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Why PC Makers Will Make Android King

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.

49 Responses to “Why PC Makers Will Make Android King”

  1. Interesting read. I’m trying to compare this approach to the alternative:

    I guess as Larry Ellison says in the article, they’ll either be geniuses or idiots.

    At the end of the day, it’s a consumer device (the smart phone) so it’ll come down to utility and cost. OpenSystems have traditionally won on cost, but lost on utility. Vertically integrated technologies have usually had good end to end utility, but have lost on cost. The real question is whether component costs are now cheap enough,and standard enough where assembly is easy enough to make the end user experience as good as if you controlled the entire stack.

  2. les madras

    Excellent post, well reasoned thesis.

    Just as MSFT’s control of the desktop gave them good margins while squeezing PC vendors, we are going to see a replay in the handset market with Google laughing all the way to the bank. Will Apple will replay their role too?

  3. James Bailey

    It is interesting to read this after playing with a Droid over the holidays. I can tell you that in comparison to the iPhone, the Droid is not even close to being done yet. It isn’t as polished as the first iPhone release.

    There was plenty to like about it but usability wasn’t even close to the iPhone 3Gs. I saw plenty of lag on the UI. Lots of odd little bugs like having Google stop responding to requests while the keyboard was open. I couldn’t position the cursor easily without the hardware D-pad on the keyboard. No correction on the hardware keyboard is a huge problem. There was a lot more that needs work too.

    But the biggest problem is with the Android Marketplace. I didn’t find any software that worked correctly with the Droid’s larger/higher resolution screen. This strikes me as a huge problem. Android is failing as a platform. When the hottest new phone on the supposed platform isn’t compatible with a lot of the existing software you are going to have trouble competing with Apple’s dominant position as a standard platform. Just a simple app to measure download/upload speeds didn’t work correctly. Now I know you blame the developer for this but users aren’t going to care whose fault it is, just the software has major issues.

    Google needs to take a much more proactive approach to hardware/software compatibility or they are going to end up with a large number of devices all incompatible with each other. At that point, they’ve won the numbers game but have lost the platform to competing vendors. Windows works because Microsoft has hardware standards that licensees follow. There is still a huge variety of hardware solutions but in general, Windows works the same on all of those variations. It doesn’t look like Google/Android cares about that kind of compatibility. If they don’t start caring, they will lose to Apple’s huge infrastructure advantage. Apple has the iTunes App store, the standard dock connector and hardware that stay compatible across three different generations. Google needs to follow suit to stay competitive in my opinion.

    • James, some of that is part of the challenge of having an open ecosystem as compared to one that is locked down like Apple’s is. There’s an entire debate about how openness and fluidity of a platform will affect usability that we’re going to see in the coming months. I think there are different demographics that will end up being served here as well, but I agree that Android will have to deliver a good (not merely decent, but not necessarily great) user experience in order for this type of future to play out.

  4. Stacey,

    Thanks for the article, it was definitely worth reading. However, I have some questions/remarks that I think are worth talking about.

    Interestingly, based on your article it seems that opertors’ (and anyone else’s) only choice when it comes to “open” is Android. Why did you not mention Symbian the current market leader in smartphones? Please let me draw the attention to the difference between smartphone OS market share (Symbian ~50%, followed by RIM and iPhone) and web-usage share (depicted above by AdMob).

    It’s also worth noting that we tend towards continuous connectivity, which is still a huge problem to resolve in the future. For example, one of the main reasons to disallow tethering on certain networks is the fact that carriers’ network is simply incapable of supporting the increased demand from users.

    As for being biased towards Google or not, let me not commit myself to either side. However, what is a fact among people the increasing resistance to Google. Let it be “average” people who says Google is evil or big players like Microsoft and Rupert Murdoch’s News Corp who make big deals with not supporting Google at any level. Not sure how this will influence Google’s attempt to make Android more popular.

    In my opinion, the question of what your phone can do will never disappear, that is, it’s wrong to believe that smartphones, especially Android ones, will simply be terminals and users will only need to look at operators’ offerings. Such factors that are still to be considered are e.g. browser capabilities, user experience (within and outside the browser), tech specs (camera, GPS, WiFi, accelerometer, etc.), etc.

    “Developers for the hottest apps will also win” – I can assure you that you talk about less than 1 percent of overall mobile sw developers here. Having said that, from a developer’s perspective Android has not brought the promise of cross-platform sw development being less fragmented (which it has never promised, to be fair), on the contrary, it increased it. That is, the life of the rest 99+% of developers will be in fact harder.

    For some strange reasons, you forgot to mention application stores and the fact that none of them flies except Apple’s App Store. As long as this problem remains uncured one of the key questions a smart smartphone user asks: what applications are available for me?

  5. oohmyygoood

    I think you got this wrong.

    Of course the PC makers want to continue the PC business model in the handset market. But it’s not they that decide, it’s the end user. And the end users all want a smart phone that…. just works. The tight integration between hardware and software is one of the key reasons why the iPhone user experience is so superior to everything else.

    The networks that have started offering Android based phones do so because they can’t offer the iPhone. If Apple leaves the network exclusivity model and starts working with every network, they will corner this market. Because their product is simply way ahead of the pack. Only if they don’t, will Android have a chance.

    • Apple has the right business model. Welcome to digital consumer electronics world.

      People want their phones to work. They don’t want to jump through hoops to get stuff working. They want to be able to easily get apps and will go for the platform with the best selection of quality apps.

      Iphone is a winner here by far.

      Apple just has to dump the network exclusivity so carrier choice isn’t an obstacle for consumers and come out with a few more models much like they eventually did with the iPod in order to cover a few more market segments.

      Otherwise I truly believe Apple, RIM, Palm etc have the right business model in this space.

      You also have to wonder just how many resources Google will devote to Android given that they aren’t making money directly from it. And how much support are they going to give customers? Who’s problem is it when an Android phone screws up? Google’s, or the hardware manufacturer’s? Can I call Google tech support?

    • your logic is confusing me. Stating that it is the end users that decide and then suggesting that all they want is something that works, basically implies that the end user doesn’t care about the operating system on the phones, which I agree with. But then you suggest that the game is Apple’s to lose, that the only inroads into the market by other developers is only because Apple doesn’t challenge it by putting the IPhone on different networks. The only way both can be true is if the end users choose the Iphone. Any other option proves your statement to be false.

      • oohmyygoood

        Most end users don’t care about what OS the handset is running, but they do care about what they can do with the smartphone and they do care about stability and user experience. So given a choice, most smartphone buyers would opt for the iPhone because it’s by far the best product. However, the prospect of switching network provider is perceived as too much of a hassle, hence they opt for an alternative, e.g. an Android based phone.

        Sounds pretty logical to me. :-)

  6. Hardware makers are indeed flocking to Android. Windows Mobile is seen as a lame duck and hardware makers in the mobile market have never been willing to hand Microsoft a monopoly on a silver platter the way PC makers did. But there are other factors as well. Android has the interest of consumers, it has Google’s brand power behind it even though Google has open sourced Android. That open source factor is in Androids favor as well. Furthermore, Android is gaining momentum with developers, which may be the most important factor of all.

    Android has today in the mobile market what Microsoft had in the PC market in the early 90’s, the broad support of manufacturers and developers. Android is also liked by users a good deal more than Windows was.

    Android is poised to rule.

  7. pk de cville

    “If Android phones proliferate while delivering a consistent user experience and numerous compelling applications…”

    And also, if the queen had balls, she’d be king.

    • The point of this isn’t to lay down The Future, it’s to explore what could happen as the hardware for mobile phones becomes divorced from the software and is commoditized. That’s the way the tech world tends to work, although there will always be notable exceptions with Apple being an important one (although even Apple embraced Intel eventually).

      • oohmyygoood

        I disagree.

        There is only one example of commercially successful hardware/OS “divorce” in the tech world and that’s DOS/Windows on Intel based PCs. Everything else (mainframes, mini computers, game consoles, phones, calculators, cameras, etc, etc) were and are all integrated packages. And the reason: the products are more stable and the user experience is superior.

      • @oohmyygoood, that’s not correct. Unix variants, both on desktops and servers, run on widely-varying hardware combinations: from Intel PCs to embedded devices.

        For years, tech companies have attempted to use OS/software differentiation as a competitive advantage. Nothing to do with stability or superior user experience as confidently claim.

        In fact, I bet if the Internet had started out primarily in corporations rather than government and academic labs, we’d probably have dozens of competing Internet protocols and standards today.

  8. Sarah Bachel

    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.

  9. Julien Fourgeaud

    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.

  10. 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.)

    • 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.

  11. JohnPhone

    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.

  12. “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.

  13. Justa Notherguy

    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.

    • 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 :)

  14. 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).

    • 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.

    • 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.

    • 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.

  15. Brett Glass

    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?

    • Justa Notherguy

      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

    • 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.


    • 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.