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Complex Cellphones Hold Industry Back, Report Says

10/11/2007 10:01:00 AM Eastern

Florham Park, N.J. — Widespread problems with embedded software in today’s more complex cellphones, particularly smartphones, is preventing the cellphone market from reaching its potential, according to a research report that surveyed 90 embedded-software suppliers and cellular industry executives.

Embedded-software problems result in product delays and phones laden with bugs, said Accenture, an embedded-software services company that teamed up with the Economist Intelligence Unit to produce the study. Software bugs force retailers to spend time addressing customer complaints, sending phones to a service center, and handling their return. Product delays frustrate consumers who walk into stores looking for anticipated products, Accenture said.

“These problems directly affect smartphone retailers in various ways related to image, branding, performance, reliability, customer retention, business growth and strategy,” Accenture said.

The time spent by retailers dealing with consumers’ malfunctioning phones could be significantly reduced if more phones were equipped with Firmware Over The Air (FOTA) capability, which enables carriers to upload firmware upgrades to phones over the cellular airwaves to debug a handset, said Abhijit Kabra, Accenture’s senior executive of product engineering and development. Only about 10 percent of cell phones feature this capability, whose deployment started two to three years ago and is being deployed at a “steady pace” but not a “radically fast pace,” Kabra told TWICE.

Over-the-air software downloads enable consumers “to order the software that fixes the problem or problems through their own smartphone by calling an operator,” he said. “The software upgrade travels directly into the smartphone email file.” FOTA thus “reduces the time the retailer has to spend addressing these problems and increases the time the retailer can spend on other aspects of the business, such as generating revenues.”

Even with widespread FOTA deployment, however, “some of this over-the-air interface software can’t even solve some specific cell phone problems,” Kabra told TWICE. “So those 10 percent that do have the interfaces still tend to have other software problems.”

Besides accelerating FOTA adoption in handsets, the cellular and embedded software industries have to get their act together to overcome other problems, Accenture said. In its survey, for example, Accenture found that 46 percent of surveyed embedded-software manufacturers admit they deliver their products to market late; 88 percent admit they do a poor job testing products; and 81 percent admit don’t work well with other companies and other industry organizations

“Delays are rampant,” Kabra said. “That means many cellphone retailers are facing situations in which customers come into their stores asking for smartphones they have heard or read about that will be available on a certain date. When these customers find out the products aren’t in retail stores yet, they tend to get angry and frustrated. This hurts the relationship, trust and reputation that retailers have with their customers.

“Worsening the problem, when the smartphones do become available in retail stores, they often have software bugs that need ironing out,” he continued. “One main reason for this is the devices have not been sufficiently tested for reliability and high-performance.” Again, “retailers take heat from customers in these situations and hurt their own businesses as upset customers look elsewhere for retail stores with higher-performing and more reliable smartphones.”

Poor collaboration between wireless infrastructure manufacturers, smartphone manufacturers, and carriers is also hurting retailers, Kabra said. These groups “are underachieving working together.” If retailers know about these issues, they could work closely with the other players to improve collaboration, he said.

Much of the blame for product delays and bugs “belongs to a recent a shift from standalone devices with limited functionality, to complex, multifunctional, networked devices,” according to two-thirds of the executives surveyed.

“Increased product functionality has come at a steep price for manufacturers,” said Accenture senior manager John McConnell. “The pervasiveness of embedded software means devices are more complex than ever. This complexity often translates into a need for more product testing, a longer and more expensive product development process, and lower product quality and reliability—just the opposite of what customers want.”

All of this multifunctionality, he said, “increases the demands on embedded software developers, boosting their need for collaboration, better testing procedures, and standardized work procedures.”

In the U.S., one result of growing product complexity might be fewer handset choices for consumers. Jerry Panagrossi, Symbian’s VP of U.S. operations, told Accenture that the U.S. cellphone market will eventually follow the trend in Japan, where “as a greater percentage of the population owned a mobile phone, the operators came under fierce competition for voice services. The customer acquisition costs jumped. So operators deployed 3G infrastructure to support greater capacity and began to trial data services.”

 Eventually, he said, “operators noticed that they had too many devices in their portfolio to continually upgrade. So the market began to standardize on fewer networked devices with fewer operating systems, while abandoning proprietary operating systems altogether.”

Linux, the open-source software, is playing a growing role in the mobile phone industry, Accenture said. “We believe that all embedded-software sectors can expect to see an increase in the use of Linux because of its low cost and flexibility,” said Dr. Greg Besio, Motorola’s corporate VP of mobile-devices software. “We're driving a lot of effort into Linux as service providers have looked to standardize on fewer—but nonproprietary— operating systems.

Accenture’s report includes case studies of how some embedded-software suppliers have conquered the market’s challenges as they “pursued high performance in an increasingly complex” business.

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