The ASUS effect prediction may be coming true after all .. The Mobile device industry mirroring the PC industry

ASUS mobile.JPG It seems that the PC maker ASUS is jumping on to the Android game with Android based devices ..

Oddly enough, this was a key part of two talks I gave recently, One at Mobile Monday in Amsterdam and the other at the SIM alliance conference in Hong Kong.

While I was not referring to ASUS – the company – I was referring more to the effect of Open source (especially Android) since it will mean that many NEW players can enter the device manufacturing market who are currently not device manufacturers(may a 1000 devices bloom!) because the fixed costs drop This is good for innovation i.e. if we have more device manufacturers and not just the Top 5 (aka the mobile device industry mirrors the PC industry)

In the The ASUS effect : Mobile innovation triggered by open source, long tail devices and a shift in the device value chain, I said:

a) Mastery of the supply chain achieves economies of scale. Economies of scale apply to ecosystems with higher fixed costs. However, as the fixed costs decrease, then we start to get a more divergent market. We will discuss how fixed costs for handset development are likely to decrease.

b) If the market for mobile phones follows the PC market, then there could be as much as 40% white label devices . In contrast, the big five control as much as 84% of the market today (For Q2 08, the sales percentages for the top 5 handset makers is as follows: Nokia 41.1%, Samsung 15.4%, Motorola 9.5%, LG 9.3%, and Sony Ericsson 8.2% Rest 16.4% – source Chetan Sharma consulting)

c) In addition to a wider range of devices, there is of course likely to be a range of applications that can benefit from a wider number of devices. Who benefits from this? In the end the customers and developers will be the winners as is always the case with open systems and open source. Customers, because they will have more choice and developers because they will have more avenues to deploy their ideas. The whole ecosystem will also benefit as a result. If the impact similar to that of the ASUS is to be mirrored on to the mobile ecosystem, then we are likely to see a wider range of cheaper mobile devices with the differentiation being provided by software I watch this space with interest ..

Image source: Mobile crunch http://www.mobilecrunch.com/2008/10/29/asus-jumps-into-the-android-game/