How smartphones are transforming small and medium business operations

Smart Phone Revolution and Its Effects on Business

Smartphones are quickly revolutionizing business systems, strategies and the way people and companies communicate and collaborate with one another. The intent of this report is to present how the smart phone revolution is re-ordering the business landscape, changing every aspect of how businesses operate. Smart phones have actually increased the accuracy and efficiency of communications within enterprises, leading to a continually dropping Total Cost of Ownership (TCO) (Mitra, 2010). This report begins with a brief background of the history of the smartphone, and their current state today, followed by an analysis of key smartphone competitors. Next, an analysis of how smart phones are changing the way small & medium businesses (SMB), mid-tier and enterprise companies do business is also analyzed and reviewed. The smart phone's impact on business has also been to create more effective knowledge sharing and the development of more integrated knowledge-sharing networks (Luttenegger, 2010). As smart phone adoption has reached critical mass and today more are shipped compared to PCs, the phone as a platform will continue to accelerate software development and innovation (Romero, 2011).

The Smart Phone Revolution and its Effects on Business

IBM is credited with designing the first smartphone platform and enriching it with several key applications that included basic e-mail, address book, clock, calendar, notepad and a low-end fax client. Introduced in 1993, the IBM smartphone was called Simon and it was more of a novelty than productivity device. In the mid-1990s, Nokia launched its initial smartphone platform, the 9900 Series, which shifted the market away from just concentrating on features to relying on the operating system as the basis of differentiation. As Nokia continued to produce their 9000 Series, their Symbian operating system began to dominate the global, yet nascent, smartphone market (Anderson, 2009). Scandinavian cellular phone providers Ericcson also launched a platform into the market, creating their own variation of the Symbian operating system (Anderson, 2009). In parallel with these developments, Palm Computing launched the first Personal Digital Assistant (PDA) into the market, which was more focused on personal productivity applications relative to the enterprise uses that Nokia and Ericcson designed their phones and operating systems for. These parallel developments served as the catalyst of the smartphone market shifting form pure features to more of a focus on operating systems.

Evaluating Smartphone Competitors at the Operating System Level

The competitive landscape of the market completely changed as Apple, Google, Microsoft and Research in Motion (RIM) entered the smartphone market. Each has their own unique strategies as it relates to operating system design and feature-based differentiation. Each also has their own philosophy about whether their operating systems are open or closed, which according to industry analysts is a predictor of long-term growth (Kharif, 2011). Operating systems are today the primary means by which smartphones differentiate themselves from each other. The Google Android operating system, which is an open platform and has an open policy to source code has seen over 700% growth in adoption in the last twelve months (Romero, 2011). The Android operating system is also used today for defining payment protocols over ad hoc or randomized networks, which is what researchers contend will be the fastest growing area of mobile e-commerce in the coming five years (Tellez Zeadally, Sierra, 2010). Android is also manufacturer and carrier agnostic and has revolutionized open source innovation at the application development level (Kharif, 2011). While Google has trailed Apple, Microsoft and Research in Motion (RIM), their focus on software and application evangelism has led to them dominating new application development (Macsai, 2010).

Apple's iPhone OS has been the leader in closed operating system development and is credited with bringing optics and online collaboration into the industry. The iPhone Series of smartphones helped to legitimize the industry and helped to create a stable platform of developers for the evolving industry and its many platforms. Apple designed the iPhone OS as a means to also locked in customers to their highly profitable iTunes ecosystem. Every application sold for delivered free on the iPhone must be either purchased or downloaded from the iTunes Store. Apple claims this ecosystem based on iTunes is delivering one out of every three dollars of profit for the company (Johnson, 2011) and is also today responsible for 3 billion applications downloaded globally. It has also been the focus of studies on data mining, specifically how to predict application development needs and requirements over time (Saxena, Verma, Pratap, 2010). The design of the Apple iPhone OS also makes the iPhone itself very demanding from a power consumption standpoint as well, as the operating system draws commands for every function from Application Programmer interface (API) calls designed as part of the development toolkit. Apple continues to concentrate on innovation and a closed architecture, a paradox in the smartphone marketplace that Google and their Android operating system, and Microsoft with Windows Mobile are looking to capitalize on. Nokia has also attempted to emulate the Apple iTunes Store with minimal success (Mitra, 2010).

The enterprise market is the most data hungry there is from an application standpoint, and one that has attracted all competitors in the market to create smartphones specifically to this markets' unique requirements. The Blackberry from RIM however continues to dominate this market, as the company first launched their initial smartphones in 1998 after completing a successful financing round prior to becoming a publicly held company in Canada (Anderson, 2009). The BlackBerry OS is updated on average six to eight times a year, continually adding in additional features for the enterprise market. RIM has attained critical mass in the U.S. enterprise market specifically yet has not been able to gain global market share as Apple and the many smartphones based on the Android operating system have (Macsai, 2010). Analysts contend it is due to the relatively limited functionality of the BlackBerry App World development environment that is designed to support enterprise needs above those of consumers. As a result, there are less than 6,000 applications on this platform worldwide, which is only a fraction of what the Android and iPhone OS operating systems have achieved. There are approximately 250,000 Android applications that have been downloaded just over 3.3 billion times as of February 2011. There are 400,000 Apple iPhone OS applications as of February, 2011 as well.

Additional competitors in the market include Windows Mobile, an operating system that is manufacturer and carrier agnostic yet has closed source code. As a result, this operating system and its supported smartphones have less than 20,000 applications developed. In addition, there are fewer smartphones supporting this operating system than any other in the market today. Microsoft's recent alliance with Nokia is specifically focused on using their hardware and WindowsMobile operating system is meant to overcome the weaknesses of this smartphone operating system and the lagging sales of Nokia phones (Wingfield, Lawton, 2011).

Smartphones and Mobile e-Commerce

Another aspect of smartphone adoption is the rapid advances being made in near field communications (NFC) which are a series of short-range wireless technologies being integrated into credit card scanning devices attached to smartphones. The NFC standard supports peer-to-peer communication and also has a series of options for managing secured and encrypted communications of credit card data (Poe, 2005). The start-up company SquareUp.com is the leading provider of NFC-based solutions for the Android market today (Romero, 2011). Squareup.com creates a small reader that inserts into an Android compatible phone and can scan credit cards for payment, while also verifying and authorizing amounts (Tellez Zeadally, Sierra, 2010). This is the first device to be launched using the NFC standard, with several more projected in 2011 (Romero, 2011). NFC is going to revolutionize the smartphone as an e-commerce platform.

Conclusion

The proliferation of smartphones continues to lead to exceptional growth of application development across all platforms, with Android being the clear leader in the last six months of development. The decision to make the platform and source code both open have contributed to Google quickly overtaking Apple and their iPhone OS operating system in terms of market share. It has also need to more phones and devices supporting Android than any other operating system today. The growing competitive threat to the Apple iPad is also attributable to the Android operating system gaining critical mass in this segment of the market as well. Finally, the collaboration applications on smartphones continue to redefine how businesses use these from an enterprise standpoint. Sales force automation, CRM, and customer service have all been made more efficient due to smartphone applications. The dominance of the NFC standard in the development of mobile payment systems, including the innovative approach SquareUp.com is using, illustrate how the rapid pace of innovation will eventually lead to smartphones having greater functionality than personal computers.