We’ll have to wait and see which pans out in the long run.