Michael P. Silva

Mobile + Emerging Technology Analysis, Strategy, Transactions, Go-To-Market

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Letting Google In

Posted by michaelpsilva on January 13, 2010

Gartner says Android will be the #2 Smartphone OS by 2012. Between Nexus and the slew of Android announcements this past week (AT&T to launch 5 Android devices, LG counting on Android to boost market share, etc.) I’d say the Android train has definitely left the station.

We all know that it will take time for consumers to adopt Android, whether it mean switching service provider (SP) or buying a new device. And with all the Android offers out there, which devices will rise to the top? There are bound to be devices that are so revolutionary that App support will be low initially (in effect setting up a “Pre” effect for innovative form factors and features).

But by 2012, 3 years from now, I agree, adoption will have taken hold. Developers certainly are agreeing with that assumption as well.

So what does it mean for a carrier to Let Google In? Android ships optimized for Google Apps and Google services. Many of those services compete with existing offers from the SPs such as GPS, or, LBS more appropriately. The SPs have been counting on knowing a whole lot more about their customers than any web services company, and leveraging that knowledge to provide better content, services, and communications offers.

When an OEM adds a Ux and customization layer on top of Android, such as MOT’s MOTOBLUR or HTC’s Sense UI, the OEMs can hook up the SPs services and remove GOOGs, thereby being a better vendor to the SP, and (possibly) limiting the “Letting In” factor.

But how will the consumer feel about these moves? A good pal who studies mobile app psychographics says, “consumers are lazy.” Meaning that the more integrated and easy apps and services are, the more likely the users will use GOOG apps and services. (Log on once to any Android device and prepare to be delighted if you’re set up with Gmail, Google Apps, GoogleVoice, etc.) And these devices from the SPs could wind up causing confusion or inspire themes that end-around the carrier attempts to keep GOOG at bay.

Bill Gurley has a nice piece on why Android is here to stay and why the SPs are having a hard time keeping (and wanting to keep) Android out.

The OEMs are embracing Android as a means to move their featurephones up market with a low cost (free) OS that has nice standardized handset applications with beautiful APIs like SMS, messaging, web, etc. (versus the old featurephone “OS” and apps) which lead to a much lower cost of porting, customizing, and upgrading devices. In other words, OEMs are able to lower their OpEx with Android devices even as they now face the challenge to differentiate (but not too much) as I’ve opined above.

But not so fast, folks. There still is a market for featurephones with a much lower Bill of Materials (BOM) than the Nexus or other Android phones.

And that gives AT&T and others reasons to adopt BREW MP or ALP’s LinuxMo plus Widgets solution. Featurephones aren’t going away soon. They fill a big need in the lower end of the market as freephones with their lower BOM and lots of smartphone-like functionality provided via better apps and widgets. Many folks outside our world of tech and mobile like phones that are just phones that call and text and hit the web when they need to, and if you can throw in customization like Samsung’s widget devices, they’re thrilled.

So yes, GOOG will pick up a huge chunk of the market. Carriers will have to deal with GOOG being in their infrastructure. Other Smartphone OS’s and Featurephones will be around for the next 5 years or more (Although Gerry Purdy at Frost & Sullivan says 100% of phones sold in the US will be Smartphones by 2014).

But how brilliant is GOOG on so many fronts?
– They launch phones without the manufacturing costs or risks
– All their services integrate seamlessly (versus other portal or app services like WinMo, Y!)
– They steamroll MSFT in no time
– More mobile computing devices than PCs in 2-3 years–they grab a lion’s share of the OS market on the next computing platform.
– They extend their monopoly on advertising
– And on and on . . .

Well done, GOOG! It’s not a matter of Letting Google In any longer for SPs if you look at all the data points, it’s how they’re going to respond, and what services they’re going to offer that GOOG doesn’t wind up offering at some point for free.

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