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Summary:

As Lenovo steps back into the mobile business, it’s becoming clear that Android will democratize the hardware for mobile phones allowing the PC makers (both Dell and Acer are using it) to make a compelling handsets and put the hurt on traditional handset makers.

As PC makers such as Lenovo — which said today that it will spend $200 million to buy back its mobile unit — move into the mobile phone market, they are most likely to rely on Google’s Android (both Dell and Acer are using it) to deliver their iPhone-inspired smartphones. So while fellow-computer maker Apple may be the inspiration (and a key enabler by getting the carriers to open up their networks and their application stores), it’s Android that will democratize the hardware for mobile phones by offering a widely adopted, open operating system that divorces the phone from its software.

The OS is certainly becoming popular. Requests for web-based ads from Android-based smartphones are on the rise, according to the most recent stats from AdMob, a mobile ad network in the process of being acquired by Google. When it comes to data requests from smartphones, which make up 44.4 percent of worldwide mobile web requests, Apple holds the crown, but Android has only been available on handsets since September October 2008.

Widespread adoption of Android could lead it to become what Windows was for the PC world, an operating system that can be licensed on any underlying hardware and ensure that a variety of applications run on the machines. There will be room for other players in this multibillion-dollar device market, of course, but for the most part, the computer makers have already settled on Android. (Acer has Windows Mobile phones, too). Ironically, Microsoft’s Windows Mobile was aiming to be the OS for the computer guys.

If Android phones proliferate while delivering a consistent user experience and numerous compelling applications (the consistent user experience bit needs work), consumers who want to use the web on their phones can choose their devices based not on what kinds of apps are available on the handsets, but the quality of the network, pricing for access and other carrier-specific factors that consumers deem important.

Eventually, if handset exclusivity becomes a non-issue and networks open up, then the handsets and the network will be divorced as well, leading to a world where consumers will benefit from competition amongst device makers, software firms  and even the carriers. In this future, pricing innovation (and maybe even actual competition) by carriers will matter, given that those factors are the primary concerns for wireless customers when choosing a network. Prepaid carriers will have an advantage, although I imagine the larger carriers will have to fight to keep consumers happy — leading to lower prices or more services.

Developers for the hottest apps will also win, as OS makers try to attract and sign exclusivity agreements with them much like Sony and Microsoft fight for the hottest console games. On the hardware side, expect few traditional handset makers to survive, especially after the computer makers learn from their mistakes and get their later-generation phones out. Maybe some handset OEMs will be bought, but without a proprietary OS and the exclusive access  to carriers that are in the process of being swept away, they have less value.

To survive, handset OEMs will need to either build out compelling services such as Motorola’s Blur or Nokia’s Comes With Music efforts, or pander to a large, specific community of users with features that really matter to its members, as Research in Motion is trying to do with the business market. Even the efforts to build differentiating services or focus on a community may not help handset makers, but doing nothing isn’t an option.

  1. Stacey, this article — like your many articles on Internet regulation, which favor monopolist Google’s political agenda — shows an extremely strong bias toward Google. Why? Do you receive any compensation or perks from Google? Does the fact that GigaOm runs ads placed by Google have anything to do with it?

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    1. Justa Notherguy Friday, November 27, 2009

      Since you give no specifics, I’m not sure what ‘bias’ you see. Providers and hardware makers are flocking to Android. Meanwhile it seems clear that Apple’s iPhone and market-opening (‘democritizing’?) efforts – far from locking up the market, in their favor – created this situation, so ripe for platform commoditization.

      As shown by the recent reversal in smart-vs-plain cell phone sales, more and more consumers now seek powerful, fun phones which can serve as limited desktop replacements. Android has taken a clear lead in this, providing a user experience that is near enough to iPhone, yet also bringing in the benefits of choice: many handsets at many price-points on many carriers.

      Seems to me that any ‘bias’, here, is trending toward a bias for skilled competitors to come out on top. And the only ‘monopolist’ trend is that Google continue to dominate in web-search. Would you blame consumers for preferring freedom of choice, over Apple’s claims of benign dictatorship? Do you blame Google for their competitors’ apparent ineptitude, in search?

      “The race is not always to the swift, nor the battle to the strong, but that’s the way to bet.” — H.L. Mencken

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    2. Brett,

      I suspect that it is your own anti-Google bias that makes you think Stacey has a pro-Google bias.

      Actually, the main Gigaom blog shows an anti-Google slant more often than not. Katie and Stacey are two of the Gigaom writers who are even-handed. It is just incidental that Google happens to be on the same side on some of the issues that these people support. Stacey is a strong supporter of net neutrality. Tomorrow, if Google were to say or do something against net neutrality, I am sure she will speak-up against it here.

      LL

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      1. > Tomorrow, if Google were to say or do something against net neutrality, I am sure she will speak-up against it here.

        I meant, that she will speak up against Google. Not against Net Neutrality.

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    3. Brett, please define:
      1. monopolist Google.
      2. Google’s “political agenda”

      Also, this is an opinion piece, not news. Just because it does not agree with your “political agenda”, does not mean it is biased.

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    4. Brett

      The great part of my job is to read baseless and pointless assertions like the one you just made.

      Happy Thanksgiving!

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  2. Another extrapolation from PC industry to smartphone industry. If this is valid, Win mobile should have won 5 years ago. The number one reason this extrapolation is invalid is that the hardware platform for the smartphone industry is not yet as commoditized as the PC industry. Some people would argue that due to the personal nature of mobile devices, the hardware platform would never converge to a single one (like the wintel platform did).

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    1. Win mobile did not win 5 years ago due to two reasons:

      1. It was a PC-based OS and interface that was being retrofitted for smaller hardware. It never down-scaled well enough.

      2. The hardware was not powerful enough to support Win OS.

      Both of those actually boil down to one reason – it did not offer a good enough user experience. Still doesn’t. Android was built from the beginning for phones and hand-helds. That advantage can’t be denied.

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    2. RK

      I think the point here is that like the PC platform, there are going to be no winners here except Google’s services: starting with search and advertising and eventually whatever else they want to push through the Android OS.

      I guess, the hardware makers are going to be reduced to playing bit roles in this game.

      On WinMobile: well they had a chance to do something and they didn’t. In fact, if there was rapid progress on the WinMobile platform, there would have been little or no room for anyone else.

      On hardware commoditization: well it is on its way to getting completely commoditized. Not today, but it is getting there really fast. Take a look at all the Android phones and you can easily see the similarities in those devices, and many of them are emerging from same ODMs in Asia. It would be interesting to see how next couple of years shake out.

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    3. Kind of like what the others said, WinMo failed because it moved too slowly. Look at the update cycle of WinMo; it just can’t keep up with the newer OSs.

      And another thing is WinMo wasn’t consumer targeted; it was primarily targeted to businesse, which kept its market small. Android, on the other hand, was build solely to target consumers, with almost no focus on enterprise. In the phone market, consumers are a much bigger market, and Android is set to expand the smartphone market to consumers; Apple led the way in doing so, but Android is going to continue and maybe even overtake Apple.

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  3. Justa Notherguy Friday, November 27, 2009

    Small but significant correction: the first Android-powered cell phone (HTC Dream/G1) appeared, not in September 2008, but on 22 October 2008…ie: roughly 13 months ago. And that was a US-only introduction, followed by a (very) slow international rollout, since.

    Also, I wondered why ‘Network Quality’ shows up so low (#5) on consumers’ hierarchy of mobile needs. I suspect this is less a true reflection of its importance than it is a function of their previous experience….or lack, thereof. Its likely that the vast majority of respondents have owned ‘plain’ phones, only – not smart phones. Thus, they have yet to deal with the frustration of downloading web pages over a 2G circuit. Given the recent spike in smart phone sales (plus Verizon Wireless’s brilliant ‘Map for That’ ad-campaign), I’d bet that next year’s poll-numbers will differ, greatly.

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    1. Justa, thank you. I was looking at the launch date rather than GA for the handsets. Fixed.

      I tend to agree on the network quality point. As consumers do more over mobile networks and see the performance differ between voice, laptop data use and mobile data use, I expect that quality will become more important. Of course, I don’t have an iPhone for that very reason :)

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  4. “Android has taken a clear lead in this, providing a user experience that is near enough to iPhone, yet also bringing in the benefits of choice”

    My god, you should do PR for android.

    Android will provide what windows does for mac: a watered down experience for those thar would rather pay a little less.

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  5. Fun with the Internet: google the strings — “brett glass” google

    It turns out everybody’s got some kind of a bias.

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  6. Android has a different chance in the market than iPhone.

    I really shouldn’t even say “the market.” It has the opportunity, like WinCE, to be used on devices other than phones and therefore has a broader market. In that respect, Android is a very different monster than the iPhone.

    Unraveling this further, Apple is currently as “locked down” as they come when it comes to licensing applications and developing for the iPhone. Google is currently mostly open. The entire look, feel, and function of the OS is modifiable with freely available source code. One could argue that there is a good chance this will stick around due to Android’s use of Linux as the OS foundation and the licensing agreements related to it.

    Therefore, I find any iPhone comparison very narrow in terms of what Android COULD be compared to. It is all speculation, but I believe Android has an excellent chance of becoming a very major player in the nearish and not so near future. Not only for phones but for many new types of mobile computers.

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  7. Stacey, the very best thinking on this subject, by a very long way, that I have seen can be found here:

    http://tinyurl.com/ykl3whe

    A lot of reading but complicated subjects are like that.

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    1. Thank you. About halfway through, but so far finding it a valuable resource.

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  8. Brett’s actually got some history behind his position, and reasons why he’s arrived at the position he has.

    Brett is a small time ISP fighting to be competitive in an environ filled with big providers only, and the FCC seems content to permit big entities to asphyxiate little entities. Google is a big entity that plays along with the FCC when it suits them.

    Brett isn’t a fan of net-neu because he sees his ISP as ‘his’ and not his customers’. Net-neu would force him to be traffic agnostic, and he sees this both as a violation of his ownership rights to his network, and as a violation of his ability to protect his network from uses that degrade performance of his other customers. (If one person does huge torrenting, the argument goes that the people receiving the torrent aren’t paying him, and therefore are stealing the bandwidth he pays for, damaging network performance for other users, which threatens his network if they choose to leave over poor performance. Absent net-neu, he can police the network and assign some bits priority over others, protecting his network and preserving the business.

    I’m sure Brett, if he’s following this thread, will come back and correct me, but those are the sorts of arguments he used to make back when I read him more frequently a few years ago.

    And that’s why he sees bias and presumes everyone understands his meaning when he says “monopolist” and “political agenda” – because from his point of view, Google is a monopolist, and doesn’t mind playing politics for tax advantages (data center in NC came with tax breaks), for FCC rules (Google and their bid on spectrum), and so on.

    I admit, I’m probably nowhere near as good at representing Brett as he is – and I generally disagree with him. But he is an important voice as an independent ISP, and we have precious few of those. (He’ll say we don’t, that they’re booming, but endangered by the bigs.)

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    1. Actually, if you traffic police all bittorrent traffic, you aren’t doing any harm to net-neu. You are just applying some policy to your own network. It’s purely for technical reasons. If you start giving preference to Google’s instead of Yahoo or whatever. Then that is a violation of net-neu.

      Atleast that’s still what I read into a lot of net-neu.

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  9. Julien Fourgeaud Friday, November 27, 2009

    Really interesting article, thanks Stacey.

    The really interesting part of the last 2 years evolution of mobile phones landscape is the convergence of PC based devices and embedded system based devices towards the ideal “smart phone” model.
    While Android comes from the Linux PC world, Symbian for example comes from the Real Time Embedded systems.
    It will still take a bit of time before each end of the spectrum meets, but ultimately, these platforms being open, they will benefit from the community and mature towards the “ideal” platforms.

    When it comes to hardware commoditization, there are different ways of making that happen.
    Om seems to suggest that thanks to the Android “reference design”, provided to reduce the time to market for new players (such as the effort that Google invested in the Droid for example), hardware will become less relevant.
    As much as this is true for desktop PCs, where the core (Motherboard+memory+CPU) are mostly commoditized, thanks to 20 years of experience, it is unlikely that the smart phone space will reach that point any time soon.
    As of now, global radio standards are yet to be harmonised. 4G and LTE are on the way, but it will still take a while for wide adoption.
    Limited resources will keep on driving chipset competition and differentiation, enabling tighter integration and reducing waste.

    But you’re right, service integration will be the next game changer, especially for Free services.
    Enabling users to benefit from an exceptional experience built on popular services is what OS developers and 3rd party developers should be focusing on.
    But that should not be limited to Google services.
    And that’s where Android might be closer to the iPhone OS.
    As much as Android is “Open Source”, it is far from being “Open Governance”. As of now, only a limited selection of Google’s partners are able to provide feedback to Google on the direction of the platform.
    What will ultimately happen is the “fragmentation” of the Android platform, in the same way that the linux platform fragmented in distros.

    Having an open governance model, where it is accepted that the OS should be enabling the commoditization as early as possible, where Hardware Abstraction Layers are easily enhanced by silicon vendors and contribution is the currency, will most likely succeed in supporting the mobile devices of tomorrow.

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  10. I just finished reading the new book “Wired for Thought” which compares the Internet to the Brain. The author spends a good deal of time on mobile and this article is very much in line with his predictions for how things will unfold. Like the brain, networks always evolve into a state of neutrality and this will certainly happen for mobile handsets. He also says that mobile is really just an extension of the internet into a better form factor which seems obvious to me now.

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