I can remember the good old days, my phone had a key pad and a big red and green button. When I wanted to buy a new one it was a choice of the weight, battery life and durability. This was the world where Nokia was king and the rest of the world were followers and imitators.

So wind forward 5 years - A Search engine business now runs phone operating systems, websites have branded phones, Apple have turned an mp3 player into a phone (well in my case my iPhone sometimes allows me to make calls) and mobile network operators are being marginalized and looking to transform themselves. I also read today that Google are starting to react to the competition, blocking data sharing on their latest OS version and preventing Facebook contacts being shared into the address book. This came a week after GSM World where HTC released new smartphones with Facebook logos and buttons.

It’s a tumultuous world in mobile at the moment. Apple’s first mover advantage seems to be on the wane and Google Android is a growing presence in the market. The behemoth that was Nokia has dropped it’s own OS and is now in bed with Microsoft.

So what happens next? Who and how will people make money? It feels like the Klondike at the moment with collaboration turning quickly to competition, as evidenced by Google and Facebook. There is no obvious or clear direction that things are going in, but there are three areas to keep a watch on:

Location. The use of location data, and linking this to advertising is, and will continue to be, a key driver and motivator for players such as Google and Facebook to invest and stay focused on the mobile market.

Independent software vendors (ISVs). To me this is one of the most fascinating areas - businesses like Microsoft, who have made money from selling Operating Systems and support, look like the biggest potential losers. Tablets look more and more likely to grow and expand into the traditional PC / Laptop market and revenues are likely to fall as a result. This alone might not be so problemtatic, but combined with the growth in cloud based solutions for both storage and applications, I think the product engineering departments in Redmond must be interesting places to work.

Device Manufacturers. People will still look for the latest, greatest phones. But what features will drive their buying behaviors? Screens were a big area; first touch and then resolution. So what next? Looks like the next 12 months will be about processors and people are waiting to see what happens with tablets. This looks like turning into a replay of the PC market in the 80s where it became a cost focused market. Will Apples retail presence help protect them from margin erosion? HTC now out sells iPhone4 in the UK. What of Nokia? Will they survive in a low margin business with no competitive advantage from having their own OS?

The last 5 years have been fascinating to watch, the next 5 (or maybe 2 or 3) will prove to be equally interesting. Where do you think we’re going? Let me know your thoughts, observations or bets in the comments section below.

Image thanks to philcampbell @ Flickr