A year ago, Google seemed to be having everything its own way in mobile, with Android winning support from most of the big phonemakers, and its search and advertising services featuring on the homescreens of more and more handsets. Now, its mobile OS is certainly make huge strides, but the vendors and carriers are increasingly divorcing it from Google’s own revenue generating apps. And its attempts to shape the mobile web in its own image is starting to backfire, with its former close friends among cellcos and manufacturers turning against it.
Although some carriers, notably Verizon Wireless, have formed very close alliances with Google over Android, the relationship was always going to be a tricky one, given the search giant’s long term aim of creating a fully open mobile internet, a goal that has to relegate the cellcos to the bitpipe role they dread. In the meantime, the power of Google’s internet services is such that operators have no choice but to form a working truce ‘ but the same goes for Google itself, and it has sometimes underestimated the importance of the cellcos as the primary channel to market for all things mobile.
This is clearly seen in the Nexus One experience, which has likely been a factor in turning Verizon against Google in other areas too (the carrier is expected to be one of those opposing Google’s acquisition of AdMob on antitrust grounds). Indeed, Google is discovering just how dangerous it is to ruffle the feathers of the major cellcos. Its Nexus One handset may be one of the most advanced on the market, and bear the magical brand, but halfhearted marketing efforts by carriers have led to disappointing sales. Now, analysts at Goldman Sachs have slashed their estimates for sales of the phone this year by 70%.
Several operators did lend support to the Nexus launch, despite Google’s introduction of a direct-to-consumer sales approach, but there was always a sense that their backing was grudging ‘ and largely based on a fear of losing out, should the phone prove as wildly popular as some analysts predicted.
Their main qualms would have surrounded the route to market. Google offered the device, with a selection of carrier deals, from its own specially created web store. In some ways this was no different to an Amazon approach, but it was widely seen as the thin end of the wedge, in Google’s avowed bid to relegate the operators to bitpipe roles and put its own brand center stage. Cellcos will have heaved a sigh of relief that uptake of the Nexus was disappointing in the early stages, and that other handsets with similar capabilities quickly came along ‘ notably the Desire from HTC, which also makes Nexus. Both these options offer Android 2.1, gigahertz Snapdragon processors and other attractions, though the Desire has been more acclaimed for its user experience.
In the hype surrounding the launch of Google’s first own-branded handset, some pundits predicted that it would sell 3.5m units in its first year. Now Goldman Sachs has cut its forecasts, and wrote in a research note, quoted in ZDnet: “We previously estimated that Google might sell 3.5m Nexus One units in 2010. “Initial data points were disappointing, possibly due to limited marketing and customer service challenges. Flurry estimated (based on mobile traffic) that Google sold 20,000 in the first week, and 80,000 in the first month, both annualizing to 1m. We forecast that Google sells 1m Nexus One units in FY2010, benefiting from US carriers other than T-Mobile, and non-US carriers such as Vodafone, promoting the device too, but suffering from limited marketing activity.”
Vodafone is the only international carrier that has committed firmly to Nexus One, though it shows no signs of putting the phone high on its list of marketing priorities, with much of its effort being placed behind other HTC models, the iPhone and its own 360 models.
Undeterred, Google is still expected to announce new Nexus models and widen the distribution of the original. This year should see a more enterprise focused ‘Nexus Two’, probably made by Motorola, which will have to try to avoid the issues that have dogged the first model ‘ as well as carrier apathy, these are mainly poor launch timing, bad customer support and a confusing distribution strategy.
It is also extending the reach of the first Nexus. It has announced a version for the more obscure frequencies supported by AT&T and Rogers Wireless for 3G, getting the unlocked phone into the iPhone’s heartland, though without subsidies. The initial handset provided HSPA connectivity on the 900MHz, AWS, and 2.1GHz bands, catering to T-Mobile USA, but the new version supports the 850MHz, and 1.9GHz frequencies used by AT&T and the three main Canadian carriers (and other GSM carriers round the world). A CDMA iteration for Verizon Wireless is also expected next month.
And Google is said to be readying a cutdown version of Nexus One, to launch in India and Russia in the fourth quarter. This would sacrifice some features, including the top end processor, in order to keep the price down around the INR24,000 (about $500 unsubsidized).
It is not just carrier friends that are going cold on Google. One of its closest hardware allies, Motorola, has shown itself ready to dump its friend in the interests of more handset sales, especially in China, where an Android phone with an overtly Google user interface might fall foul of the current stand-off between the search vendor and the Chinese authorities. This is the main motivation behind Motorola’s recent decision to deploy rival search engines as the defaults on some of its Android models, though even outside China, Motorola ‘ and all the phonemakers ‘ will also be looking for control of their own user platform and the freedom to differentiate their offerings.
Motorola has deployed no fewer than three rival search engines on its Android phones, most recently Microsoft Bing. It has already launched handsets for China with the local search engine Baidu as the default, homescreen option. This was predictable given the strength of Baidu in the country and Google’s tensions with Chinese authorities. But then Motorola followed up with its first AT&T Android device, Backflip, which comes with Yahoo preloaded ‘ probably at the carrier’s request, as AT&T seeks to differentiate its user experience from Verizon’s more Google-oriented one.
And now the deepest cut to Google ‘ Motorola has turned to Microsoft to support Bing as a homescreen option on certain Android models. It will also use Microsoft services for mapping, probably the most important weapon being deployed in the mobile web war by both Google and Nokia.
The first Bing/Android devices will be for China, where the problems with a Google-fied homescreen are clear. But the alliance with Microsoft is a global one and Bing is likely to turn up in phones for many markets this year. Under the agreement, Motorola users get a preloaded Bing bookmark on their mobile browser and an enhanced search widget with Bing integration, plus Bing-powered map functions. For Droids and Cliqs that are already in use, or phones launched with other search engines preloaded, the software can be obtained as an over-the-air update or from Android Market.
Motorola said it was opening the doors for ‘increased personalization and empowering its end users’, which could be taken as a sideswipe at Google’s attempt to control the Android user experience tightly. First generation Android phones were heavily geared to the key Google apps on their homescreens, but as vendors gain confidence, and need to differentiate themselves, they are plowing their own furrows. HTC’s applauded Sense user interface runs across Android and Windows, and has become less Google-centric with each release. That will concern Google, since the newest phone running Sense, the HTC Desire, is expected to outperform its own-branded Nexus One. Since the latter is also made by HTC, and is almost the same as the Desire in hardware terms, the UI is likely to be the deciding factor, allowing consumers (and operators) to vote with their feet against too much control by the search leader.
Motorola currently sells four Android phones in China and the new Bing models will launch this month.