Why the New Firefox OS Is So Important

Mobile World Congress, or MWC for short, is under way in Barcelona and already the big telcos are complaining. Researcher Ovum summarized a series of executive comments at the show as a bid to gain a "more equitable share of the spoils."

Specifically, Telefonica (NYSE: TEF  ) chief Cesar Alierta pointed to the major carriers' sizable investments in spectrum and network infrastructure, only to be "pummeled" by authorities, Ovum said in a note. Randall Stephenson of AT&T (NYSE: T  ) , Xi Guohua of China Mobile (NYSE: CHL  ) , and Vittorio Colao of Vodafone (NASDAQ: VOD  ) expressed similar sentiments, the firm said.

No wonder The Mozilla Foundation timed the release of its long-planned Firefox OS when it did. Offering a free, open, and rich HTML-based platform for smartphones is a no-brainer for carriers struggling to cope with the high cost of operating a high-capacity mobile network while paying Apple rich subsidies for the right to sell the iPhone.

Of the four, only China Mobile has maintained stable operating margins over the past five years. AT&T has seen its claim cut nearly in half. Telefonica is down more than five percentage points over the same period. Vodadfone has operated at a loss over the trailing 12 months. Carriers need the sort of cost-cutting relief the Firefox OS promises.

Telefonica has already announced launch plans in its Latin America on its ZTE Network. T-Mobile and Sprint Nextel are also listed as a early partners, and either could bring a device to U.S. consumers before year's end.

Many will no doubt compare Firefox OS to Android, but I see it as the natural successor to webOS, the former Palm operating system inherited and then killed (and then sold) by Hewlett-Packard. Firefox's dependence on HTML5 is reminiscent of webOS' own usage of open web standards for creating apps. The difference here is that every function is built from the ground-up in HTML5, which could reduce costs and put rich, interactive software on cheap handsets.

Developers might jump at the chance to reach a wider audience. After all, there are only 1 billion smart handsets active in the world right now. Open-source alternatives such as Firefox OS, if widely adopted, could cut costs and kill so-called "feature" phones that lack apps.

Would you buy a Firefox OS handset? Are feature phones headed for history's scrap heap? I think so, but I also want to know what you think, so please share your thoughts in the comment box below.

And if you're interested in profiting from the structural shifts affecting the telecom industry, I invite you to take a copy of our in-depth research report on the subject: "The Next Trillion-Dollar Revolution." In it, we give you a closer look at the company we believe is best positioned to profit from the mobile revolution. Get your copy right now by clicking here -- it's free.


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