I. Android ?

Now we have introduced Android from a general point of view, we are going to assess the Google product’s current position in its environment. First with an internal analysis, in order to set back the Android project inside the Google core competencies. Then with an external analysis to locate Android with its competitors, shareolders and market. At last, we will have all the elements needed to formulate the strategy, by giving the actual state of the project.

I.1 Android within its internal firm, Google

It is important to understand what are the aims, the objectives of Google with Android. As mentioned by Richard Miner in its conference at Stanford (http://www.youtube.com/v/WUrMI9ZGxQ8&hl=fr&fs=1), the Google “No Business Model” wants to break the monopole of a few companies in the mobile phone OS industry in order to provide the customer with all that he can expect and without any additional cost accorded to the Tim Wu’s ideas. Business speaking, the Android chief product reminds us these two figures : in the world, there is 1.18 billion Internet users and 2.7 billion mobile phone users. So if Google has made such a business with 1.18 billion “customers”, what about with more than twice ?

Thus the business aim of Google with Android is to provide all the Google tools to the mobile users thanks to an OpenSource Platform. To better visualize the organization and context, the diagram below represents the Google’s core competencies based on “The Cored Competence of the Corporation”, by C.K. Prahalad and G. Hamel, without and with Android.

Without Android :

Important dictinction must be made between smartphone OS, handset makers and carriers. We will try to keep this distinction throughout the next explanations. The best analogy can be made with the computers industry : OS providers keep the same, (Microsoft Windows, Linux), handset makers are the computers makers (Asus, HP) and

carriers are the retailers (FutureShop).

And as in the computers industry, there are two types of OS providers :•the companies which are both OS provider and handset maker (like Apple computers) :

-Apple iPhone-Nokia with Symbian (to some extent Nokia is the main Symbian contributor)-RIM’s Blackberry

•the companies that only provide an OS (like Microsoft Windows) :-Google Android-Microsoft Windows Mobile

Ranking Algorithm Computing Datawarehouse

Search Engine WebApplications

Google Search Google Applications

...all Google Labs

releases

GoogleDocuments

GoogleMaps

GoogleAdSense

GoogleAdwords

Gmailgoogle.com

Essentially available from semi-mobile or fixed devices

Business Applications

Google Core Competencies without Android

With Android :

With that two diagrams, we can argue that Google is acquering a new Core Product which is the OS development, here (for the moment) in mobile phones. There is by now, no new business but Android as an end product will be a new way for Google to broadcast all its others end products.

I.2 Within its external environment

To complete the current analysis of Google with Android, it seems useful to replace the product in its market. For this, the figure below draws the Porter ‘s Five Force adding the complementary goods and the channels forces.

Ranking Algorithm Computing Datawarehouse

Search Engine WebApplications

Google Search

Business Applications

GoogleApplications

...all Google Labs

releases

GoogleDocuments

GoogleMaps

GoogleAdSense

GoogleAdwords

Gmailgoogle.com

Available Everywhere

Operating System Development

Google Core Competencies with Android

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Android in its own environment, Porterʼs Force Model analysis.

We are now going to explain each component :

CustomersThe first customers targetted by Android are the smartphone users (with a carrier 3G subscription). It essentially implies the developed countries population. Can the target be wider ? Even if Google always mentions “mobile phone users” it seems difficult to foresee Android OS on “simple” cell phones. First because, cell phones don’t provide enough features to allow a great experience : small screens, little processors and memories, ... Morevover despite of their continuous sales increase and prices drop, the mobile industry is switching towards smartphones industry and their new potential uses. For example, we can’t imagine using GoogleMaps on a 3x4 cm screen.If we consider the whole target, we can argue that the customers power is not very great. Customers buy their terminal in their carrier stores without selecting for each model its OS. Nevertherless, the innovative ones and early adopters may constitute spokesmen for Google among the others.

New EntrantsGoogle is now the last big entrant on the smart phones OS market. Apple iPhone and its OS was released before and Symbian restructured itself before too, thereby the New Entrant power seems weaker. Movial, a Linux distribution too is not well known at all and all the major actors are now in this market organized in multiple alliances.

SubstitutesCan we foresee within a short term period, another device that can allow us using all the web wealth, phoning and communicating easily between us ? As far as we know, cell phones OS can’t allow us to do such things. However, the new compact labtops as the eeePC and their different OS : Microsoft Windows, Linux,... might be consider as a substitute. They can provide full web, phoning with voIP, communicate with different medias : Ethernet (wired), Wireless (WiFi and 3G with special cards). Moreover the new development of WiMax networks will increase their appeal. So even if there are possessed by only an innovative users communauty by now, such products with their OS may become an alternative solution for a certain part of smartphone users.

CompetitorsThe smartphones OS industry is highly competitive and rule breaking. Below lan overview of the main competitors (from the wholly open to the wholly proprietary. See first part for market share of each) :

•Symbian : originally a ten-years old alliance between historic handset makers from the cell phones industry, it is now since June 2008 an Open Source Foundation led by Nokia, its main actor. It claims to be on 126 million smart phones with 550 000 developers associated (newsletter subscription). All the main computing languages can be used to build applications and added to the 9,282 applications already launched (30/day) based on the Q1 2008 Symbian figures. Symbian is widely spread in Europe thanks to Nokia leadership.•Research In Motion’s BlackBerry OS : the Canadian firm claims to have 3 million subscribers to its developper newsletter. Applications can be developed using Java, 60 are already available. BlackBerry becomes more and more popular in North America. •Microsoft Windows Mobile •Apple iPhone 2.0 OS. Official applications plus jailbreak ones....

Noticed that for each of this actor, at least one OS related change was introduced during the past three months....

SuppliersAs a supplier for Google Android we have reported all the companies that allow Google to put its OS on. And as a retailer, the companies that broadcast Android. Now it is easy to argue that both handset makers and carriers belong to the two categories. Nevertheless as suppliers refers to an input we can use this distinction :

Thus, this implies a sequential process but not such sequential as it seems, we will see after....The suppliers come from the Open Handset Alliance (OHA) and we can say that it is a Strategic Alliance built and lead by Google, This Strategic Alliance can be viewed as OneToOne (Google and the others) and Capacibility Transfer (from the others to Google) since Google reported that unusually, handset makers revealed a lot of their product specifications.

The suppliers have a huge power because as the objective for a supplier is to sell the maximum amount of its product, the OS is an ingredient of this success but not the biggest one. Many handset makers belong to different Alliances, Symbian, OHA, LiMo,.... So for them the risk is not as big as an OS company.

ChannelsThe main channels are the carriers. If Google wants its OS spread, it must be configured on smartphones which must (the huge majority) be sold through carriers offers. We can noticed that most of the Android users carriers come from the Open Handset Alliance with the main one : China Mobile.Moreover, the carriers choose the smartphones they will sell so it implies also the OS installed on it in which they have to made some changes on the phone according to their network and commercial technical features. So they introduce the final switching cost to the customer by setting the sale price, the features and restrictions installed by defaults on the smartphone. Consequently they have a strong power over Android and its success.

ComplementorsThe main complementary goods for a OS smartphone it is its applications (like in the OS computer industry). As Richard Miner mentioned, the functionalities increase while the cost decrease and so the more expensive becomes the software development cost. For this we can distinguish three different sources :•the “inside” applications. Even if we are analyzing the external forces over Android, we can argue that GoogleMaps, YouTube,... can be seen as external applications for Android as they are available on the other OS.•the other companies applications like for example eBay, Facebook, ...•the third applications, the main complementors. It includes all the applications developed by the OS communauty and based on the tools available for doing this; often called Software Development Kit or SDK.

Input (from)

Handset makersSoftware companiesSemi-conductors companies

Google Android Output (through)

Carriers

The third one is the main specific and thus source of distinct innovations for the different OS providers. Thus in order to gathering the hugest communauty, a dramatic competition occurs with some incentive rewards :•Google offers $10 million for the top 50 Android applications•RIM propose a venture company partnership with $150 million investment•Apple propose a similar partnership with $100 million.According to this, the complementors power is also important for Android. But conversely to the other powers, this role has the same impact for all the OS companies. We can make an analogy with the video game sector. Without good games and blockbusters for its console, a video game console maker will not sell a lot of its product.

I.3 And now...

Now, let’s take Eric Schmidt’s, Google CEO, chair. Here are the indicators that we know :

•Android release, intially foreseen for the second 2008 half, will be delayed probably for early 2009. So we are not sure being able to release our product before Xmas Eve.•Some developpers claim founding some difficulties with Android SDK

•The carriers partners experience some difficulties to adapt Android to their specifical needs before releasing the phone. The main carrier, China Mobile, reported finding huge difficulties with Chinese keyboard for example.•Apple iPhone 3G has just released its new product with a big commercial success (GPS).•Nokia restructured its software activities with its Symbian Foundation.•The new Gartner Q1 2008 smartphone companies market share reports that :

Market Share % Comparison to Y-1

Nokia

RIM

Apple

Sharp

Fujitsu

Others

45.2 -

13.4 +

5.3 / (first year)

4.1 -

4.1 -

27.9 -

•Adding geophical repartition, Android has to compete in the USA with RIM and Apple, and in Europe with Symbian and Apple. The main Android handset makers partners, LG, Samsung, Motorola and HTC shared less than 30% market share. But compete very well on cell phones (8.4%, 15.9%, 9.4%, /, respectively) and their smartphones market sales in Q1 2008 were relatively good : Samsung, 8.6% and Motorola 2.6%. Moreover they are popular in Asia.

Q1 2008 Gartner report, smartphone handset makers market share

•Analyst reports : “A lack of vertical integration seems to be the major problem the Android platform is facing at this time”, comparing to Apple Vertical Integration that might establish an installed based of 10 million devices until early 2009 (http://www.tgdaily.com/content/view/38070/145/).

•There is an appeal and support from the innovator users.•OHA succeeds building a good community which provides feedbacks and good appplications.

•Android OS interests new handset makers like NEC and HTC and carriers like Verizon.•“Android comes from Google”.

•Android applications are already used on the others platforms (GoogleMaps, YouTube, ...).

II. So...what to do ?

Here are the main decisions than our team will take to keep the Android project on rails and achieve its objectives :

As a qualitative and quantitative pool of applications has a great impact of the popularity of Android OS, we keep building a strong communauty of developers. It implies taking into account all the feedbacks relative to the Software Development Kit and all the other tools or modules in the core technology. Moreover, it is important to give them all the Google Applications’ API (Application Programming Interface) for the communauty to develop all the potential uses, for example with Google Lively (a Google virtual life simulator).Thanks to this it will maintain a good image and popularity for Android and thus we will rely on them to be the spokesmen over the other customers and like this reach the early adopters.

Analyzing the last Q1 2008 Gartner figures, the handset makers of the OHA are not the main actors of the smartphones market. However it is obvious that Nokia, Apple and RIM will keep their own OS. It seems then essential to build stronger relationships with LG, Motorola, HTC and Samsung, the main partners. Looking at the 30% of “others” of the Gartner Report, and adding Fujitsu and Sharp it will be a good idea to attract them in the OHA especially when we know their popularity in Asia. At last a good partner too can be Sony Ericsson despite the fact that their new smartphone (XPERIA X1) will be based on Microsoft Windows Mobile.These partnerships must be conclude keeping in mind the fact that too many partnerships will decrease the Android efficency and deployment since it implies more cooperation and work between Google and these handset makers.

Exclusive applications partnerships for Google Android Platform.

Applications or partnerships for music, games and APPLICATIONS store.

Exclusive partnership with one carrier in order to reduce first delays

III. Webgraphy

III.1 Apple

iPhone Dev CenterApple - iPhone - Caractéristiques techniqueshttp://en.wikipedia.org/wiki/ITunes

III.2 Cell phone industry

Portelligent Trends in Cell Phone Memory - 2007Cell phone market Q1 growth fastest since 2006 | Technology | ReutersQ1 2008 cell phone sales up 14% YTY | IT Facts | ZDNet.comNokia Continues To Dominate Mobile Phone Market -- Mobile Phones -- InformationWeekNokia has 39% of cell phone market in Q1/08 | Flash Enabled Mobile and Consumer Devices

III3 Google Android

http://www.tgdaily.com/content/view/38070/145/http://www.ecommercetimes.com/story/63523.htmlGoogle Android vs Apple iPhone : la guerre ne fait que commencer - Net-Marketing.frGoogle: Android Has No Built-in Business Model | Epicenter from Wired.comYouTube - Android: Building a Mobile Platform to Change the IndustryQuatre prototypes de smartphones Android présentés en images par Neteco.comSimon Wilkinson (Purple Labs) : "Je crains que Google ait une attitude prédatrice avec Androïd" - Interview sur Journal du Net SolutionsLa revue de presse en ligne du 09/11/2007Google accentue ses efforts de promotion d'AndroidAndroid (mobile device platform) - Wikipedia, the free encyclopediaOpen Handset Alliance - Wikipedia, the free encyclopediaOpen Handset AllianceYouTube - A first hand look at building an Android applicationYouTube - Androidology - Part 1 of 3 - Architecture OverviewAndroidhttp://code.google.com/android/what-is-android.htmlhttp://en.wikipedia.org/wiki/Google_Android#Historyhttp://www.openhandsetalliance.com/oha_faq.htmlhttp://mobilephonedevelopment.com/archives/507http://en.wikipedia.org/wiki/Picasa

III. 4 Microsoft

Windows Mobile for Business

III.5 Nokia

Symbian: Developer: homeSymbian : Nokia unit les fabricants de GSM contre l'Android de Google - Trends.beSymbian against Open Source (Google Android) - Canal de Noticias Moveis | PhoneReport

III.6 RIM’s Blackberry

BlackBerry - BlackBerry Developer Program | Membership Programs and Third-Party SupportBlackBerry Partners Fund : 150 millions de dollars pour attirer les développeursBlackBerry

III.7 Smartphone industry

The Smartphone Market EvolvesTechworld - Nokia ranks at top globally in Q1 smart-phone salesSmartphones - Basic Search Results - eMarketerGartner Says Worldwide Smartphone Sales Grew 29 Percent in First Quarter of 20083GWeek - Asia’s Mobile News | Gartner’s Q1 2008 report on smartphoneGlobal smartphone sales up 29% in Q1 2008, iPhone gets 5.3% share of global market | IT Facts | ZDNet.comSearch Results for 'smartphone' - The New York TimesiPhone has 19 percent of smartphone market - Wireless- msnbc.comSymbian Fast Facts Q1 2008Smartphone - Wikipedia, the free encyclopediaSymbian reste le premier système d'exploitation pour smartphones par Neteco.comLinux mobile: vers 31% du marché des smartphones dès 2012? - businessMOBILE.frgartner progression marche smartphone q1 2008 - GPS Industries dépose une plainte pour contrefaçon de brevet contre ProLink et d'autres partiesMarketsSmartphones: Industry ReportMobile thoughts: Predictions for smartphone industry in 2008

III.8 Tim Wu

Tim Wu, Freedom Fighter