With the rumor mill still in overdrive following reports of a new, Google-branded Android phone going on sale directly to consumers as early as Jan. 5, it’s not yet clear what effect it may have on the broader cellphone market.
Widely referred to as the “Nexus One,” the HTC-manufactured phone will likely be sold in two configurations, according to a source cited in a Reuters report: one unlocked version, and one subsidized version that comes with a T-Mobile service contract.
Google spokesperson Carolyn Penner declined to provide LinuxInsider with confirmation or further details. A Saturday post on the Official Google Mobile blog has only confirmed that Google employees are currently testing a new, Android-powered mobile device.
Weakness in Diversity?
The mobile market is often described in terms of competition between Apple’s wildly popular iPhone and the Android platform, which has spawned numerous contenders over the past year but still hasn’t garnered anywhere near the fan base of the iPhone.
The fact that Android contenders’ ranks are growing is often cited as a potential downfall that could cause confusion among consumers and frustration among developers.
“Unlike the iPhone, where a software application can be written once and run seamlessly on all versions of the iPhone, most software applications written for Android have to be customized for each smartphone,” said Needham & Co. analyst Charlie Wolf in a recent note on the topic.
“This limits the addressable market of an application to that of an individual smartphone rather than the Android platform itself,” Wolf continued. “Such splintering could limit serious application development, preventing Android from emerging as a recognizable and leading brand in the smartphone space.”
$500 to $600 Range
How a Google-branded entrant may change things is open to speculation — particularly since its business model isn’t yet clear.
“It really gives Google a free hand in what they want to put on the phone on top of this open source operating system,” Chris Hazelton, research director for mobile and wireless with the 451 Group, told LinuxInsider. “Everything on top of Android can still remain owned by Google — they don’t have any requirement to push improvements at the application level back into the community.”
The device will likely be sold in the $500 to $600 range, Hazelton speculated.
“If Google can knock it into the $300 to $400 range, you may see people picking it up,” he added — but it’s debatable whether Google thinks it can get enough ad revenue data off the phone to support such subsidization.
“My feeling is probably not,” Hazelton opined.
The ‘Corvette Model’
That, in turn, suggests the phone may follow the “Corvette model,” he added.
In other words, “Google will be pushing the bounds of what devices can do to kick-start the Android community,” he explained. “A lot of the benefits and apps will drive forward Android as an operating system, and will drive device vendors and carriers to keep up with Google — and, of course, the best way to do that is to provide Google services.”
So, even though the new phone may not win over the whole market, “this is not a play to augment Google’s revenue,” Hazelton said.
It will, however, ensure the company’s future in mobile, he said.
‘Google Can Afford It’
“By completely owning the experience and the customer, they can get lots of valuable information and provide that to players in the market outside of device vendors and carriers,” concluded Hazelton.
Information about what users do with mobile applications outside the browser, for example, may be particularly valuable to advertisers and possibly developers as well, he noted.
In short, “I think it’s a risky bet, but Google can afford it,” he concluded. “It keeps them in the game and pushes them to catch up and hopefully eclipse Apple.”
Indeed, the Nexus One could end up being the flagship model in the already diverse Android market, Ramon Llamas, senior research analyst with IDC’s mobile devices technology and trends team, told LinuxInsider.
“Because this will be a Google device and a Google OS, this will be the one lots of app developers will shoot for,” Llamas noted. “It will all be in-house.”
Without subsidization, the device’s price “will be a bitter pill for a lot of folks to swallow,” particularly in the United States, he added.
Nevertheless, if it becomes the flagship model, “it could be a big driver of the market,” he asserted.
Ultimately, Android promises to gain more and more momentum, Llamas predicted.
Apple may have its hardware and software in-house as well, “but it’s still just one brand,” he noted.
With Android, there is already “a good library of folks deploying the OS,” Llamas said. “That’s pretty darn powerful, don’t you think?”