Here’s the trick to playing the “open” game. It only really works if you absolutely dominate and make boatloads of money in a market sector that is NOT open. It’s a close cousin to the “free” game — you only give away razors if you’ve got razor blades to sell.
For Google, its success in generating billions of dollars via its low-friction search and Web advertising engines means that it can afford to “give away” mobile operating system code or support an “open” approach to social media widgets. By virtue of its market share in online advertising, it is already the *de facto* “owner,” or more accurately, the biggest beneficiary if such “open” approaches take off.
Going “open” from a position of strength is also a wonderful way to undercut competitors. In Google’s case, it’s open widgets across the Web vs. open widgets on Facebook and open (and no license-cost) mobile OSs vs. vendor-specific mobile OSs (from Symbian to Windows Mobile to Apple iPhone, etc).
In the telecom space, the balance of power equation for the Open Handset Alliance is as follows: Google can 1) try to negotiate their way onto mobile carrier decks ;2) pursue a viral, off-deck distribution strategy to encourage users to download Google apps to their current phones; or 3) it can try to change the rules of the game to better suit its own needs.
But the ultimate question is: are offerings like OpenSocial and Open Handset Alliance — not to mention offerings such as free-on-the-Web Google Apps or the recently-released IMAP features on Gmail (a capability most email providers charge for) — really “free” if they are tied, even loosely, to Google’s advertising engines, revenue streams and ambitions?
With a stock price over $700 and a market cap that places it in the top 5 (!) of all companies, Google is not in a position to be altruistic (or in Google parlance, “not evil”). They are in a position where they need to give the street good news every 120 days to keep its stock price steady or moving up.
Or as one enterprising blogger wrote following Google’s recent wave of “open” announcements (I can’t find the link, but I’ll add it when I do): when is Google going to “open up” its core search algorithm? I’m sure it would be great to have a slew of applications enabled by open access to that technology….
In the spirit of that query, here’s ten questions we’ll be looking to see answers to as Google’s “open” efforts play out over the coming months, with a focus on the Open Handset Alliance:
1. What specific apps or features will the Android platform enable that other modern mobile OSs cannot?
There was a lot of talk about applications and features you “can’t get on a phone today” but there are vibrant third-party developer markets around Windows Mobile, Symbian, Palm and mobile Java — not to mention that the Apple iPhone SDK will be arriving soon too. Android’s major differentiator would seemingly be: an unfettered development community — but whether that happens or not is a function of ecosystem-forces and that makes it a wait-and-see.
2. If Web apps are so great, why are you also delivering a virtual-machine based runtime environment?
Google talked about a desktop-grade browser in Android and that’s obviously important to fulfill its larger Web-driven goals. But it is also delivering an SDK that will let developers write apps to a “custom VM.” That makes this very similar to Sun’s mobile Java play — open tools, write once-run anywhere apps, etc. So with the iPhone already delivering the Safari Web browser and Java-based phone delivering a VM-based run-time, this isn’t a completely new style of phone app development but rather an alternative one.
3. Who gets to keep the advertising revenue?
Google’s Eric Schmidt made a point of saying the best partnerships in the mobile area will result in all the players sharing advertising revenue — but the devil is definitely in the details here. If Google becomes a strong ad partner with fair terms carriers may be willing to jump in bed with them. If not, carriers are going to want to continue to control on-deck real-estate. Unbelievably (literally, I don’t believe it), Google execs downplayed the advertising angle: “You won’t see a completely ad driven cellphone based on this platform for some time,” Google’s Andy Rubin said. Yes, but that doesn’t mean this isn’t an advertising play at the end, plain and simple.
4. How important is open source for a consumer-facing OS?
Linux has been around forever. Where is the market-changing consumer version of Linux today? Ubuntu? Great software, no market share. Developers write to platforms with market share, plain and simple, open source or not open source. Open source represents a relatively new and occasionally successful business model for attaining market share. But it’s not a guarantee.
5. If Android can’t get distribution, then what?
There was an interesting question on the press call about Android potentially running as a “soft-OS” — an interface that could be downloaded and run as an application on non-Android phones. Google seemed surprised by the question and said it was something they’d look into. That would be a tough path to take. So no distribution, most likely, no Android. So watch what AT&T and Verizon do in the U.S. — will they sign-up to deliver Android phones? As for handset-makers, even Open Handset Alliance partners HTC and Motorola said they will NOT abandon other mobile OSs to focus exclusively on Android. Which means the mobile OS market will continue to shake-out but remain a market with *many* options.
6. Where’s the telco route-around strategy — is it coming as a second wave?
An open source mobile OS is one thing, but the bigger disruptive play would have been to NOT partner with carriers like Sprint and T-Mobile but instead deliver a VoIP-driven device that would rely on Wi-Fi, Wi-Max or new 700 Mhz open access spectrum. This is absolutely something that Google’s various moves in the mobile space hint at. So why not pull the trigger? Because you can’t get market share playing that disruptive card today — and Google’s ad business (how it makes money) is all about share and scale. It’s not about being an alternative to the market share leader, nipping at its heels. It’s about being the leader. That’s a daunting goal to fulfill.
7. Will “forks” in the development road doom Android?
There’s a problem with open — you can’t control where it goes. Android represents not only yet another platform, but a platform that can be tweaked in any direction imaginable. Further, the Apache v2 license upon which Android is based allows developers to make forks in the code and not be forced to make that code public. By comparison, Sun made its Java platform open source but maintains a control over core platform specs through a community process. Even Linux has a “core” that is watched over for compatibility reasons. Will there be different implementations or flavors of Android? Will they be interoperable even as they become differentiated? This is not an insignificant issue.
8. Can you win in the consumer mobile space without enterprise mobile products?
Apple has proven that the likely answer to this is yes — people will buy iPhones even if they aren’t formally supported by their IT department at work. But many of us still get our phones — especially our “smartphones” — through work. So that means phones that do not have enterprise device management and back-office support (including Exchange and Office apps support) will never truly “defeat” phone platforms that do. They’ll have to co-exist. Will someone take the open source Android code and build an enterprise back-end management and security suite to go along with a slick, business-focused front-end application stack? Would IT deploy and support it? We’ll see.
9. What about the iPhone?
This is a biggie. Eric Schmidt is on the board at Apple and is a noted iPhone user himself. The way these two innovators have tackled the mobile market is worth considering. Apple released a phone worth salivating over. Third-party application development — the very value proposition that leads Google’s launch — was not only missing from the iPhone launch but Apple purposely broke third-party app hacks (though a formal iPhone SDK is coming soon). And even that didn’t discourage developers from being excited about the iPhone. So forget the open source code and the carrier partnerships and the 700Mhz wrangling, etc. etc. Watch the developers. If developers whip up a frenzy around Android the way they have around the iPhone, Google may have something here.
10. So what would make Android a winner?
This is just one man’s opinion, but what would make me go out and buy and Android-phone next year? Here’s the quick-list: great, innovative, good-looking hardware; a state-of-the-art user interface, at least on par with the iPhone; a simple, over the air application launcher that lets me add whatever apps I want; a killer application or two, either on-phone or downloadable, that will let me integrate and manage all my communications in a way that truly makes sense (btw, I saw a few apps that meet this description at VON last week — more on that later); and, finally, a rich network environment that gives me cheap minutes but doesn’t limit text, email, wi-fi (and voip-over-wifi) or Bluetooth and lets me move seamlessly between modes.
Some additional perspective: global movie box office revenues reached $26.7 billion in 2007, according to The Motion Picture Association of America. That means that simple SMS and other mobile messaging services represent a business almost five times larger than perhaps the most glamorous of content-based businesses. It’s also much bigger than online advertising, which in 2007 reached just $25.5 billion in revenue, according to numbers from IDC.
