Google's Android Will Lead to New Class of Mobile Internet Devices

The Android open source mobile platform made a splash in October when Google (GOOG) announced it, along with the Open Handset Alliance [OHA]. An Android software development kit [SDK] came on Nov. 12, and the first Android-based open source platform mobile phones are expected in mid-2008.

The impact of such a platform on mobile phones and carriers has been roundly debated, yet the implications for an entirely new class of mobile internet devices have received less attention.

In this podcast, John Bruggeman, chief marketing officer of Linux software provider Wind River Systems (WIND), digs in to the technical, business model and open source implications of Android and OHA -- but he goes a step further.

Android will lead, he says, to a new class of potentially free mobile internet devices (MIDs) that do everything a PC does, only smaller, cheaper and in tune with global mobile markets that favor phones over PCs for web connectivity [disclosure: Wind River has been a sponsor of BriefingsDirect podcasts].

Listen as I interview Bruggeman on the long-term disruptions that may emerge from the advent of Android. Here are some excerpts from our discussion:

What’s new [in Android] is the business models that open up, and the new opportunities. That’s going to fundamentally change the underlying fabric of the mobile phone space and it’s going to challenge the traditional operators' or carriers' positions in the market. It’s going to force them, as the supply chain, to address this. ... Carriers potentially are going to have to embrace completely new revenue and service models in order to survive or prosper.

Clearly, the great promise of the Google phone platform is aimed more at an ISP mentality, where they make money on how we provision or enable new services or applications. ... the traditional carrier is a more connection-based business model. You pay for connection. This model will clearly evolve to be some sort of internet model, which today is typically an ad revenue-share model. That’s how I see OHA will play out over time. We’re going to have to adopt or embrace an ad revenue-share model.

There might be revenue that’s derived through connectivity, but increasingly we're seeing the big money around the monetization of advertising attached to search, advertising attached to specific content, and advertising attached increasingly to mobile location and presence.

I don’t think that the extreme is that improbable, that the actual connection price would go down to zero. I could have a mobile phone and pay a $0 monthly fee. ... The ad revenue is where the real dollars are here, as well as all the location-based value that you can do. This is the true delivery on the promise of the one-to-one marketer's dream. You’ve got your phone. I know exactly where you are.

It would be naive to say the technology issues are completely solved, but I think a lot of the hard problems are understood, and there is a path to solution. Those will play out over the next 12 months. I see a clear road to success on the technology side. It will be easier for the technologists to overcome the obstacles than it will be for the business people to overcome the new models in an open source world.

There’s going to be a lot of pressure to drive down that connectivity price really quickly. I say that because I think you can’t ignore the overtones of Google being willing to buy their own bandwidth and become their own carrier. That threat is out there. As a carrier, I've either got to embrace or fight -- and embrace seems most logical to me.

These devices, the converged mobile device in particular -- something like an iPhone -- strikes me as a stepping stone between a traditional PC, as we know it, and some of these mobile devices.

If I can get a lot of what I get through the PC free or low-cost through one of these mobile devices, the only real difference is the size of the monitor, keyboard, and mouse. Isn’t there an opportunity in two, three, or four years that I might say, “I don’t need that PC and all that complexity, cost and so forth. I might just use my mobile device for almost all of the things I do online?"

PC manufacturers and those that are the traditional part of that supply chain are threatened by that every day now. You've hit it on the head. There’s an emerging market. Maybe the most important technology market to observe right now is the mobile Internet device [MID].

Many analysts are starting to pick up on it, and it could be viewed as the next generation of the mobile phone. But I think that’s underselling the real opportunity. If you look on the dashboard of your automobile, the back of your airplane seat, everywhere you go and everything you touch, it is a potential resting place for a MID with a 4x6 screen or a 3x5 screen, or all different kinds of form factors. That kind of use gives you the experience that is the eventual promise of the Android platform.

We all should start thinking about and talking about the MID market pretty quickly. ... The pie that we're defining isn’t really just mobile internet or voice, presence, and mobile commerce. It’s really the whole internet.

The first thing is we need to get some Android-based phones out there. Some time next year, you're going to see the first phones and that’s when we're actually going to have to see the operators who offer those phones address all the business model issues that you and I've have been talking about today.

So the next big step is that it’s got to move from the talk about to the reality of "here are the phones," and now we're going to have to resolve all these issues that are out there. That's not years away -- that’s next year.

Listen to the podcast. Or read a full transcript.

Comments

[HAYWEED]

The closed model that works with the carrier will die which will hurt companies like Rimm. It will devalue their consumer phones but business may still want the blackberry platform. Cheapest handset maker will be important as the operating system will then create the phone. Companies like HTC should have advantage over Nokia, Palm and Motorola. The phone makers become the equivalent of the pc makers. Perception of quality but low cost wins.

[DickM]

I believe there is going to be a lot of fight on the user/consumer side of the equation. A LOT! And therefore regard this hypothetical shift naive. Serious business people are going to continue to use MS Office or equiv on a PC, not a phone. And, from my discussions, people accepting adds popping up on their phone is highly improbable. Perhaps some lower earners and neophytes will go for a low cost connection. But not many, and when these "marketers" realize they aren't getting the market they dreamed of, the whole concept will evaporate. Perhaps the old axiom is appropriate here; "you get what you pay for."
This whole Google ad based connectivity based universe is pure masterbation. That doesn't mean Google won't try it, as they think they must to keep ad revenue flowing in. But a reality check with the consume/business person is highly advised. Like - who wants or needs it!

[seriously ?]

Google's plan is fairly obvious to me. You got some things right, but its much simpler really and much bolder.

1) Android and Google's spectrum bid are 100% correlated.
2) If google controls spectrum they will provide (most likely) free internet to ANY device running Android.
3) Android is completely open source because they want any and everyone to work on these devices (everything from watch/cell phone/ to computer - anything goes! ) and develop with Android.
- btw if google gets spectrum they wont have to persuade anyone to engineer devices, those selling "devices" make $$$. They will also not have to persuade anyone to develop with Android, they will force them to if they want to use free ubiquitous wireless. Of course everyone from your 6 year old to your grandmother will want to be using these devices.
4) so we have free wireless throughout the country, devices ranging from cheap wrist watches to iPhones running googles software and using googles spectrum. How does google make any $$$ ?
5) The same way they did before, only this time you must imagine a scenario where the country is getting on the internet through google, from anywhere at anytime. Do you think this might bring in a few more clicks ? Do you think more people might start using adsense ? As the original author said, imagine the possibilities ! having the advertiser know exactly where you are. He is right Android will give google yet even more information about their users but they wont be so dumb as to give advertisers your gps location ( you will use triangulation anyhow ), and destroy all trust that is left in their corporation, this would be 10x worse than facebook's beacon fiasco. But they will do even more amazing things and give advertisers and users options that I can't even begin to imagine.

6) in sum with android and spectrum, google should be able to monopolize the internet in ways that mock the monopoly they currently enjoy. All google needs to make money is your eyeballs, why do you think they called it ANDROID ? ( someone over there is getting a little too cocky in my opinion, should have stuck with something much less spooky )

Yes, I own google stock, but less than ten shares now, took profits much too soon.

-peace

[seriously ?]

sorry, to reply again, but I just re-read the article and felt compelled to say;

Google wants to/is going to be THE MID market.

I'm talking about shoes that instantly plot your path on a google map if you tell them to (the shoes), friggin' lights that turn on when you tell google to tell them to. space age shit. get it ?

I know I sound insanely cocky, but spectrum isn't bandwidth. Physics teaches us spectrum is UNLIMITED bandwidth. It's will be just like radio but with the internet.

The biggest challenge a company would face would be creating the server infrastructure necessary to move and store all of this information

Guess which company has the most massive/ fastest /cheapest server farms ever known to man (seriously) ?

Why won't microsoft or any company be able to touch google for at least the next 5 years ( unless the gov breaks them up ) ?

It's the super-computer, stupid.

That statement is not directed at the author or anyone in particular, but I feel like I need to repeat it as to inform possible google investors.

[DickM]

to MrMarket
There are so many IFS in this scenereo - - all they have to do is get the spectrum, all they have to do is provide free internet, all they have to do is get everybody to adopt Android, all they have to do is get PC users to use a phone exclusively, all they have to do is get the whole world to enter connectivity through Google, all they have to do is get every corporation to funnel their ads through Google Android, - - all they have to do is get AT&T, Microsoft, Apple, - - - to sit around and watch them take over the internet. But you are right that the government might also take a dim view of all of this. Ditto for foreign governments. And let us not forget that all of this doesn't come free. And let us not forget that Mother Lode is really money from other corporations, spent on advertising. And if this money spent on advertising doesn't yield results it will dry up in an eye blink. Just remember, nobody likes a monopoly including the government. In short, there are a multitude of reasons why this will never fly. And free internet connectivity will never yield the dream they envision for the simple reason that most people don't want a pop up ad driven internet experience - - . Think of the Facebook debacle now in making where the real driving force was this notion that advertisers could glean personal information and then exploit it to their benefit, something they could not otherwise do economically. It wasn't consumer driven, it was greed driven - - a sure formula for failure.

[seriously ?]

I agree that no one likes a monopoly, but look at Microsoft. It is very possible,especially in the computer industry sans government intervention.

I also agree about the facebook debacle, but I believe I addressed this issue and insinuated that google is very aware of the need to keep the consumer's trust.

However, I believe your statement, "And free internet connectivity will never yield the dream they envision for the simple reason that most people don't want a pop up ad driven internet experience" has already been proved incorrect by both google and nearly every website on the net (notice any ads here ? )

And finally I cannot agree that are so IFS in this scenario. There is only one. All they have to do is win spectrum in the auction everything else is in place.
AT&T is not sitting by and letting that happen, they are in the auction. Verizon knows this as well as they are also in the auction and attempting to push THEIR OWN open standard. Apple is primarily in the business of selling hardware. With their ties to google, they might very well be rooting for google to go through with this. As for Microsoft, I simply don't know, maybe without Bill Gates, they are just too dumb ?
.