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Where's the Google Phone Bump?

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android_robot1[digg=]T-Mobile said today that it had 32.8 million customers as of the end of the fourth quarter after adding 621,000 more during the three-month period. That’s a 35 percent drop in net adds from the same three-month period in 2007 and 49,000 less than T-Mobile added in the third quarter of 2008. It’s also far less than the 2.1 million net adds reported by AT&T (s T) and the 1.2 million Verizon (s VZ) gained during the fourth quarter.

Unlike AT&T’s (s t) gains that came via its exclusive deal for the iPhone (s aapl), it looks like folks weren’t willing to switch carriers in order to be the first to get their hands on the the G1 “Google (s GOOG) phone” that T-Mobile released during the fourth quarter. Perhaps it’s because other phones running Android are due to be released on Sprint (s S) as well. Even T-Mobile’s newly deployed 3G network isn’t goosing customer growth.

Despite Given the recession, T-Mobile is decreasing increasing the proportion of pre-paid customers it’s attracting. While the number is up over the fourth quarter of last year, only 43 percent of this quarter’s new customers are  pre-paid contract compared to 77 percent of those that signed up in the fourth quarter of 2007.

18 Responses to “Where's the Google Phone Bump?”

  1. Matthew Lenz

    Its not the G1. Its Tmobile’s network. I think google was smart going with tmobile simply because they use international standard gsm frequencies. Unfortunately tmobile’s 3g network is very lack luster and by the time they get it into shape there will be android phones on most of the carriers people are already using. tmobile does seem like a pretty cool company overall, but they are definitely the underdog right now.

  2. @reinharden, great rant. I am writing a post on this exact point; namely, that there is a tendency/bias to assume that “open” is a necessary requisite for success, when instead, it’s merely an attribute. Customers don’t buy attributes, they buy outcomes.

    That’s not to say that Android won’t get there but it’s hardly a straight line path.

    Bottom line is that Google has a steep learning curve to nail the end to end (hardware/software/service/sdk-ecosystem) around what is both a user experience and performance optimized type of platform.

  3. The biggest problem with the G1 is the open source mentality of we’ll fix it when we get to it. Paying customers don’t have the patience while dorks pound away at code in their mother’s basement and will spend their money elsewhere. Two years is a long time for a mobile and people will be itching to switch devices prior to the end of their contract. Not much work will be done to update Tmo’s gadget once a replacement model comes out. Carriers know this and happy to sell you something else. Three iphones versions anyone?

  4. Arjun,
    IPod had a great influence on iPhone buyers, i.e: if you are in the market for buying an ipod, you could as well spend the same money and switch to iphone to get almost all the features of ipod and product that is very much the current buzz. Some analysts feared that iPhone may cannibalize the ipod market. However, nothing like that happened, but I am sure that people looking for new ipods will consider iphone. However, there would not be such a consideration when people are looking for other phones. G1’s music store cannot replace the experience of itunes on iphone, right?

  5. Typo in above post
    “But anyway, to the point: Iphone did not outsell/outperform android just because of the iphone” should read

    “But anyway, to the point: Iphone did not outsell/outperform android just because of the IPOD”

  6. There is no question that iPhone has a ‘consumer’ oomph factor that Android does not. Android has a developer oomph factor (especially after they released source) but that does not result in immediate revenue till the developer oomph gets translated to 3rd party android innovation beyond phones (like on netbooks, chips etc – like is happening now)

    But anyway, to the point: Iphone did not outsell/outperform android just because of the iphone. Also remember it was the first really usable/good phone that had multi-touch, all screen etc. in the mass market. So when people took up on iphone, it was the *only* option. This is first player advantage. By the time android came out, the consumer oomph was already satisfied. No question that android ui/feel lags behind iphone.

    But I am sure, if android released first instead of iphone, it would also shoot through the charts (even though it is inferior in customer oomph)

  7. Remember the G1 is a first generation Android device and came out in late October of last year – barely 3 months ago.

    There should be an uptick as a plethora of Android phones come out later this year as they should be first revealed publicly at the upcoming GSMA Mobile World Congress in Barcelona.

    ,Michael Martin

  8. Stacey Higginbotham

    David, after reading the release three more times, I realized you were right. It’s both an increase in the proportion of pre-paid and an increase in the actual number. Thanks, I fixed it.

  9. David R.

    You misread the press release. T-Mobile is actually INCREASING the number of prepaid customers.

    The proportion of net new customers on contracts decreased…
    “Net new contract customer additions amounted to 267,000 in the fourth quarter of 2008, or 43% of total net new
    customer additions, compared to 293,000 or 44% in the third quarter of 2008 and 733,000 or 77% in the fourth quarter of 2007”

    …while the proportion of prepaid net adds increased.
    “Prepaid net additions were 355,000 [out of 621,000] in the fourth quarter of 2008, compared to 377,000 in the third quarter of 2008, and up from 218,000 [out of 951,000] in the fourth quarter of 2007.”

  10. Part of the issue with G1 on T-mobile is that they released it premature where software is not all the sleek nor the hardware. I use G1, I am happy about what it can do, but still I do not think it comes near iphone in terms of usability. T mobile/Google is slow in fixing some of the important aspects like email on this device. If you are paying $25 for data plan and you cannot rely on it to deliver your emails properly it does not sound right. Standard response from G1 fans is that it has been hardly 3-4 months since it is released, give some time. Some of us may be more patient to wait for the benefits to come, however general public dont care if it is 3 months or 3 years, they want something that is functional right now. iPhone received huge buzz because of iPod and apple, HTC’s G1 is no where close. So, it never had the popularity to attract people for that platform, most of the buzz was with tech aware people for it’s ‘open’ platform. It is also to be noted that T-mobile did put some restriction on this ‘open’ platform like no voip irrespective of network you use (home wi-fi or T-mo mobile network), that is quite irritating.

  11. @reinharden – Fair point. I am of the mind that too much openness is not what users want as well. The phone certainly has more under the hood than I’ll ever use.

    My point was more that the iPhone/Blackberry Storm are about shipping units for the OEM and filling the carrier’s pockets. Android is certainly about increasing the subscriber base for the carriers, but it’s also about one unified system that sees how people use and interact with the phone, and what can be done with that flood ( or so far, trickle) of data. Kind of a big-picture view, I know.

  12. more people are buying nokia 5800 (which has sold more than million sets ) in india as iphone flopped in india ,i think we should give Android more time for more hardware vendors (like motorola , htc) to release sets and more applications to come , we cannot compare Android which is platform to single vendor specific iphone ….give Android year then talk

  13. reinharden

    So I take it that Mike is saying that the iPhone and the Blackberry are based upon business models, but that Android is more of a hobby or a political statement and thus its actual results therefore don’t matter?

    My experience thus far is that “People want open software-based solutions” is about as true as the first 30 years of TV convergence was. People want stuff that works and in some way increases the quality of their life. It’s a very small minority that care about how or why it works.

    I say this having committed code in open source projects as far back as BSD 2.9. Open source is a stupid business model if its the only business model that one is offering — one has to offer compelling solutions. And one’s solutions will be compared to one’s competitors’ solutions on the basis of their ability to perform, not on the basis of their openness.

    So comparing the results is quite a reasonable approach to ascertaining whether or not Android is mass-market compelling yet. Right now it’s clearly not…


  14. The iPhone was the next logical step for millions and millions of people who owned iPods, so it’s not hard to figure that launching basically a product extension tied to one specific carrier would boost sales for that carrier.

    Similarly, Blackberry is the standard for business use with a huge built-in market. Coupled with arguably the best US carrier (Verizon), you’ve got a product for the millions of iPhone hating, Verizon-loving edge consumers.

    Android is a different beast entirely, and it’s almost impossible to compare the three. iPhones are about media consumers, Blackberrys are about business consumers (for the most part), while Android is about openess, communication, data, and cloud.

    Two of these are products, and one is the operating backbone for the managing world’s information. Expecting a bump for this carrier or that carrier misses the point entirely.

    But, for the sake of “journalism”, it certainly is easier to lump them all together and make meaningless comparisons.

  15. I’ve been using a G1 for the last three weeks, and I’d say that the problem lies less in Android (which is a good mobile OS), and more in the unfortunate hardware platform it’s running on. Google should have been more patient, and released the G1 on svelte piece of hardware.