Rarely does a major player enter the smartphone market anymore, and for good reason: It’s a cutthroat industry with habitually decreasing margins — not to mention the fact that the business has a history of laying waste to the ambitions of even the strongest competitors (see: Nokia, BlackBerry, and Microsoft, for a few examples).
So a report in British newspaper The Telegraph claiming that Google intends to release its own handset this year — designed in-house and solely Google-branded, unlike the co-branded Nexus line — hit industry watchers like a bombshell.
Out of all the resource-rich companies that could theoretically step toe-to-toe with Apple (Samsung, Huawei, etc.), Google offers the greatest potential to serve as a disruptive force. That’s because the company is already the steward of what is, by far, the most popular mobile operating system in the world: Android.
The advantages of stewardship
As the gatekeeper of Android, Google is in a unique position to manufacture phones that offer the very best Android experience — or, perhaps just as powerfully, the perception thereof.
Which company would you, as a consumer, intrinsically expect to best tailor Android to a phone’s hardware, and vice versa? Just like Microsoft makes some of the best Windows devices with its Surface lineup, Google also possesses some key advantages that could give its Android phones a leg up.
Besides enjoying a vertical integration more closely akin to Apple’s — meaning control over the hardware, software, and services — a Googlephone would also likely see updates with Nexus-like speed. Widely coveted for this aspect alone, Nexus phones and tablets have traditionally been the first devices upgraded to new Android builds, because their firmware is provisioned directly by Google (except in the few instances when they have been sold through carriers).
Such timely updates would provide an ancillary benefit to this hypothetical widely available, Google-made phone: pushing other Android manufacturers to speed up their own update deployment, as well. Fragmentation (the wide disparity in Android versions among active devices) has plagued the platform since nearly the beginning, and Google’s frustration with slow-to-act licensees has reportedly reached a critical status recently. Pushing slowpokes to accelerate their update rollouts through direct competition would be a bold, and likely effective, strategy.
Additionally, Google could leverage its intimate knowledge of, and access to, Android source code to potentially endow its own-brand phones with early features, advanced capabilities, or other value-adds unavailable to other Android device makers.
Also worth noting is another Google-branded handset that’s even more certain to head to market within the next year: the semi-modular Ara. With slightly decreased ambitions from its initial vision of full modularity, the project aims to endow smartphones with a previously unseen level of personalization.
Market abuse potential
And therein lies a series of pitfalls that Google must avoid at all costs: Utilizing its stewardship of Android to bestow its own handsets with advantages that could be seen as either abusive of its market power or detrimental to the sales of its licensees (or both).
The first potential issue that could trip up this rumored phone stems from the European Commission’s inquiries into Google’s possible breaches of antitrust law — including one that targets Android specifically. Right now that inquiry is focused on the ways Google may or may not be leveraging its control of the licensed version of Android (as opposed to the free, open-source version) to stifle competition and extract unfair concessions from its partners.
But if Google were to begin to, say, preload the latest version of Android on the Googlephone a full month before other manufacturers even had access to the source code, that would almost surely be seen as an antitrust violation. Likewise, if its own-brand phone were to get better versions of features than original electronics manufacturers (OEMs) were privy to, that too could be seen as leveraging market power to enhance its own position — to the detriment of other Android licensees’ sales.
That scenario could prove to be a double whammy for Google: Not only could Google face potential sanctions in Europe and elsewhere, it might also risk alienating the very partners responsible for Android’s success. Assuming that a briskly selling Googlephone would cannibalize most of its sales from other Android-powered handsets (and not mostly iPhones, for instance), Google runs the very real risk of placing the straw that breaks the camel’s back regarding its already complex relationship with some licensees.
A significant decline in Galaxy sales, for instance — and one that could be attributed to an ascendent Google device — might be exactly what Samsung would need to finally take a serious look at its own homegrown platform, Tizen. That OS currently powers just a handful of phones and wearables, but its mere existence is enough to keep Google honest, with the knowledge that its biggest sales partner has a replacement waiting in the wings.
Realistically, it’s nearly impossible to imagine Samsung completely abandoning Android for Tizen, especially with the huge disparity in ecosystems available to support both platforms. But even a partial replacement of Tizen for Android could give Samsung the confidence — and developer interest — to continue moving away from its rival’s software. And that’s true throughout the Android universe; OEMs faced with stiff competition from Google might have a strong distaste for competing directly with it, as well.
Assuming that Google is able to avoid these pitfalls, it has the potential of doubling down on the goodwill it’s engendered with a rabid Nexus fanbase. With a built-in and eager market already primed for all things Mountain View, a Googlephone could achieve a number of the company’s goals with respect to Android: tighter control of the end-user experience and more timely updates, while ensuring that its own core, profitable services remain at the forefront.
According to the Telegraph report, we should know by the holidays how this will all play out — although some of the longer-term implications will likely take months, if not years, to come into focus.
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