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Taking Back the Market

Does the Android G1, Doomed as an iPhone Killer, Dream of Electric Sheep?

Tim Nash - 2008.10.29

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This articles title reference is to Philip K. Dick's Do Androids Dream of Electric Sheep?, the story from which Blade Runner was adapted.

Marketing the HTC G1 as an iPhone killer meant it was dead on arrival. Blog articles on 1.5 million initial sales, when the manufacturer HTC talked about supplying a maximum of 500,000 this quarter, raised the hype without a chance of delivery. Already articles are appearing comparing the queues - or lack of them - and when articles like Neil Gaiman's appear about a T-Mobile franchise that is required to advertise the G1 but can't sell it because it doesn't work in that area, you know the G1 is doomed.

G1 vs. iPhone

It didn't have to be this way. Walt Mossberg gave the G1 a reasonable "First Impressions" review.

It was very clear there was no hope of launching the Android Market with anything like the number of apps that Apple had in the July launch of the App Store. T-Mobile knew that 3G would only be available in 19 markets, with another 10 on the way, compared to the 250 that AT&T offers. So why go with a saturation strategy which can only lead to negative stories?

What the G1 needed was strong word of mouth from niches poorly served by the iPhone. The G1 has tight integration with Google's email, contacts, and calendar programs, so users of those - and all the Apple haters disenchanted with Windows Mobile - would have bought and evangelised.

As it is, the medialets figures for the first 24 hours of downloads showed strong interest in the Android Market.

Android G1 smartphone Combined with the cheaper minutes and data packages and restricting sales to the well served 3G markets could have given T-Mobile a small but strong market to build out of. This should have sold the 500,000 to gadget lovers and for Christmas, but few users are willing to evangelise a new product against negative press.

However, Google doesn't really care. Android has been well reviewed and passed over to Open Source, and the G1 hardware decisions were down to others. The most crippling mistake, limiting the G1 to 70 MB of third party apps at any one time when the average iPhone user has already downloaded 18* apps, can be changed in future designs, and it is those and the design wins in the coming quarters that will decide the future of the platform.

There is an old maxim: "Follow the money." Google's money comes from context sensitive ads, which on mobile also means location sensitive. Google can serve those up as well on the iPhone as it can on Android, and so it does not care which platform is more successful. Apple is too busy making money from selling the iPhone to be interested in selling ads, which is why Eric Schmidt is still on Apple's Board of Directors.

Google's lack of interest in Android beating iPhone is seen in the developer terms for the Android Market. Only free apps are available now - distributed at no cost to the developer. Next year 30% of any fee to cover costs, exactly as the App Store charges. Only charging $25 to list an app, instead of Apple's $99, hardly makes for cutthroat competition.

All Google wants is that Android is seen as better than Windows Mobile. Manufacturers and carriers unable to sell the iPhone need an alternative. If Android looks better, they won't take up Windows Mobile where Microsoft would serve up the ads. Google's main interest in Android is in making sure that Windows Mobile does not succeed. Giving Open Source developers a home, so that they don't work on a less Google-friendly mobile OS, is an added bonus.

* 200M downloads from the App Store (Steve Jobs, Apple Q4 conference call). 6.1M first generation iPhone users ( if all have updated their software) + 6.9M iPhones sold last quarter - 2M iPhones in channel (stock at retailers, carriers etc.) = 11M iPhones in use. Average number of downloads per user is 18

Tim Nash lives with his wife, her website on the area ariege.com, two daughters, a cat, and a dog in the French Pyrenees. He has worked for computer companies for more years than he cares to remember, lapsed for a while after the Apple II, but became a Mac fan when his wife introduced him to the IIsi. If you find his articles helpful, please consider making a donation to his tip jar.

Recent Taking Back the Market columns

No Verizon iPhone Any Time Soon, but Verizon May Have Another Apple Opportunity, 10.23. Put simply, the iPhone is a GSM device that Apple would have to re-engineer for Verizon's CDMA network. But Apple's tablet could benefit from Verizon's 3G network.
How Apple Will Beat Sony and Nintendo in Handheld Gaming, 10.16. The iPhone platform has more users than Sony's PSP, and it will pass Nintendo's DS platform within two years.
Palm Pre: Cutting Off Business Customers, 10.05. Palm contines to shoot itself in the foot by making the Pre increasingly unattractive to business users.
Competing Visions: Apple, AT&T, Google, the FCC, and Google Voice, 09.03. Apple wants to sell hardware, Google wants to sell advertising, and AT&T wants to sell you minutes. Some conflict is inevitable.
More in the Taking Back the Market index.

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