It is interesting that Google is getting so much of coverage as they unfold their mobile marketplace strategy – similar capable phones have already been announced by Nokia, Microsoft and Apple. Difference being - Google calls is open technology standard and for other vendors it is ‘closed technology’. Wonder how the likes of Apple, Nokia and Microsoft deal with this – will they too may give their software away for free and call it ‘open technology’ to instill greater collaboration leading to more innovation.
To understand the implications for each – let’s look at what constitutes the biggest source of revenue and their current position of strength.
Apple: The real incentive is to push more gadgets like iPod, IPhones etc. They would build software to make their devices more user-friendly. But the goal remains to sell more devices.
Nokia: They are market leaders in providing handsets for GSM services worldwide with market share of over 36% worldwide. Their motivation is to make money on device and will give away software if it can help them sell more mobile phones. They of late have introduced a new platform for services ‘Ovi’ to benefit from the revenue sources from applications and services.
Microsoft: Makes a big chunk of their revenue from providing software and are focusing on the web 2.0 technologies to improve their earnings potential from internet based advertising.
Google: Makes a big chunk of their revenue from Internet advertising and wants to aggressively defend this position of strength. Their goal is leverage this strength to enter the wireless marketplace and this is the reason for their intentions to create an eco-system for the mobile market place - ‘Android’.
It is in Google’s interest to protect their turf and look for additional revenue sources that leverages their core strength – Internet advertising and not get locked out of the mobile advertising market. So it should come as no surprise of their intentions to enter the mobile marketplace. This is a novel market entry tactics. They could not go to the market and create another ‘closed system’ and ask their alliance partners to pay for the software they build. Rather they want to give this away for free so that they can make money on the advertising – which is their strength. The software developed would potentially be paid by these alliance partners to get real-estate space on a mobile phone. This Google tactics would surely hurt Microsoft.
It is interesting to see players like Motorola, Samsung, LG and HTC in the alliance – together these vendors have a market share of over 50% globally. But then the Google software will be available on new handsets only – makes one wonder of the real motivation for these vendors.
However, it appears Google’s real motivation could be to reduce cost of handsets which in turn would reduce the barrier to adoption of cellular services. Also given that huge market opportunity exist in Africa, East Europe and other emerging countries in Asia, thought that service providers in those economies would be more willing to take the subsidy to improve market adoption as a benefit to be part of the alliance. It was surprising that those providers have not been included or maybe the list is still growing. Also not sure the real motivation for the likes of Motorola - Motorola has a good penetration in North America and a relatively ok position in Europe. What is their expectation from the alliance? Maybe they are targeting the Japanese operators or trying to further improve their market position in North America and Western Europe.
Other thoughts/opinions?
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