Android Is a Success

For a new mobile technology, let alone an operating system, to go from announcement to shipping product is, however you look at it, a spectacular success.  That's exactly what happened to Android with the G1 phone available from T-Mobile.  It normally takes years for any technology to get in a carrier's network.  Android did it in one year.

In addition, Walt Mossberg called it "a worthy competitor to the iPhone".  Given the iPhone is one of the most impactful technology innovations of the last 3 years, that's is a big statement.

Now we are also hearing that Motorola is reorganizing around Android.  Yet another sign of success in such a short period of time.

Last year I predicted that Android would be a success, I consider that prediction to have come true.  Here is what I wrote then, still quite valid:

"1) The Success of Google's Android and the Open Handset Alliance:  This means that handsets will become more like PC's and wireless carriers will become more like landline DSL providers.  This is a bold statement because both handset makers (like Nokia) and carriers (like Vodafone) don't want this to happen.  So why do I predict a change in an industry where dinosaurs were surviving for such a long time? 

Because a meteor the size of Texas hit the wireless industry in 2007 and it was called the iPhone.  For the first time in the wireless industry, the handset chose the carrier as opposed to the carrier choosing the handset.  The product was so impactful and well designed that some carriers agreed to share 30-40% of their data revenues with Apple in order to have the device on their network.  That could be a very meaningful $200 dollars to Apple.  Why did carriers agree to that?  Because the carriers did the math and the revenue share probably made up the customer acquisition cost that they no longer had to pay which, in the US, is about $200.  In return for that bargain they gave up ALL revenue from applications, ringtones etc.  The consumers wanted it, they gave it, and doing so opened up the market an catalyzed the next innovation which came from Google.

Android and the Open Handset Alliance, enables other people to quickly create new iPhones.  It creates an environment that let's developers focus on what they do best, which is writing innovative applications.  So that somebody can come up with a device so compelling that it too will chose their carrier (if carriers need a nudge Google can share search revenues, if they need a punch they'll fund an open carrier).  Once that happens, the carriers become a dumb pipe, but a dumb pipe with similar economics and no worries for churn. 

The second reason carriers may embrace Android, is so they don't have to be hostage to Nokia which is exerting a bigger and bigger pressure on carriers.  They are even building an ad network and making carriers pay them a piece of their ad revenues.  Especially European carriers, are so dependent on Nokia that they may just welcome a cheap, Android phone that has a few killer apps built by young application developers.

Which brings me to my third and final reason why Android will succeed; the developers.  They are frustrated.  It is frustrating to write mobile apps if you have to test them with 100s of handset each running a slightly different OS, in slightly different carrier networks.  Getting apps and phones certified is a big daunting, time consuming and frustrating task.  Palm will attest to that as they lost 25% of their market cap because they missed certification.  Android, sets these developers free.

So between, independently innovative products, a tough supplier to the market, frustrated developers and a tough carrier business model, this industry is ripe for big changes, and I predict it will start happening in 2008."

If you disagree, comments are open.

Comments

[Michael Martin]

I would say so far so good.

The litmus test will be in 2009 as the next generations of Android phones come out and compete against each other as well other phones.

If it muscles out a signifigant slice of the mobile market - at least 30% - by the end of 2009 I would affirm Android's success.

,Michael Martin
http://www.googleandblog.com/

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