The Android open source mobile platform made a splash in October when Google (NASDAQ: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.
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.