Global Insight Perspective | |
Significance | Google has unveiled its strategy for the mobile phone industry, offering a new software platform but with no immediate plans for a mobile handset. |
Implications | The emergence of Android could facilitate a quicker destruction of the current “walled-garden” approach in favour of a more open approach towards mobile-centric software applications. |
Outlook | Given the presence of other giants such as Microsoft and Nokia in the mobile software market, Android may well become just another mobile software platform competing with more established platforms, and with little hope of ever becoming the key mobile handset software platform. |
Google Inc has unveiled its strategy for the mobile industry, pledging to offer a software system, “Android”, that will make the internet work as smoothly on mobile phones as it does on computers. In a statement yesterday, Google said it was working to make Google-based phones available in the second half of 2008, and would start allowing independent designers to develop new software products based on Android later this month. Continuing further, the company said it has no immediate plans to follow Apple into the mobile handset market, but will focus on putting its software into mobile phones. "We're hoping thousands of different mobile phones will be powered by Android," the Google chief executive, Eric Schmidt, told reporters on a conference call following the announcement.
To promote the software, Google said it has forged an alliance with 33 companies, including handset manufacturers Motorola, Samsung and Taiwan’s HTC. Already, Reuters reports that Deutsche Telekom’s T-Mobile will start selling Google software-based phones in 2008, while China Mobile, NTT DoCoMo, KDDI and Telefónica also said they were working with handset makers to develop Google-based phones.
Outlook and Implications
The Timeline: Although Google has avoided plunging into the highly mature mobile handset market with a “GPhone”, the launch of Android is still expected to make a significant impact on the mobile industry. Linux-based Android is targeted at the smartphone market and is likely to be used to provide an entry point for Google’s mobile-centric advertising services. Already, Google is downplaying suggestions that it is anxious to make money out of Android, preferring to eulogise the benefits of an open-source mobile software platform. Specifically, the company is offering the software for free and is inviting operators that enter into its revenue-sharing deal to pass along about 10% of savings to customers through phone subsidies and lower monthly fees. "Let's put the technology enablers in place and figure out how to monetize it later," Andy Rubin, the official in charge of Google's mobile phone push, told Reuters in an interview. "You won't see a completely ad-driven cell phone on this system for some time," he added.
Disrupting the Status Quo: The launch of Android is a bold initiative that could well disrupt the status quo in a tightly controlled industry. Presently, device manufacturers and mobile operators largely operate a “walled-garden” approach, deciding on what software is pre-installed on mobile handsets, and whether to allow third-party applications to be installed subsequently on the device. In most cases, operators also get a slice of the revenue accruing from third-party applications installed on the mobile. However, Google is planning to change all that, and is promoting the Open Handset Alliance (OHA), an open platform for handsets and applications, in conjunction with device manufacturers, software and content developers. The OHA hopes to create compatibility between applications, ensuring that the applications do not discriminate between the pre-installed applications and any independently created applications added by customers later. Indeed, regardless of its eventual success, the emergence of Android could facilitate a quicker destruction of the “walled-garden” approach in favour of a more open approach towards mobile-centric software applications.
The Battle Ahead: While Google has revolutionised internet searches, the battle in the mobile domain may yet prove far more difficult for the internet search giant. Unlike in the internet domain, where it opened up a previously unknown business channel and offered something new to customers, Android is not offering anything new to the mobile domain and may have been over-hyped beyond its impact. Interestingly, existing software providers in the market include the biggest names in the IT market such as Microsoft, Nokia and Apple, which are capable of matching Google’s spending power. Despite Google’s promises, these earlier entrants are capable of tinkering with their strategy to ensure that there is no grey area or loophole for Google to exploit for its Android service. In the long run, and much to the chagrin of a Google used to dominating its landscape, Android may well become just another mobile software platform competing with more established platforms, and with little hope of ever becoming the key mobile handset software platform.