Seeking Alpha

Google (GOOG) is reportedly planning a major overhaul of its Android strategy. Instead of...

Google (GOOG) is reportedly planning a major overhaul of its Android strategy. Instead of partnering to build a handful of devices via its Nexus line, Google will now partner with up to 5 OEMs at once on hardware sold directly to consumers. Google's objectives: create no-compromise Android gear to better compete with the iPhone (AAPL), limit OS fragmentation, prevent carriers from modifying Android devices for their own ends, and soothe partner fears related to the MMI acquisition. (earlier)
From other sites
Comments (19)
  • jcjojolopez
    , contributor
    Comments (85) | Send Message
     
    It's finally getting smart by doing what Apple has been doing for decades. Too little, too late.
    15 May 2012, 11:10 PM Reply Like
  • Asif Suria
    , contributor
    Comments (340) | Send Message
     
    About time. Android has been buggy for way too long.
    15 May 2012, 11:18 PM Reply Like
  • David Urban
    , contributor
    Comments (1036) | Send Message
     
    I believe that they are getting some blowback from app makers over fragmentation.

     

    Because of all the adjustments handset makers perform on Android app makers are having problems stable versions across handsets.

     

    I read an article where one app maker has almost 400 devices for testing to ensure a similar experience across devices.
    16 May 2012, 12:09 AM Reply Like
  • creayt
    , contributor
    Comments (6) | Send Message
     
    Too little to late as in Android's currently leading in market share and that's not enough for you or?
    15 May 2012, 11:38 PM Reply Like
  • Leftfield
    , contributor
    Comments (3813) | Send Message
     
    Can't be good for Amazon and the Kindle, a highly modified Android device. Maybe the stock trend finally tips towards earth for this company with declining margins and a PE of around 200.
    15 May 2012, 11:42 PM Reply Like
  • Jeremy Johnson, CFA
    , contributor
    Comments (781) | Send Message
     
    I don't think it is too little too late. The marketplace shifts and you learn from others. This is an evolution of the strategy. I am unclear about the financial success of Android over the long-term, but it certainly has done well for itself in gaining users and is a powerful OS for people that like a little more control. The foundation is now in place and with a couple more iterations of the OS with greater collaboration with hardware manufacturers, you will get a highly polished product. Its really a great accomplishment in a short period of time.
    15 May 2012, 11:45 PM Reply Like
  • DougRk
    , contributor
    Comments (1567) | Send Message
     
    Sounds interesting. But if device makers lose the ability to differentiate, Android will lose the steam that comes from motivated makers.
    15 May 2012, 11:49 PM Reply Like
  • Aloha96815
    , contributor
    Comments (20) | Send Message
     
    The irony of this move by Google is that most Android users often use their ability to modify their devices as some kind of a defense. Changing strategy midway now? Am I to conclude the existing strategy was not working out too well? Hmmm....
    15 May 2012, 11:59 PM Reply Like
  • skibimamex
    , contributor
    Comments (442) | Send Message
     
    i laughed so hard that i almost choked. Wait we want 5 OEM's to work simultaneously with the same pure Google experience and stock app pkg so that we can commoditize those OEM vendors to be nothing but contract manufacturers for Google.

     

    We then want to further alienate carriers and to not permit them to any kind of carrier customization and instead want to sell directly to consumers, who will eagerly pony up full price without the $200-$400 carrier subsidies that they currently enjoy for post-paid. That worked so well for Google to date for the 3000 phones they were able to sell, because no surprise, customers were dying to pay a premium to buy from a website and get tech support from a call center in India.

     

    Oh lastly, we want to do this with "unlocked" devices that employ a SIM card, thus limiting our targeted customers to GSM networks only as the CDMA2000 networks of Verizon, Sprint, US Cellular, Leap, Metro, C.Spire, Ntelos, Alaska Telecom, .... oops they dont work with SIM cards.

     

    Google must have changed its hiring protocol from minimum 120 IQ to maximum 80 IQ.... this is the stupidest strategy that I've ever heard. Way to go for a company that lacks physical distribution and fulfillment capability to alienate every possible partner it needs to get to market. At least in the US. Maybe different in some other countries, but no carrier will support somebody getting around them to bypass them in reaching the carrier's customers.

     

    Fail.
    16 May 2012, 12:00 AM Reply Like
  • Jeremy Johnson, CFA
    , contributor
    Comments (781) | Send Message
     
    Phone manufacturers turned themselves into what you are describing when they decided not to internally develop software for their phones. Software is hard -- one of the hardest things to get right in the tech ecosystem. You can spend hundreds of millions or billions and get literally nothing out at the other end. There are lots of examples. I have worked with private companies that have developed internal software costing hundreds of millions, and they had to scrap all the code because it just didn't work. Health IT in Britain has had a similar experience after billions spent. Nokia's effort on MeeGo is a total write-off ... billions gone. There is room to differentiate in the hardware and that is what HTC and Samsung are good at. They can make adequate returns building phones and ultimately it is possible that there are just a few that end up surviving in market.
    16 May 2012, 12:24 AM Reply Like
  • DougRk
    , contributor
    Comments (1567) | Send Message
     
    Differentiation in hardware is arguably limited. Your observation about the difficulty of software is exactly right. And it is for that very reason that it's the ultimate differentiator. Camera, flash, touch screen, some buttons, battery... all ho hum. Touchwiz, Sense, carrier add-ons, Beats, et al, and now the SGS3 customs, are what have made the devices what they are. Too, the US model is carrier driven as you know, and they won't be happy either. After the MMI purchase, Samsung started making waves about Bada, and now Tizen. This move, imo, will accelerate that push. What flagship maker wants to be commoditized by Google for a Google end? Goog thinks this settles the MMI issue, but I think it exacerbates it.

     

    I've followed you for a while JJ. You're a very insightful guy and I look for your comments.
    16 May 2012, 01:03 AM Reply Like
  • mistersocks
    , contributor
    Comment (1) | Send Message
     
    The Nexus line does not preclude OEMs from producing their own differentiated phones..see Samsung's extensive line of phones besides the Nexus S and Galaxy Nexus and HTC's phones outside of the Nexus One. Most people still won't want to put up the high initial cost for an unlocked phone and are perfectly happy with whatever carrier/OEM bloated phone is available for under $200 and a 2yr contract. This seems to be a push for the niche market that loves Android but hates OEM/carrier bloatware and are willing and able to put up the $600+ cost for a pure, unlocked phone.
    16 May 2012, 10:49 AM Reply Like
  • kmi
    , contributor
    Comments (4030) | Send Message
     
    FYI, Google is selling the Nexus for $400 unlocked, bloatware free and contract free. Not $600.

     

    http://bit.ly/IY05cv
    16 May 2012, 10:55 AM Reply Like
  • DougRk
    , contributor
    Comments (1567) | Send Message
     
    socks, the analysis is correct when applied to the current paradigm. ie, one maker of a single high cost Nexus phone. But Goog's push here is to have the makers deliver a fleet of phones, pushing prices lower, to bypass carriers, and eat into the makers margins. Goog is stepping on the toes of two interests here: the makers and the carriers.
    16 May 2012, 11:27 AM Reply Like
  • dgbrown
    , contributor
    Comments (3) | Send Message
     
    The BOM for an Android and Apple phone hardware are substantially similar, but the price to the carriers differs by up to $300 per device. Consumers simply pay for the subsidy through carrier service plans that have minimum bundles of voice, text and data that greatly exceed their typical needs. The carriers play the non-Apple OEMs off to attempt to contain their total subsidization costs across their mix of Apple and non-Apple phones. The Android hardware OEM market will remain challenged because of the effective duopoly that exists in the US wireless service market. the real question is why people don't accuse Apple of price gouging. You have to give Apple credit, but it is the evil empire of the wireless age.
    16 May 2012, 05:33 PM Reply Like
  • skibimamex
    , contributor
    Comments (442) | Send Message
     
    ahem, you can get the two brand new LTE versions on either Sprint or Verizon for $199, rather than the older HSPA+ version from Google for $400

     

    http://bit.ly/JiPYUI

     

    http://bit.ly/KbZ9mc;ptn=

     

    Oh yes, I forget, GOOG has to sell the GSM version directly to consumers because both T-Mobile (GOOG's original partner on the Nexus One) and AT&T declined to distribute the Galaxy Nexus. Each of them are instead featuring the new HTC One S (in the case of T-MOB) or the HTC One X (in the case of AT&T who got the LTE version) instead as their premier Android device.
    17 May 2012, 12:32 PM Reply Like
  • kmi
    , contributor
    Comments (4030) | Send Message
     
    Most folks who care about contract-free unlocked phones are GSM customers. Verizon and Sprint will always have the issue of their limited value to international travelers who want to use their phone with other carriers.

     

    That said, you $200 price is ON-contract, with Verizon's retail contract-free price being $650, according to the link supplied.

     

    Additionally, the bloatware free unmolested version of Android on the Google supplied Nexus has more functionality.
    17 May 2012, 12:59 PM Reply Like
  • rubicon59
    , contributor
    Comments (1383) | Send Message
     
    What happened to "open"?

     

    Will those phones be sold at Google stores?

     

    Will customers pay a full-minute rate for service even though just paid full price for a Google phone?

     

    Will those be called smartphones or smartphonies?
    16 May 2012, 03:32 AM Reply Like
  • kmi
    , contributor
    Comments (4030) | Send Message
     
    Aha, so this is how the Moto acquisition is being sold, Google will move a Moto Nexus at same time as 4 others, probably Samsung LG HTC and ?
    16 May 2012, 10:27 AM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector