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Android: Double-Edged Sword

When Apple Inc. (Nasdaq: AAPL)’s iPhone redefined the smartphone market two years ago it blindsided the competition. Ever since then vendors have been playing catchup with varying degrees of success or failure.

When Google (Nasdaq: GOOG) waded into the market with the introduction of its license-free Android platform in November 2007 it created a sword that cuts both ways for phone vendors. A number of handset companies quickly jumped on to the Open Handset Alliance bandwagon, as is usually the case with such announcements. Hey, go back and look at the Advanced Computing Environment (ACE) group from 1992, and you’ll see it doesn’t take much to put out a press release announcing your support for XYZ. (See Open Handset Alliance Names New Members.)

Just how well Android does and its impact upon the market is anyone’s guess at this point. However, two things are very clear: First, Android is for the benefit of Google and its mobile aspirations; and second, if you’re an OEM reliant on Android you’re largely relegating yourself to assembling other people’s technology.

Regarding my first point, this is nothing new or profound. Dominant, cash-rich companies have been doing “good works” for the benefit of an industry or group for many decades. Obviously, Google needs to extend its search and advertising dominance into the mobile Internet world as early as possible. With something of a fractured handset market several years ago led by proprietary products, what better way to open that market to all-comers than to offer your own platform, free to all? So much the better if that platform accelerates the acceptance of Google applications and other Google assets. Hey, everyone wins, right?

I suppose that depends on how you define winning!

Android levels the playing field for every handset original equipment manufacturer (OEM) and wannabe to enter the smartphone and/or mobile Internet device market. In essence, what we’re going to see is a replay of the PC market from a financial and investment standpoint.

Next Page: PC Does It

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t_newt 12/5/2012 | 3:57:33 PM
re: Android: Double-Edged Sword

It is a good point, but I'm not sure how this is different from those companies that based their phones on the Windows Mobile platform.


With all the features of a smart phone you need a pretty advanced operating system, and you want large acceptance so that software developers will write programs for it.The computer companies that are really forgotten are those that did not go with Microsoft.


Has Motorola ever had their own kernel? It seems that they are really just consolidating to one platform.


 

renkluaf 12/5/2012 | 3:57:32 PM
re: Android: Double-Edged Sword

You're correct; base your product on someone else's IP and you're in the assembly business.  And, yes, the ISV's are looking for the biggest platform to target for their apps because there are only so many resource to go around.


If you look at the current business model in the handset business versus the PC business, you'll see the future.  The handset guys who follow this path are going to experience margin compression.


Motorola was part owner of Symbian but sold that off a few years back.  In retrospect, not a particularly good move (like many others they've made).


Thx for the thoughts,


 


RMF

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