In seeking to talk about economics, and about market failure, I’m moving way outside my depth. There seem to be so many different viewpoints about economics, each appearing reasonably plausible to me (when I read them in isolation), yet all contradicting each other. It’s a tough subject! What one writer sees as a market failure, another writer sees instead as a failure of individual actors within that market – and so on.
However, one of my correspondents has made a series of thought-provoking comments about market failure in the particular field of mobile operating systems. I believe these comments are sufficiently unusual and also sufficiently intriguing, to deserve consideration by a wider audience – despite my reticence to broach the subject of economics. The comments arose in the responses to an earlier posting of mine, “De-fragmenting the mobile operating system space“. To quote from these responses:
Currently, mobile developers withstand very high development costs due to a very fragmented mobile ecosystem, meanwhile mobile OSes enjoy a much lower developing cost than they would if they had to built compatible OSes between versions: therefore, a de-fragmentation process would move developing costs from mobile developers to mobile OS developers, that is, mobile OS companies/foundations would have to internalize those costs.
But developing an OS with full source or binary compatibility between versions is an order of magnitude more expensive than building one with broken compatibility, and it gets worse with time and versions. Moreover, building a de-fragmented mobile OS requires committing considerable resources (people, money, time) in the present, sunk costs that must have positive expected returns in the future (at least to cover developing costs and money opportunity costs).
Will foundations/consortiums (Symbian, LiMo, OHA/Android), given their non-profit nature, carry these investments in the present to obtain stable software platforms in the future? As Adam Smith wrote, displaying good will and hope is not enough: mobile foundations/consortiums/companies committing resources in the present must charge higher prices in their future and profit handsomely from their risky investments, otherwise the effort will stop…
- Economic incentives on individual mobile operating systems will lead these operating systems to diverge from each other;
- This divergence will mean that application developers (and providers of middleware, etc) will suffer greater difficulties, because of having to spread their efforts across larger numbers of diverse mobile operating systems;
- As things stand, no one who is in a position to actually do something to reduce the divergence of mobile operating systems, has a sufficient financial incentive to make that happen;
- So we can actually expect things to get worse for application developers, rather than better.
(I’m over-simplifying what my correspondent actually says; see the original for the full argument.)
Tentatively, I have the following answers:
- I believe that things will actually get better for application developers, rather than worse;
- It’s my experience that major players in the mobile phone industry can, on occasion, take actions based on strategy rather than business case;
- This requires strong self-discipline on the part of these companies, but it’s not unknown;
- Action on strategic grounds becomes more likely, the more clearly the argument is made that the actions that make sense in the short-term are actually detrimental to longer term interests;
- The other key factor in this decision is whether the various actors can have a high degree of confidence in at least the medium-term viability of the software system they’re being asked to collectively support.
So, in line with what I’ve argued here, what we need to do is to keep on pushing (in creative and diverse ways) the merits of the case in favour of de-fragmenting mobile operating systems – and to keep on highlighting the positive features of the mobile operating systems (such as Symbian OS) that are most likely to enable at least medium-term success for the whole industry.
Incidentally, one big contribution that the shareholders and customers of Symbian are taking, towards that end, is to agree to standardise on S60 as the UI framework for the future. They’ve taken that decision, even though both UIQ and MOAP(S) have much to commend them as alternative UI frameworks on top of Symbian OS. They’ve taken that decision for the greater common good. New phones based on the UIQ and MOAP(S) UI frameworks will continue to appear for a while, during a transitional period, but the Symbian Foundation platform software is standardising on the S60 framework. Elements of both UIQ and MOAP(S) will be available inside the Symbian Foundation platform, but the resulting system will be compatible with S60, not UIQ or MOAP(S). That’s a decision that will bring some pain, but the shareholders and customers have been able to support it because:
- S60 is now (in contrast to the earlier days) sufficiently flexible and mature, to support the kinds of user experience which previously were available only via UIQ or MOAP(S);
- Indeed, S60 now has flexibility to support new types of UI experiences, whilst maintaining common underlying APIs;
- Distribution of S60 will pass out of the hands of Nokia, into the hands of the independent Symbian Foundation.
I also believe that the disciplines of binary compatibility that have been built up in Symbian, over several years, are significantly reducing the difficulties faced by developers of add-ons and plug-ins for Symbian software. Because of this discipline, it now costs us less to maintain compatibility across different versions of our software. It’s true that some practical issues remain here, with surprising incompatibilities still occasionally arising in parts of the software stack on Symbian-powered phones other than Symbian OS itself. But progress is being made – and the leading nature of the Symbian platform will become clearer and clearer.
To finish, I’ll give my response to one more comment:
Samsung is gaining market share and producing S60 devices. Let’s suppose that Samsung starts snatching portions of market share from Nokia, do you really think anyone believes that Nokia would refrain from intentionally breaking compatibility to derail Samsung, if that would be necessary?
I can see that there might be some temptation towards such a behaviour, inside Nokia. But I don’t see that the outcome is inevitable. Nokia would have to weigh up various possible scenarios:
- Symbian Foundation quality assurance tests will notice the compatibility breaks, and will refuse to give Symbian accreditation to this changed software;
- The other licensees could create their own fork of the software (which would have official endorsement from the Symbian Foundation) and build up a lot of momentum behind it.
Instead, Nokia – like all users of Symbian Foundation software – should be inclined to seek differentiation by providing their own unique services on top of or alongside Symbian platform software rather than by illicitly modifying the platform software itself. That’s a far better way to deploy skilled software engineers.