By Alok Saboo on December 12th, 2009
The blogosphere is abuzz with the imminent launch of the Google Phone. It seems that Google has already handed out the phone to its employees for internal testing, and so far the impressions are favorable. To me, this is significant news not because of the phone per se, but because of Google’s entry into the hardware business. Let me elaborate…
So far, Google had stayed away from the hardware business. The company instead focused on developing the software (Android) and helping other device manufacturers in developing compatible devices. Google would provide design inputs to companies such as HTC or Motorola so that they can exploit the Android features. If you have ever worked in a product development environment, you already know how difficult it is to co-develop products. Multiple parties often have different (read conflicting) requirements and objectives. Under the current set up, Google would have had to continue to invest in developing Android, but at the same time assist device manufacturers to develop devices that showcase the latest Android features. So, while Google is already “developing devices”, it is doing it for others. From experience, we already know that joint ownership is “no ownership” (recall tragedy of commons), leading to lot of compromises. Both Google and the device manufactures would waste a lot of time bargaining over the design features, leading to tremendous loss of productivity.
By formally entering in the hardware business, Google has done a great service to itself and the entire industry.
- Firstly, this provides Google complete control over the user experience. Google can now tightly integrate the hardware and the software element and thus control the entire value chain. Remember, one of the driving factors for Apple iPhone’s growth was Apple’s tight control over the iPhone platform.
- Secondly, instead of working with several device manufacturers (e.g., HTC, Motorola), Google can now focus on developing cutting edge prototypes for others to adapt. Google is still sharing knowledge with its Android partners by working closely with them (more on that later).
- Finally, integration of hardware and hardware makes Google a formidable force for Apple to reckon with. Google can now be in a position to define the smartphone industry landscape and thus protect consumers from Apple’s hegemony.
What about the existing Android manufacturers? Will they suddenly become Google’s competitors?
I don’t think so. Here’s why. The existing smartphone market is heavily dominated by Apple, Blackberry, Symbian, and Windows Mobile. Android is just starting to make its presence felt. For Android to be considered seriously and make a serious impact, it needs a champion – who better than Google to do that. Google can create the mindspace for Android and the other manufacturers can continue to develop devices that ride on this. Also, do these companies have a choice. Given the control freak nature of Apple, it is unlikely that HTC or Motorola will get to use Apple OS. Windows Mobile and Symbian are already losing ground. So in some sense, Android is their only worthy option. I am sure, Google did consider all this study before deciding to produce the Google Phone. Mind you, even now, the device is manufactured by HTC. It’s just that there is no interference in the product design process. In the future, Google could work with other partners, but it is unlikely that Google will enter the manufacturing business. This ensures that there is knowledge transfer between Google and its Android partners, but there is no drag on Google’s productivity.
Remember, it is a huge market and there is space for more than 2 players