Google Mobile OS Competitive Strategy - May 2010
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Transcript of Google Mobile OS Competitive Strategy - May 2010
Competitive Strategy Group, May 2010
Rajeev KalavarAdam Rahman
Diana TsaoSrujana Vallabhaneni
Slide 1
Mobile OS Strategy
Primary Sources / Interviewees
• Subir Jhanb Google, Android Engineer
• Herman Ng Google, M&A Finance Manager
• Jerry Denton* Google, Marketing Director
• Jahanzeb Malik Qualcomm, M&A Sr Manager
• Bradley Layous AT&T, Chief-of-Staff
• Gregory Hoffman T-Mobile, Finance Sr Director
• Hitesh Anand Nokia, Head of Strategy
* Name altered at request of interviewee for confidentiality
Slide 2
SmartPhone OS: Porter’s Five Forces Competitive Rivalry (HIGH)
iPhone (Apple), Symbian (Nokia), Windows Mobile (Microsoft), Research In Motion (Blackberry OS)
Slide 3
Complements (MED)
SmartPhone apps/handset, carrier plan, m-phone accessories, flash memory
Threat of Substitutes (LOW)
Need an OS to run Smartphone, especially with “open” handsets
Bargaining Power of Buyers (MED)
Consumers select from the many existing SmartPhone OS offerings.
Bargaining Power of Suppliers (LOW)
Mobile OS designed and made in-house; minimal suppliers.
Threat of New Entrants (HIGH)
Most telecom / software companies have ability to enter. Many firms in emerging countries launching new SmartPhones with simple, reverse-engineered OS.
Google Mobile OS: Android• Android central to strategy• Tightly integrated with Google’s web product offerings
Slide 4
• Open Handset Alliance that sets standards for mobile devices; Initially 65 companies from across value chain
• It is Open Source and free to handset manufacturers
• Symbian (Nokia’s OS) has leading global market share (small in US)• Android small, but has highest growth rate of all
Slide 5
• Apple has had high growth and closing in on RIM. Extracts a significant portion of industry rents
• Mix of vertical and horizontal models within SmartPhone business
Nexus One Launch• Advanced features with 5 Megapixel Camera, 1 GHz
Processor, Google Android OS, GPS, etc.
Slide 6
• Low-key launch: little marketing, one carrier, unsubsidized $529.00 / unit direct-to-consumer model
• 74 days following launch, unit sales:• iPhone 2G: 1.0M• Motorola Droid: 1.0M• Nexus One: 0.1M
• Nexus One Purpose:• Example of Android fully leveraging Google product offerings
• Lift the innovation bar for handset manufacturers on Android• Google is signaling to Android ODM’s and Apple
Android Consortium vs Apple iPhone
Apple / iPhone[Closed Platform]Andoid-Based
Manufacturers
History repeating itself like Windows / PC’s vs Apple Mac?
Slide 7
Power of Brand
•Google's brand valued at $100 Billion,* greater than brands like Coca-Cola and Microsoft!
Slide 8
•Lends credibility to Android
•Handset manufacturers can leverage strong Google brand to market Android-based handsets
* 2009 Datamonitor report
Google’s End Game in Mobile
•Is it the Nexus One?
Slide 9
•Is it Android?•It is about controlling the Mobile Ecosystem
and eventually extracting majority of its rents through mobile search advertisements with its portfolio of Google products as search transitions more from desktop to mobile computing.
…No
. . .No
Recommendations
• Attract more handset manufacturers to Android
Slide 10
• Increase mobile application offerings– Make Android Market easier for developers to use & quicker app
approval process versus iTunes– Offer higher app sales cut to developers versus iTunes
Product Integration• Match or beat tight integration offered by iPhone/ OS X/ iTunes within
Handset/ Android OS/ Android Market combinations
Market Penetration
• In addition to mainstream users, target the enterprise / business segment
Recommendations continuedSlide 11
• Ingredient marketing: Cover portion of handset manufacturers’ costs (Intel Inside case)
• More integration in Google product offerings
• Continue building VoIP capability through Google Voice
Marketing
• Protect brand image in mobile
Leverage existing offerings
Questions?
Slide 12
Google vs Apple:Collaborators turn Rivals
1. Enter SmartPhonemarket
2. Acquire MobileAd company
3. Block Mobile Ad firm acquisition
5. Reject Google VoiceApp from iTunes
• Parallel between Google / Apple and Gillette /Bic case• Google does not have competitive advantage in hardware
Slide 13
4. Antitrust Allegations
Collaborators or Competitors?
06.07Apple releases iPhone
11.07Google unveils Android
10.08Google launches Android Market
07.09Apple rejects Google Voice
09.09Google CEO steps down from Apples board of directors
11.09Google acquires AdMob
Collaborators or Competitors?
01.05.10Google releases Nexus One
01.05.10Apple acquires Quattro wireless
01.22.10YouTube starts to rent movies.
01.26.10Google Voice in browser released
04.08.10iAd announced
01.10FTC investigating Google/AdMob deal
03.10.10Ads served on YouTube mobile
02.05.10Apple bans word “Android” from App store
05.10Apple to replace default search engine with Bing?
Google vs Apple:Mobile Strategy
Slide 16
Apple Google
Mobile OS Closed [OS X] Open [Android]
Primary Mobile Rents Hardware Mobile Ads
Partnership Limited [Primarily AT&T]
Numerous [Open Handset Alliance]
Customer Value End-to-End User Experience
Integration: Mobile OS with Google web product offerings
Online Store iTunes Android Market
Apps Offered 190,000 50,000
Smartphone / Mobile Trends
• Mobile phones have become like small computers• Features on Smartphones becoming “an extension
of your senses” with vision (camera), touch (screen), voice (speech recognition), awareness (GPS), etc.
• Consumers personalize their phones with applications
• Growth in mobile search outpacing traditional desktop search. Substantial shift in revenue source for Google: from desktop to mobile ads.
Slide 17
ComponentSuppliers
WirelessCarriers
MobileConsumers
MobileOS
Mobile Value Chain in US
Mobile RetailOutfits
Handset Manufacturers
Mobile Handsets (in general):
Wireless Carrierof Choice!
Nexus OneConsumers
AndroidOS (Google)
Google(online store)
Nexus One Manufacturer:HTC
Google’s Model (D2C):
Semiconductor Chips
BrandedCompanies
ComponentSuppliers
Semiconductor Chips
Slide 18
SmartPhone Hardware:Porter’s Five Forces Competitive Rivalry (HIGH)
Apple (iPhone), Motorola, Nokia, Samsung, Research In Motion, LG Electronics
Threat of Substitutes (MED)
Landline telephones, VoIP, PC, laptop
Compliments (MED)
Applications, carrier service plan, mobile phone accessories, flash memory, Personal Computer
Bargaining Power of Buyers (MED)
Consumers select from existing SmartPhone offerings. However, many options.
Bargaining Power of Suppliers (LOW)
Mobile semiconductors and phone hardware becoming commoditized.
Threat of New Entrants (HIGH)
Most telecom companies have ability to enter. Many firms in emerging countries launching new SmartPhones.
Slide 19