Shifting Sands in the Smartphone Market: What’s an Etailer to Do?

Online retailers that have committed to supporting consumers on their mobile phones are bracing themselves for a challenging year.

Just as they thought it was a two-horse race for smartphone dominance between Apple and Google — which enabled them to establish a neat mobile Web and app strategy — a rejuvenated smartphone market is set to spoil their plans.

In fact, nearly all the leading mobile hardware and software companies — like Samsung, Sony, LG, Motorola, Nokia, Microsoft and Research In Motion — recently introduced a wide range of new devices at Mobile World Congress and CES.

This enhanced competition will put immense pressure on retailers that plan mobile as a channel to engage and sell to consumers. It is particularly critical for brands with a global reach to understand the innovations currently reshaping the smartphone industry, as they must now ensure that their mobile presence is robust enough to simultaneously keep up with new hardware and software combinations, as well as the emergence of Asia and other developing markets.

Simpler Times: iPhone and Android Market Domination

In 2011, the smartphone market was dominated by just a few hardware and software partnerships. At the high end of the spectrum, there was just a handful of smartphones of choice for consumers in the U.S. and Europe, including the iPhone, the Samsung Galaxy running Android, and RIM’s BlackBerry.

Meanwhile, Android dominated the lower end of the smartphone consumer market. The many hardware manufacturers that chose to run the open source, limited 2.x version of Android helped cement its market-leading position based on units sold. That created additional issues for retailers, however, as lower-end Android devices supported fewer features for apps and less mobile Web interaction.

The landscape was manageable, though, as the rest of the market was made up of smaller players such as Microsoft and Nokia, which gained very little market traction in 2011. Simultaneously, RIM experienced losses in U.S. market share, through a combination of stalled innovation and a series of missed marketing steps that severely affected its BlackBerry brand.

An Eye on Asia: New Markets and Competition Diversify Smartphone Options

The smartphone landscape is shifting in dramatic ways. The biggest drivers of change have been in Asia and Europe, which have become open and very sizable markets for both smartphone device manufactures and online retailers to win. As these markets continue to mature, smartphone innovation will be pushed forward even further, and online retailers will be forced to keep up in a more fragmented landscape.

At the mass consumer level, most notably in developing countries in Asia and elsewhere, we are seeing a land grab for marketshare. For example Samsung, the largest mobile OEM player, recently introduced its Bada operating system. In just two quarters, it already accounts for 4 percent of total worldwide shipments (mostly in Asia). With the strong early showing of this entirely new operating system, global e-commerce brands are taking notice. This also means, however, that they will be forced to adapt their existing mobile strategies by testing and developing apps and sites that work on a whole new set of devices.

At the high end, Apple will continue to dominate, and its tight connection between hardware, software, and iTunes for distribution will cement its popularity in the app developer community. However, because Apple releases new hardware and operating systems on a six-month cycle, brands are required to support apps and mobile features across two or three of these different versions simultaneously, which increases the costs and human resources required for mobile development and testing.

Google’s acquisition of Motorola will enable tighter hardware and software integration and provide a more-central developer community that mirrors Apple’s ecosystem. However, Google is also working with nearly every other major hardware manufacturer with its open source OS, which means retailers that have committed to supporting the Android user will have hundreds of devices that need to be accounted for.

Additionally, Samsung will continue to assert itself as a major hardware player, and it has demonstrated its own high-end aspirations with the latest entry in its Galaxy product line — the Galaxy Nexus.

Motorola also recently entered the higher-end market with an aggressive push of its Motorola Razr, which runs Android’s Ice Cream Sandwich OS.

Nokia re-entered the smartphone market with new hardware running Microsoft’s Windows Phone 7.5, aka Mango.

Finally, while RIM continues to struggle to innovate, the forthcoming release of its new BlackBerry OS 10 promises a solid new foundation for BlackBerry users.

Global Scale for Brands

With this recent flurry of new smartphone devices and operating systems to account for, global brands face a unique challenge as they look to scale their mobile presence to reach the smartphone-carrying consumer.

As consumer options continue to broaden in 2012 and beyond, and more competition seeks to disrupt the current landscape, the key challenge for online retailers will be to ensure that their mobile sites and apps function properly on all devices and operating systems. Additionally, as Asia has emerged as a lucrative untapped market, understanding the Asian smartphone landscape is crucial for retailers that want to reach the global consumer.

In this new mobile world, brands must develop and deliver a robust mobile strategy that supports all of the increasing devices and operating systems, beyond just the few dominant players they had to support in years past. And in order to separate themselves in an intensely competitive environment, online retailers must understand how these new devices and operating systems are used by consumers, while also continuing to innovate and deliver easy-to-use mobile solutions.