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 (s goog) Android (both Dell (s dell) and Acer are using it) to deliver their iPhone-inspired smartphones. So while fellow-computer maker Apple (s appl) 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 (s sne) and Microsoft (s msft) 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 (S mot) Blur or Nokia’s (s nok) 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 (s rimm) 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.