Android phone announced, platform expected to gain 4% of US Q4 smartphone share

By Suzanne Deffree, Managing Editor, News -- 9/23/2008

T-Mobile has formally announced the first Android-based phone, inspiring some industry watchers to question what the impact of Open Handset Alliance (OHA) platform will be on the mobile devices industry.

The Google-led alliance first announced plans for a smartphone platform -- consisting of an integrated mobile software stack containing an operating system, middleware, user interface and applications -- in November 2007. Following through with second-half 2008 release estimates made at that time, OHA member T-Mobile today released information on its touch-screen, Google products-based G1 phone (pictured) to be available October 22 at a $179 starting price.

“Increasingly, connectivity does not just mean a phone call, but rather access to the world’s information,” said Andy Rubin, senior director of mobile platforms for Google, in a T-Mobile statement. “Today’s news signifies an important first step for the Open Handset Alliance: With Android, we’ve opened the mobile Web not only for millions of users, but also to mobilize the developer community that understands the next most important platform in the world rests in the palm of our hand.”

ABI Research noted that whether to buy a smartphone or a basic phone is a conscious decision for most subscribers when shopping for a new handset. However, that may soon be changing.

"Today's unveiling of the T-Mobile G1, the first mobile phone based on the Android platform from the Google-spawned Open Handset Alliance, may be the beginning of a significant movement towards a situation in which a majority of mobile phones will run a high-level operating system, rather than the variety of real-time operating systems currently powering more than 85% of the world's mobile phones," ABI Research Director Kevin Burden said in a statement from the analysis company this morning.

ABI Research noted that if OHA's intentions behind Android are truly about leading the industry towards common standards that halt further fragmentation, as Google claims, its emphasis will be on the high-volume feature phone market rather than lower-volume smartphones that offer similar functionality.

For more on OHA and Android, see: Google confirms mobile phone open platform effort Mobile phone market grows smarter Free software encircles embedded design

Because users buy mobile phones not operating systems, the ultimate win for OHA would be users eventually buying an Android-based phone without necessarily intending to buy a software-heavy handset, ABI Research stated, adding that marketing based on capabilities has brought the smartphone market to less than 15% of worldwide handset sales.

"If Android is going to pay off for Google and OHA, subscribers will need to start buying smartphones without fully realizing what they just purchased," Burden said.

According separate research from Strategy Analytics, the Android operating system will account for 4% of the estimated 10.5 million smartphones sold in the United States during Q4.

“We estimate smartphones with Google’s Android operating system ... will reach 0.4 million units in the quarter, for a 4% market share," Neil Mawston, director of wireless device strategies at Strategy Analytics, said in a statement.  "Android is a relatively late entrant and it will join an increasingly crowded market alongside Blackberry, Microsoft, Apple, Palm, Symbian and LiMo.”

Strategy Analytics further reported that while Google has the brand power in the US to make a big impact at launch, the main issue for Android-based phones will be operator subsidies.

“As seen with the iPhone and smart devices in general, retail prices need to be well below $200 to be competitive. Longer-term success will, of course, rest on Android vendor ability to create designs with wow factor and an intuitive user-interface," Chris Ambrosio, executive director at Strategy Analytics, said. "Google will do its part to drive growth, and we expect Android will eventually offer a compelling range of mobile applications emphasizing Google’s online assets, such as advertising, mapping and search.”

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