Android vs the elephants in the room


So in February, a large chunk of the mobile world's top executives, innovators, analysts, media, PRs and assorted hangers-on, gathered themselves in Barcelona to contemplate the future.

The handset companies huddled in a corner bemoaning falling sales and kicking over the still warm bodies of the fallen giants.

But, as was confirmed by Industry body the GSM Association - there's four billion mobile handsets out there and the challenge facing the industry now is about getting people to do more with them.

So in Barcelona we expected to see a plethora of mobile app stores being opened or refreshed by the likes of Nokia, Samsung, and Microsoft.

And while Apple didn’t actually exhibit or speak at the Show, they were all over it as thousands of the delegates pulled out their iPhones and showed off the latest app they have downloaded. And it is Apple that really helped define and create the mobile app market.

But here's the thing. While the mobile world largely operates to a single standard in terms of the transmission of the voice and data itself - GSM and all its evolutionary variants- for the devices, it's a very different story.

Established Mobile O/S platforms include Symbian, Nokia Series 60, Microsoft Mobile, and more recently, Apple. But look, what's that coming over the hill: it's Google Android.

Of course, this multitude of platforms means that for application developers the potential market is fragmented to say the least. And of course some of the systems are more adaptable, and easier to work with than others.

The new boys in town, Apple and Android, are the ones that have been designed with the App market in mind, and where the greatest excitement is currently to be found. Unfortunately for the developers, they also represent the smallest market share.

By way of contrast, Nokia has around a third of the global market and sells more handsets in a weekend than Apple does in a year. So that's one elephant in the room as far as a new player is concerned.

But there's another one. And it's got Nokia worried as well. The mobile operators in the developed world are doing all they can at the moment to discourage handset upgrades. Two year contracts, SIM only contracts, bigger text bundles if you don't upgrade at the end of your term etc.

After years of offering free handsets every year in an effort to steal customers from each other, the networks have cut back that "marketing" spend and, as a result, handsets prices - especially at the smartphone end - are creeping up as the incentives are switched towards loyalty and extending handset life.

Nokia and the other established players now depend on the emerging markets for the great majority of their new sales. And it is the low-end phones that break that ground first.

In the developed world, where the high end, app-heavy, pc-connected smartphone battle will be fought - the consumer is faced with rising prices at a time when his or her pocket is being hit the hardest.

So if 2009 is the Year of the App in the mobile industry, I do expect Android and Apple to pick up share against the established players in the UK and Europe. If the subsidies are equal or non-existent, then consumers will likely buy the coolest brand.

But sales will slow down and for Google, this is going to be a very slow burn and the rewards are neither easy or plentiful in the short term. Luckily, they do have very deep pockets, and the end game, if they can stay the course, is a big one. Did I mention the four billion handsets earlier?

Written by Kevin Taylor, CCgroup, first blogged on www.thinkabouttech.com February 2009, under his alias Telecomtails