Competitors & Threats

Competition in Smartphone market

The Smartphone industry has gotten more competitive with the addition of numerous new companies and Smartphone models. There are currently several companies leading the pack. These include Apple, HTC and the Blackberry. Other telecom companies have also started joining in the competition, including mobile phone giants such as Sony Ericsson, Samsung and Nokia. With the market currently growing more attached to the smartphones as compared to other mobile devices, a number of other companies are also starting to release their own Smartphone models.

Growth of Sales On 2010:
According to the press release by Gartner (Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company), smartphone sales are increasing at a breakneck pace. As per their research, handsets defined as smartphones grew by an astounding 96% from the same quarter last year – from 41 million units to 81 million.
The good news for every operating system is that almost every system saw increases from the year prior. We find the following increases in total units shipped, by OS:

• Symbian (Nokia)11,166,000 handsets
• Android (Multiple) 19,706,000 handsets
• iOS (iPhone) 6,444,000 handsets
• RIM (BlackBerry) 3,386,000 handsets
• Windows Mobile (Multiple) -1,012,000 handsets
• Linux-Based (Multiple) -221,000 handsets
• Other OS (Multiple) 602,000 handsets

However, we can see one startling number in the pack: Android. Its growth during the 3rd quarter was more than 1st place Symbian and 3rd place iOS combined. That is a startling metric, given that Android is by far the newest member of the tracked OS types, having been sold since the 4th quarter of 2008.

What does this mean for the future?

1. Windows-based handsets are at their twilight. Although there is some hype surrounding Windows 7 phones, it is unlikely to make a dent in the Big 4. Windows phones are selling only 19% that of 4th place RIM. For the most part, the decline in Windows handset sales can be attributed to its direct competitor, android, which is one of the few other major manufacturer-agnostic operating systems on the market. Sales are down roughly 25% year-to-date from 2009, which is very bad for Microsoft.
2. RIM is starting to walk on shaky ground. Of the Big 4, it saw the smallest growth in the 3th quarter, at just 6%. Of the Big 4, it also has the toughest path ahead. BlackBerry devices are already on most major carriers, meaning that the phones have saturated the market amply. I expect sales to continue to increase, but only in line with the smartphone market as a whole. When the smartphone market becomes fully saturated (which should happen in about 3 to 4 years), RIM may be the first one to be cannibalized, as iOS, Android and Symbian seem to be having a better time at convincing users to purchase their handsets. Finally, its weakness was evidenced by its largest reduction in market share, as it was down 6% from the same quarter in 2009.
3. iOS can still sell well in an Android-filled world. iOS is up a staggering 88% year-over-year, and saw great margins with the release of the newest iteration of the iPhone. Most importantly, its sold very well with so many exclusivity agreements, most notably AT&T in America. It is rumored (and has been for some time) that the iPhone may go to other networks once the exclusivity contracts are finished.
4. Symbian’s market share is starting to become cannibalized. Although it has been a fact for the past year, it peaked in the 3rd quarter. Symbian lost 6% of its market share during the 3rd quarter of 2010, when compared to 2009. Nokia still managed to deliver the most handsets of any Smartphone manufacturer, but one can wonder how long it’s growth can be sustained as other alternatives (e.g. Android) are vastly outpacing it.
5. Android is likely to dominate OS sales in the future. I’ve been very bullish on Android since it came out two years ago. Despite its flaws as a gaming device (as evidenced by rather weak, but growing sales), it has seen a meteoric rise since Q4 of 2009. To put it in perspective, Android is selling more hardware per month than it sold during the entire year of 2009. It has posted two consecutive quarters of 100% growth. Not year-over-year, but from the last quarter. Although this pace is unlikely to be sustainable for much longer, it shows that the pace is unbelievable. Couple this with the huge growth of the smartphone market, and we’re looking at a likely scenario of 120 to 170 million Android handsets being sold next year.

Expectation for the future:
Knowing hardware shipments is critical to forecasting performances of each market place for games. Android is simply becoming too large to ignore, as the massive number of shipments means that there will be an incredible number of users that desire gaming content. If current trends continue, we could be looking at a 200 million install base for Android by the end of 2011. Although the market is certainly fragmented, we’re seeing titles perform at decent sales levels. Early numbers are in for Android in October, which put sales at approximately $2.1 million USD during the month, up 22% from $1.8 million in September. Likewise, iPhone should continue to be the leader in revenue for some time, as sales continue to increase with huge average revenues per user. Both platforms look to be viable in the future, with Android having a stronger upside, and likely surpassing iOS in 2012 or 2013 for game revenues in trends persist.


Threats:
While smartphones are garnering more attention from the cybercriminal community, most users are not aware of the risks. However, the security industry is struggling to develop tools to defend these devices, a panel of experts said on Wednesday at RSA Conference in San Francisco.
For years, members of the information security community have warned that smartphones will increasingly be targeted by cybercriminals as they grow more ubiquitous, said panelist Marcus Sachs, vice president of national security policy at Verizon. Even though mobile malware has been discovered in the wild, many argue that it does not pose a significant threat right now.
But recent history proves that other long-predicted threats – such as attacks targeting critical infrastructure systems – have materialized, Sachs said.
“Our adversaries are entrepreneurs,” he said. “And they are just as mobile as we are.”
Smartphones are appealing to cybercriminals because they contain vast amounts of data and are always connected to the internet, said panelist Joseph Opacki, technical program manager of the FBI's malware analysis program.
The threat of mobile malware was recently highlighted by a team of researchers, including from the University of Hong Kong and Indiana University in Bloomington, who developed a Trojan dubbed Sound miner that can monitor a user's phone calls and steal credit card numbers that are spoken during a conversation or entered into the phone's number keypad. The Trojan, which targets phones running Google's Android platform, shows that the threat of mobile malware is real, Opacki said.
Meanwhile, panelists agreed that mobile applications are one of the greatest threat vectors for smart phones.
“Even though we say this is the year of the mobile threat, people are still downloading any app they want,” said panelist Adam Meyers, director of cyber security intelligence at IT services and solutions consulting firm SRA International.
Also, mobile web browsers and operating systems contain vulnerabilities that could be exploited for malicious purposes, panelists said. Users may begin to encounter malware that exploits these weaknesses via drive-by-download on mobile websites, Meyers warned.
Despite the threats, most users don't even think about smart phones as mobile computers or consider the risks posed by these devices, Opacki said.
You think you're secure, but mobile devices are the next target for malware writers,” he said.
Because smart phones are essentially full-fledged computers, organizations need to secure them with the same level of protection afforded to PCs, said panelist Winn Schwartau, chairman of smartphone security firm Mobile Active Defense.
But part of the problem is that technological innovation is moving quicker than security, and vendors are struggling to develop technologies that can protect mobile devices from malware, Meyers said. The market for enterprise-grade smartphone anti-virus solutions, for example, is largely nonexistent, panelists said.
In the meantime, organizations should question whether to support new devices and consider the risks before doing so, Sachs said. Also, user education is extremely important and organizations should ensure employees are conscious about what they do online.

 Security threats

 Security threats were bound to catch up with the proliferation of smartphones across the enterprise. More than half of mobile device-makers said their products experienced malware, voice-, or text spam attacks last year, according to a newly published report from McAfee.

Experts have long warned that smartphones, such as Windows Mobile and iPhone handsets, could become the new weakest link in the enterprise, with more users relying on them for accessing corporate email, surfing the Web, and other applications. "[Users] want to do everything on them," says Stewart Allen, a Toronto-based independent consultant. "But they are [typically] completely bypassing the IT infrastructure." They are also bypassing security, he says, putting sensitive corporate data at risk

Enterprise smartphones are starting to get hit with the types of security problems wireless LANs have been facing, industry experts say. "We've had a lot of conversations with our [wireless] customers, and a lot of the same rules that apply to laptops and wireless apply to handhelds," says Scott Pope, product marketing manager for mobility solutions at Cisco Systems. Viruses -- especially via Windows -- can be carried from smartphones to the network, he says, which puts the entire infrastructure at risk.

And identifying smartphones on the network is difficult today. "This is a fairly tough nut to crack. How do I decide if the laptop is getting on the network or a handheld? If I'm running NAC [network access control], I can do it...But visibility into the handheld is an area where there's not much deployed," Pope says.

Last fall, a new smartphone-specific malware variant called Beselo emerged, prompting warnings from mobile security vendor Adaptive Mobile, which said one of its mobile operator customers (it wouldn't identify by name) gets hit with 100,000 virus incidents each day. That same provider had previously seen a total of 70,000 in one year. Beselo spreads via Bluetooth and Multimedia Message Service (MMS) and goes after all smartphones, according to Adaptive Mobile.

However, like other mobile virus variants today, Besolo doesn't rapidly spread widely. "It doesn't replicate itself particularly well. That is a fundamental limitation of most mobile viruses," says Gareth Maclachlan, COO and co-founder of Adaptive Mobile. He says only 10 percent of MMS users were infected with a virus within a six-month period. "MMS is not a particularly effective [means of spreading malware]," he says.

Meanwhile, more than half of the mobile manufacturers surveyed by McAfee said that between 10,000 and 1 million of their handsets experienced data-loss incidents last year; voice- or text-spam attacks have hit the most devices overall, with more than 20 percent of respondents reporting that in excess of 1 million of their devices had been hit with these attacks. Nearly 50 percent said they have experienced an increase in costs for patching and fixing their devices.

But this is only the first wave of security woes that will eventually plague smartphones, experts say. One mobile device chipset vendor quoted in the survey said the combination of multimedia applications and opening up of mobile operating systems "will be the tipping point" for mobile security problems.

Malware Threats to Smartphones Are Real

A recent report from security giant McAfee (McAfee, Inc. (; ) is an antivirus software and computer security company headquartered in Santa Clara, California.)said malware growth on mobile devices is at an all time high. In 2010 mobile malware threats increased by 46 percent from the year before, it said mobile platforms suffered from several attacks including SymbOS/Zitmo.A and Android/Geinimi. SymbOS/Zitmo.A was from the creators of the Zeus botnet as a repurposed an old version of a commercial spyware package. Android/Geinimi went after the Android operating system, as it was a Trojan inserted into legitimate mobile applications and games for the OS.

The report also identified 20 million new pieces of malware in 2010, equating to nearly 55,000 new malware threats every day. McAfee said the most popular spyware of the year tapped into the cybercrime mentality that permeated the security landscape.