Will software set the mobile phone free?

Open source software will mean the end of proprietary phone and software bundles, and create universal compatibility and lower the cost of handsets within three years, according to analyst firm S2 Intelligence.

"All the planets seem to be coming into alignment to really blow the handset open," said Bruce McCabe, managing director of S2 Intelligence. "All the barriers are coming down."

McCabe said that the impending release of Google Android would provide a "wonderful catalyst" for the breakdown of proprietary software and hardware bundles from telcos. Other open source handset software includes the recent release of mobile Ubuntu.

McCabe said that open source handsets will create more choice for the consumer. "Within three years ... the notion of telecommunications companies trying to secure an advantage through exclusive rights to a handset will be dead."

McCabe made reference to the rush by Australian telcos to secure rights to the iPhone, suggesting such a rush might be the last of its kind. This is because phones have now become sophisticated enough to allow virtualisation layers, which create greater compatibility through emulated applications.

Software vendor Citrix recently demonstrated the potential of virtualisation on a mobile handset by creating a Windows XP environment on an iPhone utilising a thin client.

McCabe said that phones acting as thin clients also created the possibility of new powerful applications being executed on remote servers.

"Recently I was looking at a [service] out of Germany which was image recognition on a phone. As a tourist you can take a snap of maybe Ayers Rock, and the phone recognises what it is, and then provides all the relevant information," McCabe said.