India's smartphone wars: Google's Android One adds to Samsung's worries

Google Inc's (GOOGL.O) partnership with three Indian phone makers is set to rev up fast-growing demand for lower priced smartphones, and spell more trouble for Samsung Electronics (005930.KS) which is rapidly losing share in emerging markets.

Micromax Infomatics Ltd, Karbonn Mobiles and Spice Group are the first phone manufacturers to sign up for Google's Android One initiative, which provides specifications for key hardware parts. Some of the new phones are due to hit the market this month.

The aim is a vast improvement in quality that would lead to a surge in demand for low-end Android phones. Currently many cheap emerging market smartphones run different and somewhat customised versions of the Android operating system, which along with the many variations in hardware make apps on those phones prone to glitches.

While Google plans to push Android One globally, India, the world's third-biggest and fastest growing smartphone market, offers fertile ground for immediate results. Many Indians are buying a smartphone for the first time and a strong reception for Android One could promote common standards and consolidation in a market where more than 80 smartphone companies operate.

But any boom for higher-quality low-cost smartphones in India and other price conscious markets has the potential to exert intense pricing pressure on Samsung. The South Korean firm uses a customised version of the Android operating system but focuses on higher-margin offerings like its Galaxy S series.

"A major threat for Samsung is that Android One will accelerate the race to the bottom on smartphone pricing," said Neil Mawston, a UK-based analyst at Strategy Analytics.

"Android One now makes Google a foe, not just a friend, for Samsung."

A major strategy rethink for low to mid-tier products is now in order for the world's biggest phone maker and top seller in India, analysts say, particularly as Samsung is also losing share to Apple Inc (AAPL.O) at the higher-end.

GAINS FOR GOOGLE

For Google, a strong uptake of Android One smartphones should increase access to the Internet and Google's suite of products.

Analysts and industry sources also note the potential for Google to expand revenue in ways more favorable to itself than in the past, as Android One phones won't come with the heavy customisation that Samsung and other phone makers using the Android operating system provide.

That will mean more default settings for Google products and less competition from rival search engines and other app stores.

For the Indian phone manufacturers, they are banking on Android One to be the weapon that helps them grab further share as well as providing a launch pad for more exports.

Karbonn hopes the programme will expand its overseas revenue to near 20 percent in the next two years, from 5-7 percent now. It is looking to export to markets such as Europe, South Africa and Russia, Chairman Sudhir Hasija told Reuters.

Google Sends Invites for September 15 India Event; Android One Launch Likely

Google has sent invitations for an event in India on September 15. While the invite itself says "More details closer to the date!", it is expected that the much-awaited Android One smartphones will make their debut at the event.

Android One was announced back in June at Google I/O with India's Karbonn, Micromax, and Spice the confirmed launch partners, though more Indian companies have reportedly joined the list since then.

Android One smartphones with their affordable price tag and near-stock Android software are Google's attempts to regain control of the customer experience in the entry-level segment. While the success of the likes of Moto E (Review | Pictures) has made a little bit of a difference, the experience in the sub-Rs. 10,000 smartphone segment has been sub-par for most Android users.

This can largely be attributed to low-end hardware and an OS that often comes pre-installed with all kinds of bloatware due to the marketing deals that many manufacturers sign in a bid to offset some of the costs.

Sundar Pichai, Senior Vice President, Android, Chrome and Apps at Google told NDTV Gadgets that the Mountain View-based company will not subside Android One hardware. Instead, Pichai hoped that the by sharing resources between Google and the OEMs, the companies would be able to keep the total cost of manufacturing in check.

It is widely believed that Pichai himself will make an appearance at the September 15 event, given the importance of the Android One project to the company.

Google Can Kill Samsung with Android KitKat and Android One: Here's How

Google's operating system, Android KitKat and the Android One Initiative, signify yet another bad news for Korean Electronics Giant, Samsung.  Emerging markets like India and the Philippines, which are both very populated countries, are switching from feature phones to smartphones. People find it exciting to get the upgrades at cheaper costs.



Although, Google's latest upgrade with its Android Kitkat 4.4 does not impress anybody with more innovative designs and state of the art feature changes, it is certainly able to reach its main goal of being available for all kinds of smartphones, be it high-end or low-end.  Google's intention is to make the operating system a little bit smaller so that it can be used on more devices.  This certainly narrows the wide gap between high spectrum and low spectrum phones.

Lower end devices typically use only 512mb of memory so that they can keep their device affordable according to the Economic Times.  But this makes the smartphones react slower than expected.  However, Google has made Kitkat a more practical operating system, which can run efficiently with just 340 mb of memory. This is an incremental improvement for users in terms of speed and efficiency. With the help of Kitkat, people can now purchase low-cost smartphones but get the high-end experience. Users in India, are particularly ecstatic about this development.

Moving forward, this poses a grave threat to Samsung.  Xiaomi, translated as "little rice" in English, has already penetrated and beaten them in China with $100 smartphone offerings according to TIME.  The danger becomes more imminent with the availability of Kitkat and Android One.  The Android One aims to provide design references to smartphone makers who will price their phones at $100.  Currently, brand names such as Karbonn, Spice and Micromax are hitting the stores and continuing to loom over the Korean titan, Samsung.

Google under threat as forked Android devices rise to 20% of smartphone shipments

Android dominates the world’s smartphone market. A new report from analyst firm Strategy Analytics pegs the Google-owned operating system’s global market share at 85 percent. That means that nearly nine in ten phones shipped are built on Android.



That domination is colossal. But while Google has ‘won’ the smartphone market share war — revenue is different, iOS is far ahead — the company faces a growing issue: the rise of non-Google Android.

Google-less Android

Android is available in two different flavors. There’s the Google-endorsed Android, which is used by companies that agree to the terms and conditions of the Open Handset Alliance (OHA). Essentially, OHA members include the Google services that are baked into Android, and agree to limitations on how they can customize the software on their devices.

The other side is the Android Open Source Project (AOSP), a far-freer version that lets device makers tinker with all manner of elements of the software. Often that means ripping out Google services, and customizing the handset to run other software and services. Google apps are still accessible, but are not central to the experience as they are in OHA Android devices.

The concern for Google centers around the fact that AOSP handsets don’t emphasize Google services. Since Google is not a primary hardware company — though it has its Nexus range and used to own Motorola — having its services as a central of Android is an important way to get engagement (and revenue) from mobile phone owners.

‘Forked’ Android isn’t something new. Amazon has been modifying AOSP for its Kindle tablets (and now phone) for some time — swapping out standard Google Android services and features for its own app store, design and other features. Likewise, it has been common in China, predominantly for cheap devices, for some time. Notably, Alibaba sparred with Google two years ago over its use and modifications of Android — but now the rate of AOSP phones is growing.

Forked Android rising

A new report from ABI Research claims that 20 percent of the smartphones shipped worldwide between May and July were based on AOSP. The firm estimates that this is a whopping 20 percent increase on the previous quarter alone.

“AOSP’s growth is driven by the development of Chinese and Indian handset manufacturers, not only in their domestic markets, but increasingly throughout Asia and beyond,” said Nick Spencer, senior practice director for mobile devices at ABI Research.

Spencer revealed that the emergence of mobile markets in Asia is fueling the increased significance of AOSP. ABI Research’s reports suggests that Chinese and Indian phone makers accounted for a majority 51 percent share of global shipments for the first time during the last quarter. So while the rate of AOSP phones grew hugely, its effects are felt the most in Asia — rather than the US or Europe.

Targeting the low-end in emerging markets

AOSP devices are typically priced at the low-end of the market because the open-sourced version of Android provides a cost efficient platform to develop a smartphone. While this segment of consumers does not spend significant amounts, it is significant because it represents many first-time smartphone owners, and new internet users who may not be as exposed to Google services.

Even though developing markets will likely be the main focus for AOSP device makers, more sophisticated ones like Xiaomi are opening non-Google Android to a new tier of more-affluent customers. The Chinese company shipped more phones in China than Samsung in Q2 2014, a recent report showed.

Google’s answer: Android One

Google is acutely aware of the threat and its response is Android One, a new standard for affordable Android devices… which has its services baked in. Android One is specifically targeted at creating sub-$100 smartphones for developing markets, where AOSP-based devices are most prevalent.

For the end user, Google says that Android One will mean a more unified Android experience free from manufacturer’s own skins, like Samsung’s TouchWiz or HTC’s Sense, with fewer pre-installed apps and more timely software updates. Essentially, the software will be plain Android, but will include the option for OEMs to include locally relevant software tweaks.

The AOSP ‘threat’ is limited primarily to emerging markets, but with Xiaomi, OnePlus, Oppo, Meizu and others keen to expand outside of Asia and into new markets, it will be interesting to watch how things develop.

Spice may launch Android One & Firefox phones before Diwali

Earlier this year, Mozilla (developer of the Firefox web browser) tied up with Spice and Intex mobiles to bring Firefox OS powered phones to the market at about Rs. 1,500 price point. The company is eager to tap into the feature phone market and offer a smartphone at the price point of a feature phone.



As for the Android One initiative, which Android head Sundar Pichai introduced this year at Google I/O, and of which Spice is a partner, could be a game changer for the Indian market. Through the Android One initiative Spice and the other partners (Micromax and Karbonn) will be making phones with guidelines from Google. This would mean entry level Google Play Edition like phones coming to the Indian market.

Google to aggressively market Android One smartphones in India, a largely untapped user base

 

Google placed a lot of emphasis on Material Design and other new Android L features at Google I/O last month, but its Android One reference platform was actually one of the most important announcements made during the three-hour keynote. Android One will consist of Google supplying reference hardware to handset makers, who can use the guidelines to manufacture smartphones that will retail for $100 or less. 

Android One is geared towards developing markets, where high-end smartphones like the iPhone have been largely unsuccessful at gaining sizeable market share. The Information has learned that Google will be placing a lot of emphasis on India, with an aggressive marketing plan that will see it spend upwards of several hundred millions of dollars to promote the budget smartphones in the country.

There are several socioeconomic reasons why smartphone adoption has not seen as much growth in India as in neighboring China, including a lack of consistent electricity in several regions and a rich-poor divide when it comes to consumer electronics. Indian carriers have also faced difficulties in expanding their networks, as the government has not allocated much wireless spectrum.

At the same time, India presents a huge opportunity for Google. The country has the world’s second-largest population at nearly 1.3 billion people and growing, most of which is an untapped user base. There is also a newly elected government in India that has local carriers feeling optimistic about wireless spectrum allocation and regulation going forward, including a three-year ban on 3G roaming that was recently overturned.

Google is willing to spend heavily in order to attract the Indian population towards its apps and services, which is how it makes a large portion of its money as an advertising-based business. Android One devices will be built to Google’s specifications, allowing for it to install preloaded apps in lieu of third-party bloatware from carriers and handset makers.

Google is not the only company that is making an aggressive push into India. Facebook recently acquired cross-platform messaging app WhatsApp, which is a dominant player in India, and Amazon entered the market last year with a big marketing push that has been stifled by logistical challenges resulting from India’s relatively poor physical infrastructure.

The good news for Google is that it appears to have a leg up on its competition in India:

“Google has some advantages in India. It’s a country with many English speakers and whose existing Web users have embraced Google services such as its search engine—which has a 90% market share, by most accounts—and YouTube. Android-powered devices make up 90% of all smartphones being shipped.”

Google has partnered with Micromax Informatics, Karbonn Mobiles, Spice and Celkon Mobiles as its first Android One partners in India. Micromax and Karbonn account for approximately 25% of smartphone shipments in India, trailing behind market leader Samsung, which has maintained a roughly 35% share.

The latest IDC numbers reveal that India had 17.5 million smartphone shipments in the first quarter, a marked increase from six million the previous year. According to the research firm, about 80% of those smartphones cost $200 or less.

 

Celkon, Intex set to be Google's new India partners for Android One

Low-profile Celkon Mobiles and Intex Technologies are hoping to vault into a higher league by becoming the next set of Indian smartphone vendors to tie up with Google for the search giant's low-cost smartphone initiative Android One, which is aimed at emerging markets, starting with the South Asian nation. 



Hyderabad-based Celkon Mobiles has become the fourth Indian vendor to sign a pact with Google for the Android One initiative, after Micromax, Karbonn Mobiles and Spice, while Delhi-based Intex is hoping to seal a deal soon. 

Late last month, Google senior vice president Sundar Pichai had announced partnerships with Indian smartphone makers Micromax, Karbonn and Spice for the Android One initiative. Under the programme, Indian handset makers will get hardware reference models to create high-quality phones priced below $100 (around Rs 6,000). These devices will run on a standardised version of Android, allowing faster updates. 

Intex, which is in talks with Google to join the Android One programme, is hoping to build its brand image in the highly competitive Indian market. 

"We are in talks with Google for the Android One initiative. In 15-20 days, I would be able to give more information on the same," said Sanjay Kumar Kalirona, business head, mobile, Intex Technologies. 

The company has already tied up with Firefox web browser maker Mozilla to introduce what could possibly be the world's cheapest smartphones in a few months costing below or around Rs 2,000. 

Both handset vendors don't have a prominent presence in the highly competitive Indian smartphone market led by Samsung and followed by local handset makers Micromax, Karbonn and Lava. Global companies such as Nokia, Sony, Apple and BlackBerry as well a plethora of Chinese vendors including Gionee, Oppo and soon-to-enter Xiaomi have a higher profile among consumers. 

Intex, a computer peripherals maker that entered the mobile phone segment, and Celkon have been plying their trade mainly in the high-volume, low-cost handset market, which has given them sixth and seventh position in terms of market share, according to Gfk, but not much brand recall. According to estimates, more than 500 million people use non-smartphone devices in India, and as prices of the latter decline more people will migrate to the category, one which Google, helped by its tie-ups, is eyeing. 

By joining Google's initiative, Indian smartphone players are looking to get brand recognition at the local and global level. Micromax and Karbonn have already ventured into some global markets, while others are aspiring to do the same.