The Smartphone licensing race

So Windows Phone 7 (WP7) is now out there on some handsets attempting to compete with the increasing raft of phones running various versions of Google's Android operating system and Apple's iPhone with its iOS. There is a difference however. Phone manufacturers using WP7 or Android have to license that operating system from Microsoft or Google.

They have to decide in the first place which phone models to bring to market with which features and then which system to licence on top of it. While there is a huge marketing budget behind Microsoft's push for WP7, the manufacturers do not have a bottomless pit when it comes to releasing new models of handset. With the increasing competition in the marketplace, Android and WP7 will be vying with each other in the handset producers' minds. And then once they have made their choice of system for a handset, then they have to decide what version of that system software to release on it. There is already significant fragmentation of Android software versions out there across different devices, and WP7 will likely go the same way once later versions appear to support more features. Because some of these features depend on hardware, not all devices will be able to run or upgrade to all versions.

Apple do not have this problem of licensing iOS on iPhone. They can also more easily plan and control the evolution of the hardware and software features on their devices. Handset producers do not have the option of having iOS on their devices and so when choices have to be made for new handsets, it is one of WP7 or Android that will lose out. As the turf wars begin in the future smartphone market, Apple may end up benefitting from the competition between the other two. This benefit is additional to their ability to provide a simpler user experience and higher build quality from the in-house design and integration of hardware and software, and their superior model for developers to earn money from apps.