Has the Window Closed for Android?

Nine months after Sergey Brin and Larry Page rollerbladed down the streets of New York to unveil Android, Google’s mobile platform is finally positioned for an aggressive, global rollout. My colleagues here at GigaOM Pro, Sam Dean and Phil Hendrix, are bullish on the open-source platform’s prospects, but as the smartphone war heats up against a backdrop of economic uncertainty, it’s worth asking: Has Android’s window closed?

Android’s six-month infancy was supported by only one handset — HTC’s G1, an impressive yet unsexy device that was simply too clunky for mass-market adoption — on T-Mobile USA, the country’s fourth-largest carrier. Despite those limitations, though, Android usage has been encouraging: The platform delivered a 47 percent month-over-month increase in ad requests from November 2008 through March 2009, according to AdMob, with HTC’s device ranking fourth among U.S. smartphones during the period.

Google is positioned to build on that momentum later this year, Strategy Analytics said last week. Sales of Android-based devices will increase nine-fold, the market research firm predicts, as T-Mobile rolls out new handsets from three OEMs and the platform is adopted by more carriers around the world. And a 1.5 version of the platform, dubbed Cupcake, is drawing positive reviews. The Android Market storefront features a relatively consumer-friendly billing mechanism in PayPal, and it’s nearly impossible to overestimate the cachet Google’s brand brings to the table.

But Android’s anticipated growth comes as mobile users are rethinking their priorities, slashing their telecom budgets and moving to prepaid. As J.P. Morgan analyst Mike McCormack noted last week (as he downgraded AT&T and Verizon), mobile is undergoing “deteriorating wireless fundamentals, specifically in the higher value postpaid subscriber base” — i.e., smartphone users. If cost-conscious consumers don’t respond to Android’s late-year push, the platform may not have another chance.

And while casual onlookers might think of the smartphone space as an Apple. vs. Google battleground, the market is far more complicated, as evidenced by the iPhone’s second-place finish (to RIM’s BlackBerry Curve) in U.S. first-quarter sales. RIM claimed three of the top five spots, according to research firm NPD, and competition will only heat up as the Palm Pre comes to market in the next few weeks and Microsoft moves forward with WinMo 7.0 — and, perhaps, a new handset.

The platform faces some other challenges as well. While some mobile developers have praised Android’s ecosystem for its unregulated nature, simple uploading process and open source qualities, there’s also another camp of developers who claim the Android SDK has left much to be desired. And, as PCMag.com’s Sascha Segan noted last month, the platform has yet to attract another Tier 1 U.S. carrier.

Not that Google has reason to cower. Even if Android ultimately disappoints, the company’s primary goal — a heavily-trafficked wireless Web — is  already happening. Google has no mobile hardware play of its own and no direct revenue stake in Android Marketplace, leaving developers and carriers to split revenues from Android applications. But the game has changed substantially since Android’s heralded coming-out last fall. And there will be plenty of losers if the window is already closed.

Question of the week

Will Android become a major smartphone OS in the next year?
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Colin Gibbs

Colin Gibbs

Founder and Principal Peak Mobile Insights

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3 Comments Subscribers to comment
  1. Colin Gibbs Friday, June 5, 2009

    Thanks for the comments, Michael(s).

    I agree that the combined OS/hardware strategy is winning right now, Michael, but I don’t see any reason a pure OS play can’t work.

    I’m skeptical of a Symbian/Android tie-up, though. Nokia is having trouble on almost all fronts, but I don’t see it ceding control of Symbian anytime soon. We’ll see some M&A activity down the line, but I’m not expecting anything major so soon in the game.

  2. Michael Scharf Wednesday, June 3, 2009

    ^^^The question for me is whether or not there is room in the smartphone market for a pure play OS as opposed to the OS/hardware plays^^^ (Android, Symbian & WinMobile versus Apple, RIM, Palm, Danger/MSoft). Right now, the full solution options seem to be winning. We’ll have to see what happens in the Netbook space as well, now that we have Qualcomm and nVidia rolling out products using their own hardware and OS.

    If a pure OS option can work, would we expect to see some M&A activity there? Might Nokia merge Symbian into the Android platform?

  3. Michael Wolf Tuesday, May 19, 2009

    Good counterpoint Colin to what is becoming the conventional wisdom (of which I can be accused to be a part of) that Android is going to have a big year on the heels of Cupcake and new phones with the platform. ^^^Honestly, the most exciting thing to me is the arrival of a large number of big platforms this year in the Pre, Cupcake, a new as well as potentially the Microsoft XyZ device^^^ (if all the smoke actually means there’s fire). I can’t wait to see how Apple reacts to the rising competition.

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