Continued from an earlier post on Android being Google’s best strategic move ever. This Post examines how and why Android undermines the strategic intent of Google in the mobile space.
The best anti-thesis to “Android is selling in huge numbers” is possibly “Android has huge problems in fragmentation” arguement. On a superfical level what this translates to is the consistently lower engagement and monetization of the platform – a far cry from the Apple iOS. Android is the quintessential open source which also means that the Android army stretches from the Samsungs to the Shenzhen sweat shops – the smallest white label OEMs who are fragmenting the low end markets all ends. Samsung’s dominance of Android platform is not the best solution for Google as it struggles with its own line of Motorola Android phones.
Android today is at the same place where Wintel was a decade or two back with an armmy of clones of cheap PC makers churning out tens of millions of cheap commodity PCs. What Android and its eco-system ( Qualcomm, EMP, Mediatek, Allwinner, Spreadtrum) have enabled is a flood of cheap commodity smartphones and tablets. A vast range of other devices ( netbooks, in-car PCs and DVD players, set-top-boxes and lots else besides) following on behind. Often the fragmentation of the Android means a $45 smartphone with no access to Android Play market – but only a way to latch on to the internet. Google thus starts missing out on mapping this strata of smartphone buyers. (Agreed the search would still come through Google).
Compare this with Apple, a $650+ device – bought by a completely different set of consumers to whole experience, exploration and ads make more sense.Thus,it is quite possible that iPhones generate more advertising revenue for Google than all Android phones combined. In that respect 20% iPhones sold globally are more valuable than 70% of the Androids sold.
Beyond the search and advertising revenues that Google makes from Android, there are those bits of signalling data- that the low cost Androids miss out – those valuable bits of information that map the user holistically. A data mine that can be leveraged for data with relevance to the user. The real structural benefit to Google from Android comes from the understanding it gives of actual users, and the threat comes from devices that do not provide this data – even though theoretically, it can still leverage Google search. A significant portion of the $45 handsets skimp on Google apps just as they skimp on IMEI numbers. These devices are like dark matter: a lot of it around – but nothing really adding up to the worth.
Benedict Evans does a very accurate description of the Android platform- Very powerful but spiralling semi-randomly with no clarity on where it would land. Even when there is the threat of Amazon or Samsung forking the platform, there is also the threat that an increasing number of Android devices might have no more connection to Google than does an iPhone.
To put that another way, Google’s penetration of Android is as important as Android’s penetration of the handset market.
Smartphones and Tablets is where the big big competition is: Apple versus Android. The Closed and walled versus the Open. And yet, like the smartphone platform, Android is far from getting its act right. The greatest strength of the Android platform has been its “open-ness”(Debates around Honeycomb aside). This has allowed ODMs to work on the platform and position their devices and massify the platform. That was the primary reason for the rise of Android in the smartphones category from a non-entity to 36% whereabouts by Q2,2011. But the open-ness is perhaps the Achilles heal for Android leading to problems such as Fragmentation of the platform and lack of a uniform user experience. While Android managed to tide over the Smartphone markets even with fragmenting OS, the case for Android tablets will be markedly different.
The patchwork that is Android is not consistent enough to allow the platform to compete adequately with the competition. Google has set out to be loose in its control over Android as a platform, and that looseness is beginning to cost tablet makers millions, perhaps billions of dollars. The problem is there is no real Android for tablets, just a framework for OEMs to change at will to try and compete with their products. The problem is they are not competing with other platforms, they end up competing with other Android tablet makers and diluting the ability of the platform to make a run at Apple’s iPad.
Because it is symptomatic of the problem with Android in general, that the platform is totally fragmented due to no one company taking ownership of it as a platform. Google certainly doesn’t, and OEMs can’t. The end result is that Android tablet makers end up not competing with the iPad, the logical target, but rather with each other. Each Android tablet comes to market with different hardware (most of which actually works), and software that is different from that which ships with Android proper.
Consumers have no chance to make sense of this, so there will never be a uniform perception of the platform. Perception of a product is hugely important, and unless Google does something it will never catch consumer’s attention uniformly as a platform must do.
Motorola, Samsung, Sony Ericsson and many more OEMs are working on their versions of the Android tablets. Amazon is also speaking of its own Android tablet and chances are that Amazon will also produce its own spin atop the Android platform. Amazon will add a series of pieces—Cloud Drive, streaming video services and an Android app market—that play into the tablet strategy. It is expected that Amazon might price its tablet competitively and play upon its advantage of content to make money which could further lead to price-erosion. Amazon’s tablet will use the Kindle model quite effectively. It’s not the device that matters here. It’s the store. Other OEMs in that case will play match-up which is thus going to effectively lower margins for OEMs.
That adds to the complexity, un-uniformity, price-erosion and fragmentation of the platform. The volumes may increase as a result of OEMs clamouring upto Android but the consistency would be bad missing and that is going to add to the woes of Android, the Tablet platform.
Mobile Browsing and App sales on Android has not been linear with its popularity and growth
Android: Addressing platform fragmentation
Google Android (Open Platform): The Development and Deployment conundrum
Android Tablet faces fragmentation even before it takes off