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Larry Dignan has a great article about the financial changes going through the smartphone market in the Between the Lines column at ZDNet today. He notes the financial pains of such world beaters as Palm, Sony Ericsson and RIM (yes, even RIM) and comes to some very astute conclusions:

While RIM, Palm and Sony Ericsson aren’t exactly comparable their relative stumbles do indicate that there may be more leverage for IT buyers. Handset makers are being squeezed and you might as well join in the fun. RIM vs. Apple’s iPhone. Palm vs. Motorola. Penny saving commodity devices vs. gadget lust. The actual scorecard doesn’t matter. It all adds up to leverage for buyers of all flavors as these parties battle for market share and increasingly discount their wares. Meanwhile, the discounting will escalate if customers balk at those pricey smartphones.

Larry goes on to site many factors shaping the current market, and comes to a set of truisms that define market conditions right now and in the near future, which are right in line with my views (see Content, Content, Content).

According to Mr. Dignan:

• Any smartphone company that is primarily hardware based is going to be toast.
• These handset specialists are in a dog fight for market share and profit margins will suffer.
• The mobile market is increasingly driven by software, which is what makes Apple’s iPhone a hot item.
• The game is to become a platform. Sony Ericsson has no platform by itself. Palm doesn’t have its act together. And RIM has an ecosystem, but its army of developers could fall behind Google, Apple and a host of other new entrants relatively easy. Increasingly, the smartphone market will be dominated by software consortiums–Symbian, LiMo, Android–established platforms (RIM and Apple) and carriers that will collect the tolls. The devices makers will increasingly lose control over their collective destiny.

Right on the money, as far as I am concerned. As so called feature phones gain more and more of the physical attributes of smartphones, and elements such as expandable memory, powerful cameras and high level mobile chips become ubiquitous and prices therefore plummet, things are going to become more and more software based. Applications and content access is where vendors will work to distinguish themselves and gain market share…and thusly profit. The OS won’t be enough anymore, now it will require the synergy of OS, Apps and content that create a platform in order to succeed.

Care to know what Dignan sees in the future, and how he rates the odds for each of the major players in the space? Read the entire article HERE.

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Zealot (476 Posts) - Website | Twitter | Facebook

By day a department manager and writer for a major network device vendor...by night Zealot stalks the mean magnetic streets, striking fear into the hearts of bandwidth abusers and theme park mascots. Zealot has been involved with mobile devices for more than a decade now, starting off with dumb phones, moving to PDAs and then to smartphones, notebooks and netbooks with the odd PMP thrown in. Most of his mobile time currently is spent on a Treo Pro, Zune HD, Thinkpad T61, Gigabyte M912M or a Hackintoshed Compaq Mini 704. He proudly groks the Geek community and considers himself a Neo Maxi Zune Dweebie (thanks Will Wheaton!).