Four Reasons Android Will Not Lead To Cheaper Mobile Phones

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Four Reasons Android Will Not Lead To Cheaper Mobile Phones

Postby plusminus » Sat Nov 17, 2007 12:59 am

Stephen Wellman from http://informationweek.com brought his thoughts about the price-impact of the Android platform to an online-paper.

Source
informationweek.com wrote:Four Reasons Android Will Not Lead To Cheaper Mobile Phones
Everyone was talking about Google (NSDQ: GOOG)'s new Android mobile phone platform at Mobile Internet World this week. One of the meme's following Android around is that the platform will lead to low-cost mobile phones packed with cool features. Sorry, folks, but Android will not make your mobile phone any cheaper.

1. Smartphone OS licenses do not add that much to the cost of cell phones.
As much as this may shock the desktop IT world, phone OS platforms aren't that expensive and don't add that much to the cost of mobile phones. For example, the average Symbian license only costs around $2.50 a phone. Taking away $2.50 from the cost of building a phone isn't going to make the end price significantly cheaper. In fact it might not even affect it at all.

2. Launching handsets on a new, untested OS is expensive.
Many handset makers have their own proprietary OSes running on their devices, especially for feature phones like clamshells or candy bar devices. It's pretty inexpensive to launch new devices on these established platforms. But ramping up on a new software system costs money -- Q&A, hardware re-adjustments, etc. Early Android phones may be even more expensive than their rivals because of these additional research and ramp up costs.

3. All those cool features on the Android videos will require phones with expensive hardware.
Even a relatively mid-tier feature phone with enough horse power to run Google Maps, YouTube, and Gmail will cost at least $250 unlocked. Any relatively decent-grade smartphone would cost $150 or more with a carrier contract or more than $350 unlocked. Even with HTC and Motorola on Google's side, these phones will not be cheap. And it's likely that the carriers will not subsidize them to the degree that they do phones like the Razr, which, if I am not mistaken, is built on a proprietary platform, not on a third-party OS.

4. If Android phones are unlocked, they'll be even more expensive.
Android is all about being open and the most open mobile phones are unlocked ones. Assuming Google succeeds in getting its handset partners to offer fully unlocked Android handsets, you can bet these phones will be pricey. Everyone thought the iPhone was expensive -- many complain that at its new price of $399 that it's still too expensive. Many unlocked phones, though, cost way more than even the first wave of iPhones. The costs I mention above are baseline. If these Android phones offer any kinds of rich displays or other features, you can bet they'll cost a pretty penny. Remember, an unlocked Nokia N95 can set you back as much as $750. That's the same price as a entry-grade laptop. While I doubt any phones running Android will cost this much, I doubt they'll sell for $49.95 either.

What do you think? Can Google use Android to both open up the cellular industry and lower the cost of all cell phones? Or will Android phones cost as much as other mobile phones?


According to the forecasted Minimum System Requirements of 32MB Flash and a 200Mhz processor, I assume that cheap Android-Devices will be pretty affordable. Like a standard (not too sophisticated) today-phone.

Regards,
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Take it with a grain of salt

Postby izamryan » Tue Nov 27, 2007 7:43 am

I'm not convinced of the arguments proposed in the quoted text above.

Please allow me to quote you the Open Handset Alliance's aims:

This alliance shares a common goal of fostering innovation on mobile devices and giving consumers a far better user experience than much of what is available on today's mobile platforms. By providing developers a new level of openness that enables them to work more collaboratively, Android will accelerate the pace at which new and compelling mobile services are made available to consumers.


Now indulge me, while I look at the comments made in the first post:

1. Smartphone OS licenses do not add that much to the cost of cell phones.

If we are talking about the incremental cost of purchasing one more end user license, when a manufacturer produces one phone, then yes I would agree that this comment has some merit.

On the other hand, I would contend that it is the Alliance's aim to provide developers a new level of openness that enables them to work more collaboratively. The beauty of the open source platform is that it:

  • Reduces the barriers to entry. Kids in the garage, and CTOs of big corporations alike, have access to the same open source platform.
  • Sets the baseline. From a game theory point of view, manufacturers would likely ADD to the Android platform, because by removing features from the platform and (aka locked handsets) would they not be giving their competition a type of competitive advantage? If Motorola were to nerf or otherwise handicap their offerings, wouldn't HTC simply LOL it up and supply the market with a better product, and market it as a unique selling proposition?

I would argue that the buzz over Android is not "Android = cheaper smartphones cos its OSS so no license fees included in handset prices", but I would argue that the buzz over Android is the potential of these two factors to synergise and create a wave of disruptive innovation.

I feel that only good things can come from reducing the barriers to entry. Remember the day that Netscape became part of mainstream? Every man & his dog was on the internet overnight. Same can be said for Android - Every CS graduate & their penguins will have dreams to develop cool mobile apps, which can only be good for innovation.

I feel that only good things can come from setting baselines. Remember the day you opened the back of that PC Mag and see the likes of Dell, etc competing on the common "IBM PC-compatible" clone platform? Same can be said for Android - HTC and Motorola are just two names, what about the other OEMs in the Far East?


2. Launching handsets on a new, untested OS is expensive.

Yes, I agree that there is significant risk in taking to market a product with limited testing and generally low QC and engineering. The first post argues that "ramping up on a new software system costs money -- Q&A, hardware re-adjustments, etc."

On the other hand, have you seen the Youtube videos released by Google and the Android developers? In one of them, two guys from Skypop are holding up a prototype Android phone (coincidentally, looks just like the white skin of the emulator) and demo a phone, holding it up to the camera.

On the other hand, Android builds on de facto technologies: the Linux Kernel and Sun's Java are amongst the list of technologies underneath the hood. I would argue that, standing on the shoulders of giants, Android is making use of the high quality body of open source software to deliver a high quality platform.

The beauty of the open source platform is that these development costs are contributed by the community, for the mutual benefit of all parties. I'd argue that yes, ramping up on a new platform incurs costs. But by being spread over the community, would the average cost to the manufacturers, be lower? Or even for the "me-too" OEMs delivering basic undifferentiated products, I suspect their costs would be even lower if they do not contribute software engineering efforts to the platform.


3. All those cool features on the Android videos will require phones with expensive hardware.

I would like to qualify this statement, and say that: All those cool features on the Android videos will require phones with decent hardware.

If Moore's Law continues over the next few years, then eventually what we consider "expensive" features will be a part of the standard feature set of basic phones. Remember when 3D hardware acceleration first came to the PC platform? Back then you were deep dark Voodoo or not. And even then it was "just" to play Descent or Mechwarrior or Doom. Now today even this run-of-the-mill office PC has decent enough 3D acceleration for World of Warcraft. 8) 8) 8)

4. If Android phones are unlocked, they'll be even more expensive.

The first post argues that the iPhone/N95 trend is a good indicator that Android phones will be expensive when unlocked. I'd agree that operators that sold locked phones are doing it to tie their customers to the operator's own networks and creating an incentive for consumers to "lock themselves" and handcuff themselves to their operators.

On the other hand, I think operators are getting more used to the idea that the heady days of nice, high ARPUs are gone. Voice is like, so meh. Data is where it's at, and in my view, operators that can see this massive incoming tipping point and capitalise on it now would be well positioned strategically vs. their competition.

The operator that comes out with an Android phone at the $399 price point with built-in WiFi and VoIP and says, "Come use our network. If you like, make some voice calls using the built-in 3G capabilities, but we'd rather you subscribe to our data services and used lots of rich media applications. Oh, and while you're on the pause and you have access to WiFi, call your friends using the built in SIP VoIP capabilities, and if you need to, use our VoIP-to-POTS gateway." would have a compelling business model.

My 2 cents :P
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Re: Take it with a grain of salt

Postby plusminus » Tue Nov 27, 2007 9:03 am

Hello izamryan,

thanks for sharing your thoughts.
izamryan wrote:1. Smartphone OS licenses do not add that much to the cost of cell phones.

The beauty of the open source platform is that it:
  • Reduces the barriers to entry. Kids in the garage, and CTOs of big corporations alike, have access to the same open source platform.
  • Sets the baseline. From a game theory point of view, manufacturers would likely ADD to the Android platform, because by removing features from the platform and (aka locked handsets) would they not be giving their competition a type of competitive advantage? If Motorola were to nerf or otherwise handicap their offerings, wouldn't HTC simply LOL it up and supply the market with a better product, and market it as a unique selling proposition?

I would argue that the buzz over Android is not "Android = cheaper smartphones cos its OSS so no license fees included in handset prices", but I would argue that the buzz over Android is the potential of these two factors to synergise and create a wave of disruptive innovation.


Unfortunately not all parts of the SDK are open (only by now ?), as for example the screen that appears, when a phone call is incoming cannot be modified. I'ts a pity but I think even Google has some interests in making some money sooner or later (as they were/are/will be(?) bidding for the 700 MHz WiFi Spectrum. I do somehow respect that...
And yes, making software OpenSource probably never damaged its quality or respect and always brought many developers to the road of innovation.

izamryan wrote:2. Launching handsets on a new, untested OS is expensive.

Yes, I agree that there is significant risk in taking to market a product with limited testing and generally low QC and engineering. The first post argues that "ramping up on a new software system costs money -- Q&A, hardware re-adjustments, etc."

On the other hand, Android builds on de facto technologies: the Linux Kernel and Sun's Java are amongst the list of technologies underneath the hood. I would argue that, standing on the shoulders of giants, Android is making use of the high quality body of open source software to deliver a high quality platform.


I do think, that it is not a that high risk as there is still time until "2008", when the first commercial deviced are supposed to be shipped, and we have a (for first release) really well working Emulator with a nice Plugins for one of the most spread IDE. Unfortunately there is not yet a real bug-tracking page, where bug reported. Doing that will be neccessary to create high quality and low bug devices. (Of course relying on approved Linux and Java software was the absolutely right step!)

izamryan wrote:3. All those cool features on the Android videos will require phones with expensive hardware.

I would like to qualify this statement, and say that: All those cool features on the Android videos will require phones with decent hardware.

If Moore's Law continues over the next few years, then eventually what we consider "expensive" features will be a part of the standard feature set of basic phones. Remember when 3D hardware acceleration first came to the PC platform? Back then you were deep dark Voodoo or not. And even then it was "just" to play Descent or Mechwarrior or Doom. Now today even this run-of-the-mill office PC has decent enough 3D acceleration for World of Warcraft. 8) 8) 8)

=D Unfortunately the Advances in the mobile sector I recognize in the last ... 2 years were not that impressive. ( I owned a Acer n50 Premium with 520 Mhz and 128 MB RAM up to two weeks ago and that device was available since March 2005. Nowadays commonly phones have somehow less CPU-Power (or at least less Mhz)). But we will see, what the market will bring...
izamryan wrote:4. If Android phones are unlocked, they'll be even more expensive.

The first post argues that the iPhone/N95 trend is a good indicator that Android phones will be expensive when unlocked. I'd agree that operators that sold locked phones are doing it to tie their customers to the operator's own networks and creating an incentive for consumers to "lock themselves" and handcuff themselves to their operators.

My 2 cents :P


As I said above Google is perhaps(!) trying to bind the user to the WiFi-SPectrum they probably are going to obtain (we cannot be sure about that). Having discreet GoogleAds on my Phone for having the opportunity of free calls seems acceptable to me...

Regards,
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Re: Take it with a grain of salt

Postby izamryan » Tue Nov 27, 2007 10:14 am

plusminus wrote:Hello izamryan,
Unfortunately not all parts of the SDK are open (only by now ?), as for example the screen that appears, when a phone call is incoming cannot be modified. I'ts a pity but I think even Google has some interests in making some money sooner or later (as they were/are/will be(?) bidding for the 700 MHz WiFi Spectrum. I do somehow respect that...


/wave :D

If I'm not mistaken ... the SDK as it is released now is a Developer Preview.

The GNU Public License (GPL) sections of the code (the Linux Kernel) are available to download, as required by the GPL. I am confident that in 2008 when Google releases the full SDK, it will be released under the Apache Public License (APL).

Not releasing the full SDK is well within Google's rights under the APL. And I can appreciate why they are only releasing parts of the SDK for the Developer Preview ... because between now 2008 when the full release is due the underlying API may change. Today, if we coded towards a moving target, we'd just end up like this --> :oops: or like this --> :cry: if they changed the API underneath our feet and our applications broke.

But since it's not released yet, we won't run that risk, so I'm happy --> 8)
with the Developer Preview. I can get up to running and familiarise myself with the concepts for coding to the Android platform in a low-cost, ubiquitous fashion. Awesome 8)


plusminus wrote:
izamryan wrote:2. Launching handsets on a new, untested OS is expensive.

On the other hand, Android builds on de facto technologies: the Linux Kernel and Sun's Java are amongst the list of technologies underneath the hood. I would argue that, standing on the shoulders of giants, Android is making use of the high quality body of open source software to deliver a high quality platform.


I do think, that it is not a that high risk as there is still time until "2008", when the first commercial deviced are supposed to be shipped, and we have a (for first release) really well working Emulator with a nice Plugins for one of the most spread IDE. Unfortunately there is not yet a real bug-tracking page, where bug reported. Doing that will be neccessary to create high quality and low bug devices. (Of course relying on approved Linux and Java software was the absolutely right step!)


8) 8) 8)
/agreed !!!

I think one of the factors of success for an open source project is the community it creates, and the culture of sharing code. I think a public bugzilla-type bug tracking system is a key feature for an open source project, just look at the famous open source projects we have today.

plusminus wrote:
izamryan wrote:4. If Android phones are unlocked, they'll be even more expensive.

The first post argues that the iPhone/N95 trend is a good indicator that Android phones will be expensive when unlocked. I'd agree that operators that sold locked phones are doing it to tie their customers to the operator's own networks and creating an incentive for consumers to "lock themselves" and handcuff themselves to their operators.


As I said above Google is perhaps(!) trying to bind the user to the WiFi-SPectrum they probably are going to obtain (we cannot be sure about that). Having discreet GoogleAds on my Phone for having the opportunity of free calls seems acceptable to me...


http://blog.wired.com/business/2007/11/ ... go-it.html

The 700MHz C block has special rules, if won through an auction with the minimum $4.6b bid, the C block will be used for "open access" i.e. for devices to be able to connect anywhere and use any application at “technically feasible” points and also for a type of wholesale-retail model (look up "VMNO").

I agree with your points plusminus, Google bidding for the 700Mhz spectrum at the same time releasing the Android SDK with its friends in the Open Handset Alliance may be the beginning of a wider corporate strategy. As it stands at the moment, the telecoms industry is characterised by steep barriers to entry, and an imbalance of power between content providers and service providers. It looks like the moves that Google has made will result in a Win-win situation.
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Postby plusminus » Tue Nov 27, 2007 7:41 pm

We have definitely been waiting long enough for the first Android-Phones :roll: ~2 Weeks...

This issue about Google and the 700 Mhz C spectrum is very interesting so we should all keep our eyes open :!:
We obviously have to assume, that there is sth. 'big' in the near future...

Regards,
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Postby evoc » Fri Nov 30, 2007 12:56 pm

i think that android was not written for "cheap" mobile phones.
I prefer to call "cheap" mobile phones as "low resources" mobile phones.
Today's smart phones have requirements to have android in and let us write very nice applications with very low stress.
So i think Android will be the right choice for smart phones...
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Postby izamryan » Sat Dec 01, 2007 3:55 am

OK I was browsing through some other Android sites and I came across this ...


... http://www.ohadev.com/uncategorized/the ... e/#more-51

which basically reiterates the point made above ... why would an operator nerf or handicap one of their phones, if they know that the other operators have the chance to offer full-service, un-nerfed and full-fat phones?

Well, I'm quite happy about the state of competition at the moment :D :D :D

And speaking about competition ... I still think anddev.org is one of the best community sites out there after looking through what the others have to offer 8)
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Postby plusminus » Sat Dec 01, 2007 12:05 pm

izamryan wrote:...
And speaking about competition ... I still think anddev.org is one of the best community sites out there after looking through what the others have to offer 8)


Hello izmaryan,

I proudly present: We officially are the most active Android Community in the world :!: :!: :!:

Best Regards :!:
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