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Year 2010

Did Google Arm Its Own Enemies With Android?

James Allworth, a Fellow at the Forum for Growth and Innovation at Harvard Business School writes:

Baidu,… has taken an even bolder approach. It’s reportedly in negotiations with a number of smartphone manufacturers to remove all references to Google, and replace them with Baidu.

… Microsoft recently negotiated with Verizon that some of the Android phones that ship to Verizon customers will have Microsoft’s Bing, not Google, as the default search engine. And the manufacturers are getting in on the act too: Motorola recently released a new phone, the Citrus, based on Android, but shipping with Bing.

Yes, it’s Google’s operating system. In both these instances, it counts as a “win” in the handset volume war against Apple, Microsoft, Nokia and RIM. But Google will not make a cent on this handset, despite having enabled its creation with Android. All the search revenue will flow to Microsoft.

via Did Google Arm Its Own Enemies With Android? – James Allworth – The Conversation – Harvard Business Review.

Readers of this blog might find these arguments familiar.

Since February this year, I wrote four articles under the headline “Google vs. Android” documenting these contradictions in Google’s strategy. There have been numerous other opinion pieces that described how Google’s approach was not consistent with an innovation-based disruption.

I’ve also argued that there is strategic incoherence in building systems software and hardware while selling web services.

Android is powerful, but as Google is finding out, power can be very dangerous without control.

Why the Mac keeps growing

When the iPhone vs. Android rhetorical war heats up, both sides bring up the history of Macs vs. Windows PCs. The commonly held thesis is that Windows triumphed as the PC was commoditized (and modularized). This triumph was at the expense of the over-serving and over-priced Mac.

This is a largely accurate view of what happened during the 90s. But the problem with this thesis is that (1) the PC’s job has been slowly changing in the last decade (2) the Mac keeps growing faster than the PC and (3) Apple keeps capturing a vast portion of the profits in the PC industry.

These anomalies or contradictions to the thesis imply that something changed. What changed and can these changes turn the tables on the market and create an opportunity for a new computing disruption?

Are mobile networks commodities?

Apple has been contemplating a SIM card that would make carrier switching a lot easier. Sounds great, doesn’t it?

“Apple is relenting,” said Rodman Renshaw analyst Ashok Kumar. “They are now completely backing away from their plan to take the carrier out of the equation,” said Kumar,.

via Apple to Kill Carrier-Irking iPhone Plan – TheStreet.

This brings to mind a recent article I wrote that any talk of mobile dominance by platform vendors is bunk.

… no single platform can win a disproportionate share because it would threaten the balance of control the operators require. So talk of “dominance” of one platform or another is hyperbole. The most likely scenario is an even distribution of share between 4 or 5 competitors.

The power of distributors in the mobile phone value chain cannot be ignored. It’s not fair, it’s not convenient and it’s not consumer friendly, but as long as networks are not good enough for mobile computing, mobile computers cannot commoditize the network.

The consequence (for those of us who try to foresee the platform game) is that operators will continue to play platforms off against each other leading to the scenario I suggest above.

Dell's devices head resigns

Garriques will leave Dell at the end of January after nearly four years on the job. Prior to Dell, Garriques had been the mobile device chief at Motorola until early 2007.

via Dell’s Device Plan Reboots, Exec is Out – TheStreet.

Here is how Ed Zander (the former CEO of Motorola) described Garriques soon after he left the company.

…Zander didn’t have a lot of good to say about the former team running Motorola’s cell-phone business. “The management in mobile devices made calls that were dead wrong,” he said, referring not so much to massive price slashing on the popular Razr as to the slow-footed move into so-called 3G (for third-generation) multimedia phones. That particular slam was directed at a young guy named Ron Garriques, who headed that division, which is most of Motorola’s business today, before high-tailing it out of Motorola just before the you-know-what hit the fan. Garriques today is part of the crack team turning around Dell.

His move to Dell caused quite a lot of speculation that Dell was going to be a serious contender in the mobile device space (despite their previous failures).

Apparently the launch of the Android-powered Streak was not enough to cement his future at Dell.

Nokia's Ovi Store downloads hit 3 million a day

More than 400 000 new developers in past 12 months; 92 developers each top 1 million download mark; 1.5 million downloads of Qt software development toolkits

via Nokia – Show Press Release.

See the following chart comparing Ovi with iTunes Music and iTunes Apps download rates.

iTunes App Store submission rate holding at 20k/mo, Android Market on par

Thanks to 148apps.biz we know how many apps are being submitted to the App Store.

For the year so far the average has been almost exactly 20k apps per month. Toward the last half of last year, 10k/mo was the norm.

China Unicom Says It Will Introduce own smartphone OS by Year-End

The UPhone will run on a “totally new” operating system that Unicom developed based on Linux, Zhang Zhijiang, who heads the company’s technology department, said in an interview today at the Mobile Asia Congress in Hong Kong. The phone is being developed with Okwap, Huawei Technologies Co. and ZTE Corp., he said.

via China Unicom Says It Will Introduce Self-Developed Smartphone by Year-End – Bloomberg.

Operators are still considering bespoke operating systems.

See also: European Operators contemplate own OS. Why not just fork Android?

Samsung like Windows Phone, Android not so much

Samsung’s mobile marketing lead for the country, Sitthichoke Nopchinabutr, also provided a surprise and hinted that the company might turn on Google and focus primarily on Windows Phone. About 15 to 20 phones based on Android, Bada and Windows Phone would ship in 2011, but the majority of them would use the Microsoft OS. For every 50 Windows devices, 24 would be Android models and just five would use the in-house Bada OS.

via HTC, Samsung see Windows Phone, Android dominating phones | Electronista.

Shocking!

In three years Apple will still have a minority market share in smartphones

Morgan Stanley’s Web 2.0 update came out yesterday and it’s full of nice charts. Here is one:

Note that the expectation for smartphones to overtake all PCs (including netbooks) will happen when smartphones sell more than 450 million units per year.

In 2013 nearly 650 million smartphones are forecast to be shipped.

My estimate for the iPhone in that year is 180 million. That would give iPhone (excluding iPad and iPod) about 28% share. The last quarterly figure is around 17%.

Perhaps 180 million iPhones per year will be defined as failure by those who consider over 80% share as a threshold for success but I still think it will be a healthy business.

Even assuming a cut in ASP to about $350, Apple will still be able to get about $62 billion in sales from phones (a bigger number than 2009 total sales for the whole company).

I would also add that by the end of 2013 Apple will have sold about 470 million iPhones. Though many will be out of use by then, the installed base will not be small (I’d guess about 300 million). Including all iOS devices, 500 million is a credible estimated audience for developers.

It’s entirely possible that Android variants, offshoots and forks will add up to a bigger number by then, but to pre-emptively declare the platform “war” won because the also-ran Apple will only have half a billion users seems disingenuous.

Warner Music waits for Godot

You really can’t stress this point enough: We’re a decade past Napster, but the music industry still runs on CD sales. In Warner’s case, digital now accounts for 25 percent of overall revenue.

via Warner Music Renews Spotify’s European Deal, Waits for Google | Peter Kafka | MediaMemo | AllThingsD.

What’s even more amazing is that after ten years not a single industry participant has found a new job for which its product can be hired by consumers.

The music companies wait for Apple, Google, Spotify to  “invent” some new consumption model from which they can extract a rent.