Narrative: Android is Hard
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Narrative: Android is Hard (Jan 9, 2017)
Written: January 9, 2017
Android is the dominant smartphone operating system globally, and if anything the market share of iOS is shrinking on a worldwide basis. It would be easy to say Google had won in smartphones, if not for the fact that Apple takes the vast majority of profits from the market, and Samsung takes almost all the rest, with almost every other Android vendor losing money on smartphones.
The single biggest challenge for Android vendors is that differentiation is really tough when your devices are based on the same operating system as most of your competitors’, and you’re not very good at services, which is true of essentially all the Android OEMs, including Samsung. Samsung’s marketing muscle and resulting scale have allowed it to assume a position as the default vendor for premium Android phones and therefore to reap the high margins available in that segment, but all other vendors have had to focus on the more commoditized mid-range and low-end segments, with predictable results.
Beyond smartphones, Android tablets have never really taken off, partly due to an apparent lack of commitment from Google to optimizing the OS for this form factor. Wearables, too, have been a challenge, with Android Wear fading into obscurity as Apple and Samsung carve up the smartwatch category, and Fitbit and others take much of the rest of the market.
Being an Android vendor is hard, and it will become even more so as Google takes a leaf out of Microsoft’s book and begins pursuing a first-party hardware strategy with the Pixel, Home, and other devices. Like Microsoft, it is targeting the attractive premium segment, and in the process will put pressure on its own OEMs more than Apple, whose customers have shown themselves to be the most loyal in the industry.
Moto X4 Brings Android One to the US and Google’s Project Fi (Sep 20, 2017)
I noted a couple of weeks back with the launch of Xiaomi’s first Android One device that the project appeared to have morphed from a low-tier emerging markets play to one focused more on the mid market, and today’s news reinforces that perception. Motorola is launching its Moto X4 device into the US market as part of the Android One project, and this $400 phone will be available on Google’s own Project Fi service as an alternative to the Nexus and Pixel phones it’s offered until now. (The Nexus phones Google has offered are, by the way, currently showing as out of stock on the Project Fi site, suggesting they’re likely to get phased out with the launch of new Pixel devices in a couple of weeks.) The Android One version isn’t the only one Motorola offers – as I noted when it was announced, the main version actually comes with Alexa baked in, something the Google version certainly won’t do. All of this is indicative of Motorola’s falling leverage with carriers, and its need to do deals with other market players to parcel up its phones in different ways to find attractive niches.
HTC has formally announced that its shares will halt trading for a material announcement tomorrow, and Bloomberg is reporting that it will be that Google is acquiring at least part of the company’s smartphone operations. Other sources – including Taiwanese site Apple Daily and as I understand it shortly also the Wall Street Journal – are saying that it’s the smartphone design operations specifically that Google will acquire, for a relatively small sum in the hundreds of millions of dollars. As I’ve said before, there’s a strong logic to this acquisition despite the history with Motorola. The biggest change since that earlier acquisition is that Google is now far more clearly serious about hardware, with a consolidated division about to announce a second generation of major products at an October 4th launch event. In addition, acquiring a very focused slice of HTC would be a very different proposition from buying what was at the time a much larger and more diverse Motorola business, which was subsequently run largely at arm’s length inside Google. I would expect Google to bring the HTC assets deeply into its own hardware division and to use the new capabilities to drive much more optimized and integrated hardware design relative to the ODM approach used for Pixel hardware, which likely relied heavily on existing designs and platforms from HTC.
All of this is, of course, further validation along with Microsoft’s Surface push of the approach Apple has long taken to tightly integrating hardware and software. It’s increasingly clear that the best results in hardware are achieved by those who can combine hardware and software in such a way, preferably with tight control of the whole process, and Google would get a lot closer to that goal through this acquisition. The big question still remains what happens to whatever’s left of HTC, which presumably will abandon making smartphones and focus on its Vive VR efforts, something that’s going to be a tough proposition in an increasingly competitive market. I’m still surprised that Google isn’t taking over the whole thing, because it could clearly benefit from the Vive assets as it seeks to deepen its own Daydream VR capabilities.
Google’s Android One project for emerging markets was launched in 2014, and focused on countries in the Indian subcontinent and other parts of Asia. But it’s appeared to be struggling, with little recent positive news from vendors supporting it in those countries. In addition, at its I/O developer conference this year Google announced a project internally called Android Go, which is focused on optimizing Android for low-cost devices and therefore seemed to be in somewhat the same vein. But the funny thing about Android One is that’s it’s been morphing somewhat from a project for the low end of the Android market to one more targeted at the mid market. There have been several Android One phones through Sharp in Japan since mid-2016, and now Xiaomi is announcing a device. which seems at least in part targeted at India.
The most interesting thing about Xiaomi as a partner is the fact that it’s always majored on its proprietary UI – MIUI – as a differentiator for its devices, and it’s arguably that the fairly locked-down Android One was intended at least in part as a response to Android OEMs’ customizations, so this is certainly a departure for Xiaomi. As with the Japanese phones, though, this one is also targeted at the mid-market, selling for a little over $200, with 80% of handsets sold in India below $200. So it’s a poor fit for the original focus of the Android One project, which is arguably now being taken over by the Android Go initiative, but indicative of what Android One is evolving into. The big question is whether the device will actually sell, given that a Xiaomi phone without MIUI is a tougher sell and there are plenty of other cheaper Android phones in the countries the companies are targeting with this one. There’s certainly no guarantee Android One does any better in India at $200 plus than it did at $100.
The Verge seems to have secured the first of two exclusive looks at Android founder Andy Rubin’s new phone, from his company Essential (Recode’s Code Conference will have an interview with Rubin tonight where I’d expect him to share more). So far, there’s nothing about the software, beyond the assumption that it’ll run Android. So the focus is entirely on the hardware design, including the materials, connectors, and a theoretical ecosystem of modular add-ons (for now, there’s just one: a 360° camera). The reporting on this is all a little breathless – Andy Rubin has quite a reputation and anything he launches will be accorded a fair measure of respect. But the pitch here feels so much like almost every other new entrant in the market, a mix of straw man arguments about the current state of the market, grandiose claims about how all that will change, ambitions to build an ecosystem without any evidence that any other player is interested, and nothing at all about distribution, which continues to be the key question in the US smartphone market. We’ll hopefully know a little more by tonight, but I’m extremely skeptical that this phone will do any better than any other recent attempt to change the smartphone market. In the meantime, that won’t stop this project from getting tons of positive media attention in the run-up to an actual launch sometime later this year. It’s worth noting that beyond the phone there are some other bits and pieces too, including a smart home OS and speaker with a screen, but again the details are so short and claims so grand that I’m inclined to ignore them until we actually know something specific about them.
via The Verge