All of this adds up to make a massive – and still growing – market for everyone involved in what is an increasingly complex value chain. According to Gartner, just under one billion mobile phones were manufactured in 2006 – adding up to a market for the chips alone of US$41 billion. As the huge populations of both India and China switch onto mobile, those figures are expected to surge yet again in line with their swelling economies, while even the poorer parts of the developing world are playing catch through falling handset prices.

Above the basic dimension of simple voice and messaging connectivity, additional forces are also at work on the demands that we place on our handsets. While cameras and multimedia capabilities are now seen as standard, Near-Field Communications (NFC) finally looks like it’s starting to take off after a number of years loitering in the doldrums, offering contactless payment functions. With mobile music, video content, advertising, RRS feeds, on-line purchasing, internet search functions, social networking and all having to negotiate their way through the mobile, the personal mobile wallet is finally becoming a reality.

On top of this, the ubiquity of the mobile handset and the potential power lurking within current SIMs also makes it a potentially powerful tool in helping to resolve the emerging can of worms that’s about to hit the whole telecommunications industry – and wider society - in the area of personal Identity Management. According to a recent report from ID management group the Liberty Alliance, unless service providers exploit their position in the value chain to offer ID management then all their worst fears of being reduced to bit pipe carriers will be realized.

There’s also the impact of other, much more disruptive forces on the horizon as well that are already impacting handset design, such as fixed mobile convergence and the need for hybrid cellular/Wi-Fi devices capable of handling VoIP.

Against this backdrop, it’s clear that ever greater pressure to perform is going to be put not just on the wider network technologies and supporting IT systems, but also on the hardware and software crammed into the few cubic centimetres available in the mobile phone. The other circle that needs to be squared involves the relationship between the handset OS and additional downloaded applications. Just as with the ‘walled garden’ debate of  old about external content, how open should a service provider allow their handset to be – especially if those new applications or widgets might confuse or crash the handset, with the poor operator getting the blame !

While some have tried to draw direct comparisons between the mobile environment and the OS wars that have raged around the PC over the last few years, the handset OS picture is far more cloudy. While, to a large extent, a PC is a PC, handsets can be divided into roughly three classes – basic, featurephone and smartphone. It’s probably also now correct to also highlight some potentially significant developments at the bottom end of the market, driven by the need for ultra-low cost handsets and initiatives like the GSMA’s Emerging Markets project and its sub-US$30 cost point - now being repeated for 3G.

While there has been a bit of a consumer backlash recently in some markets against unnecessarily complex and too feature-rich handsets, it’s in the feature/smartphone sectors where the OS battles are really taking place.  Here, it’s a relatively straightforward – at least for our industry – three horse race between Symbian and Microsoft’s Windows Mobile, with Linux bringing up the rear as an ‘open’ platform.

While headline-grabbing battles between these three communities have been going on for a number of years now, Microsoft has yet to dominate the handset OS market in the way that it has done the world’s PCs and Symbian’s retains a still powerful position in the marketplace as Alison Bogle, Senior Analyst at IMS Research explains, “Some pundits have predicted the demise of Symbian OS as competitive platforms such as Windows Mobile or Linux began to make their mark in the smartphone sector. We believe however that all the evidence points to the contrary. Symbian has enjoyed a significant share of the smartphone market up to now and IMS forecasts that it will continue to do so through at least 2011, accounting for an approximately 42 percent share of the smartphone market by that time.

“Symbian’s naturally going to begin to lose some market share to other competitive platforms, but the OS will remain a viable contender,” she continues. “The platform’s strength in the European market, its backing by Nokia and the S60 group, as well as its support by major operators such as Vodafone will ensure the OS’s strength for the foreseeable future.”

Initially slow to take off, smartphone sales do seem to be booming, driven both by the increasing availability of rich content, messaging and social networking services, but also by the increasingly important role that the mobile device plays as a status symbol. It is reckoned that in 2005, one smartphone was being manufactured every second – while by the end of 2006 that figure had effectively doubled.

For David Wood, executive VP at Symbian the drive for more features is coming from the end user, “What ever-larger numbers of ‘ordinary’ customers are looking for around the world is smartphone functionality at featurephone prices. One of the increasingly important aspects of this involves the use of multiple applications at the same time – users have got used to multitasking at their PCs and laptops so they expect to be able to do the same thing when they’re mobile, such as playing a game while holding a conference call or texting someone. With this increased functionality, many users – especially in the youth market in developing countries or those with limited broadband penetration – can cut the queuing at the local Internet café and join their social networks wherever they are and whenever they like.”

“To achieve this sort of functionality but remain within the small handset technology footprint, we’ve been able to tweak things like demand paging to use less memory, speed performance and prolong battery life. Users these days expect real ‘real-time’ performance and handsets have to support those expectations.”

From the hardware perspective, summed up by Dr G Venkatesh, Chief Technology Officer at Sasken, ‘Smartphones currently have around fifteen percent of the total world market – but that is expanding very rapidly. That said, however, basic handsets not using a major OS will continue to be big for the foreseeable future. Symbian currently has an excellent momentum behind it and it’s clear that Microsoft’s strategy will be largely via the enterprise route, supplying HP and others. Linux does also have a role – though there will be multiple versions and we’re already involved with this market and seeing take up from major service providers such as DoCoMo and vendors like NEC and Panasonic.

“For Linux to be really successful however, that’s going to take some significant investment by the community and we don’t really expect to see widespread Linux adoption before 2009,” he continues. “There’s currently such a big gap between the basic platform and all the middleware that you need to support a featurephone that there’s a way to go yet. Many customers just want pre-integrated functionality on their handsets – just like they get on other consumer electronics devices.”

This perspective is accentuated by IMS’s Bogle: “The Linux ecosystem will have to continue to address fragmentation – one of the most common complaints levelled against the OS – if it is to remain a viable alternative. What many don’t realise is that Linux itself is not actually a complete cellular OS platform – it’s simply a kernel. When that’s been modified to create a solution, it’s resulted in yet another Linux ‘flavour’. Organisations like the LiMo Foundation are however working to resolve these problems.”

This pre-integration now also has to extend to the third-party service providers now playing an ever larger role in the on-line environment, such as the much-hyped Web 2.0 and web services worlds and offerings like You-Tube. Symbian’s Wood adds, “Companies like Google, Yahoo, Skype and E-Bay are all Symbian platinum partners in their own right as well as establishing their own links with some of the cellular operators who themselves are now changing their own data tariffs to encourage take up and loyalty.”

One area that’s going to be interesting to watch in coming months and years is the take up of 3G services in developing countries. With the recent announcement by the GSMA of its ‘3G for All’ campaign to develop a low cost 3G handset and the selection of LG to build it, perhaps enough momentum will pick up to drive featurephone – and more complex OSs - even further and faster.