The curse of Google?: Android licensees fail to cash in

Google's Android is now in almost half the world's smartphones – but licensees are finding that quod eos nutrit eos destruit – or what nourishes them destroys them. Figures from research company Canalys released this week certainly show booming growth in Android devices. Android is grabbing 48 per cent of the smartphone market …

[Gordon 10]

Dare I say it?

Maybe Elop had a point.

Doesn't forgiven the "osbourne effect" way in which it was done. Or confirm that m$ was the right partner, merely that Android could have been a worse bet.

Of course having Apple and Rim up there is a strong argument for forging your own software path.

[Daren Nestor]

Agreed

I agree entirely - it seems Android is bland. It is, really, and the Android Market is a mess which doesn't help.

It makes Nokia look shortsighted for killing the maemo effort though.

[samster]

How is the Android market a mess?

Even my mother in law can use the Android Market..... it does the job and you can also send programs to your handset from a web browser - which is nice :)

[Anonymous Coward]

title

'Even my mother in law can use the Android Market..... it does the job and you can also send programs to your handset from a web browser - which is nice :)'

Bloody hell, you have low expectations of a market/app store - Even the Ovi store can manage to achieve all of that without any bother, so it's hardly moving the game on any.

[Anonymous Coward]

Uhm... Its not dead yet...

You do realize that there's this phone... the N9?

Depending on how the market receives the phone... who knows...

I think people misunderstand why Elop went to Microsoft in the first place....

[Ilgaz]

Buy Linux phone from MS slave?

First of all, N9 won't be available where mobile developers exist. It is another sign of little games the company plays.

N9 and current Symbian relies on Qt framework, a massively multiplatform framework that actually delivers the promise and... Won't be shipped for Windows Phone. Ask Nokia why...

Seriously, N9?

[Anonymous Coward]

@Ilgaz

Silly me, I heard that there was a developer phone the N950 for those developers working on stuff for the N9.

The point of my post is that it would be short sighted to kill off Meego completely. Remove it from focus and not put a ton of effort behind it would be a better strategy. Sure MS gave Nok 1 billion USD. (There was a reason for that...) ;-)

But you still have Meego partners and you still have a gap in Nokia's product offerings that they have to fill.

Out of sight, out of mind. Until they want you to see it. ;-)

[James Micallef]

Yes and no

Sure, Nokia could have become just one of many phone makers offering Android. However Nokia already had a strong brand loyalty, and a good part of this was based on hardware quality, not software. If existing Nokia users had been offered the choice of Nokia Android vs someone else's Android a couple of years back, a lot would have chosen Nokia.

However they've now missed the boat on that one.

[ThomH]

@James Micallef: I'm not persuaded

I don't think most Nokia cheerleaders actually believe the hardware quality tag, it's just something they can cling to when an argument requires it. Nokia phones tend to contain older processors and GPUs, and the companies with the lowest reported malfunction rates for phones tend to be Motorola and Apple.

Nokia fans probably would have gone Nokia Android though — you're right about that. Unlike Motorola, HTC et al, Nokia did actually have a decent body of brand loyalists at one point.

[Ilgaz]

We wanted them to keep Symbian and Linux

Before "operation Elop" (yes, like secret service) Nokia promised to keep Symbian where it belongs. Rock solid kernel, device drivers and leave everything above to Qt framework.

Same goes for Linux based platform.

What these guys did is pure criminal conspiracy. Release N97 with half specs (ram, nand flash). Keep Linux team understaffed.

This is not a tech argument, this is conspiring a company down to its knees, also hurting the idea of Linux on handsets and hurt qt framework.

Nope, I wouldn't buy a Nokia running Google OS too. If BB doesn't manage to die, QNX seems a better deal.

[N13L5]

Still think Elop was wrong, way wrong...

I understand your point in regards to Android, but I contend Elop was still wrong. Why?

1) Nokia has lost more money due to the market share crash than M$ paid them, with future losses set for a continued climb.

2) Nokia did have an extremely promising and almost ready to go OS of their own, that would allow them to continue to be their own masters.

3) All Elop needed to do was to re-fashion the departments and get employees set to just finish some MeGoo phones, which they now did in great style, but which would have gone a lot faster without wasting a lot of executive's and employee's time with M$ dealmaking and putting most of of their resources on figuring out Windphone 7, and Microsoft's arcane proprietary code.

Just look at the great MeGoo phone Nokia just put out. Ok,, its technically behind, but the OS is great, its Micro$oft free (which means a lot to people who avoid Apple; cause they don't want to trade a walled garden for a walled ghetto)

MeGoo benefits for Nokia and its customers are pretty good:

1) No single company has complete control over MeGoo

2) not a walled garden/ghetto

3) Its based on Linux.

4) Its not controlled by Google

5) Its not controlled by Apple

6) Its not controlled by Microsoft

7) Nokia did a great job with the implementation

8) Its not an indecipherable proprietary mess like Windphone7

Nokia was starting to get Linux cred, so they would have had loads of programmers buy their phones and - naturally - they'd build cool stuff for MeGoo.

I think MeGoo has 3 times the chance to compete with Android than Windphone has.

[Jah]

How is this situation different from the Windows PC market?

How is this situation different from the Windows PC market?

We will see further differentiation. Sony does well with Vaio so why can't HTC/SE/Sammy do the same with Android?

[stu 19]

Windows is our own fault

I'm not a fan or naysayer of MS. Anyone who has delivered software in a commercial environment knows they actually do a decent job of getting working stuff onto computers for the majority of people to use.

Stop right there Mr Linux superiority complex :) I use Linux at home and unix at work, I know what ACLs and role based permissions and real limited accounts are, Win 7 does not. However I can't play the majority of games I like to play on linux - I've looked at the wine premium services and the idea of trying to get a new MMO or FPS working chokes me on the spot. So unless my current contract is going to pay me to work out how to host BFBC2 on vmware VMs then I'm not going to be trying to do anything like it at home anytime soon.

Long story short, windows is most definitely shit and inferior to *nix but its that way because the vast majority of users (myself included) do not want to spend their leisure time getting the PC to work at all!! So windows is our (own) fault

[Ken Hagan]

Re: Windows is our fault

"I know what ACLs and role based permissions and real limited accounts are, Win 7 does not."

Apparently you don't, since Win7 (and all its NT predecessors) has full support for these things. It takes about two minutes to set up, mind, and good luck getting any games to work in anything other than "pants down, bent over" mode, but that's hardly Windows' fault.

If games vendors did Linux versions, they require that you run as root. (Google Earth 5 had that property on my Kubuntu box until I switched off some sort of atmospheric effect. Performance was abysmally slow and the recommended workaround was to sudo the app.)

(Btw: where's that "Google sucks" icon? This one'll have to do.)

[Anonymous Coward]

Differentiation

I'd love to see more differentiation between the models.

But right now there's two problems: First, in the US, the carrier picks the phones that most people will get. If you want a new phone, you go down to the <Insert favorite carrier name> store and pick one out that you like and that has an additional price you're willing to pay. So consumers are heavily limited by what the carrier is willing to give steep discounts on for starting/renewing your contract.

Second, there isn't a lot of consumer visible differences between the models. I was looking at the phones in a Radio Shack, a Best Buy and a Sprint store a couple weeks back and from the little bit of documentation they had, all I could tell was that one phone had a second camera so that it could take 3-D pictures. If I look at Sony's (or any other OEM's) computer's, I'll find that they all look different at least. They come in bright colors for consumers with the company logo splattered all over the cover. Some say they come with a faster processor and more memory or have a Blu-ray drive in them. I don't get any of that with a smartphone. They all seem to come in brushed aluminum with 1-3 cameras, depending on how much you want to spend. The only visible choice the consumer seems to have is between Google, Apple and Blackberry--and some of those aren't available for every carrier.

I'd love to see some more product differentiation, even if it's just making some smartphones colorful instead of brushed aluminium, but it's not here now. Perhaps, there's some issue with differentiating the phones where the extra hardware specs don't increase the performance of the phone, leaving only superficial differences to work with.

Note: How did this thread get hijacked into a Windows vs. Linux debate?

[Anonymous Coward]

I thought it was

I thought having market share was the whole point, that is what we have been hearing for some time. It is not the apple model of making most profit per item that matters, but having biggest market share?

[Rob Dobs]

Not just market share

Market share is not just a ghostly number.

Market share means work. Jobs. People working and developing R&D for HTC and Samsung. The more phones they sell the larger their corporation.

Even if they are breaking even it can still be a win for the company. (Like the CEO and all the workers are some-how paid after profits? Hell-NO). HTC and Samsung CEO have certainly paid themselves, their offices, workers factories etc first, and then whats left over gets divided up amongst share holders.

I'm really tired of a one type only business model. Sure every business wants to make profits in the end, but as long as you are not loosing money, and especially if the company is growing, it can be a good thing to be capturing a market, especially one as promising as mobile computing devices.

Now maybe an argument could be made that as an investor betting heavy on a Android me-to company isn't a good idea.... but that not what the article was about now was it.

And yes this AC is dead on, What good does 900% profit margin do for you when you only have 1% of the market? (yeah yeah there is a place for niche companies, but that is certainly not what Apple is spending all their marketing $ to become)

[Anonymous Coward]

re: not just the market share

That isn't how it works. The number you should be caring about is the direct profit (ie, excluding costs that do not relate to the manufacturing costs of each handset) from each handset sale multiplied by the fraction of market share multiplied by the market size compared to your indirect costs.

If you only ever make £1 on each product you sell, you shift a million a year and your overheads (R&D, staff costs, rent, etc) are more than £1m/year, you could have 100% market share and it won't make any difference.

A high direct profit / indirect costs ratio might generally mean your business model is less risky but if direct profit - indirect costs isn't positive, you're in serious trouble. Having low direct profit margins and high volume (and the high indirect costs that usually comes with needing the infrastructure to do that) means that it only takes a small percentage drop-off in sales before you are making a loss as you still have to pay for your infrastructure even if you reduce your manufacturing output. That's the risk here and why most people choose to not chase market share as the ultimate goal.

Apple have reached the point where they can now play by different rules, unfortunately. If they know that there's no one competing with a given product, they can make customers pay through the nose for it and top up their profits. They can switch to the low-margin model for other products that have heavy competition, safe in the knowledge that there's enough cash in the bank that they are very safe while forcing all of their competitors to play in a market that has no profit margin left in it, making it unattractive for anyone to spend money on R&D.

[Anonymous Coward]

You have a point...

The smartphone share enjoyed by Android isn't a real reflection on the shares each business has. That ~48% share is between at least 6 companies, Apples and RIM's are their own. The fact that Apple have ~20-25% of the market with what is essentially 3 handset is actually very impressive. The commoditisation of the smartphone is in full flow as is the race to the bottom, except that I cannot seeing ending like the desktop.

[Anonymous Coward]

Spin...

No Brand Loyalty or Forced Brand Loyalty???

Buy Apple, and you have FORCED brand loyalty, all your apps and music means you can never buy anything from anyone else every again without losing everything you have bought. This is how Apple keeps it's customer base.

Android on the other hand, you buy apps for Android, and you are in no way locked to any device (infact a single app purchase works on ALL your Android devices), this means you are free to switch to a different handset next year from a different manufacturer and not lose your investment..

Surely that's a GOOD thing, consumers have choice, and manufacturers can't get complacent...

The rest of this article is utter tripe. Samsung have gone from nowhere to right at the top fo the mobile tree in a couple of years, Android has turned HTC's and Sony Ericcsons fortunes around drastically...

[Stu Wilson]

AC === Atrocious Comprehension

Apps = sure, you can't use iPhone apps on Android.

Music = oooh, i'm pretty fricking sure I can use any music I've paid for on any of my devices because theres no longer any DRM

Android apps = so does this mean app A that only works on 10 phones, will work on your new phone? or that the phone you buy actually connects to the store you want since the carrier removed the Google store and put in their own? or that the app will still be free and available when you upgrade?

Consumers have choice, and the its pretty obvious from recent reports, the only choice that they have willingly made is too buy the iPhone and spend oodles and oodles of cash with Apple.

Everyone else just happened to buy a phone with a big screen they can play ad-supported Angry Birds on.

[ChrisC]

Willing choices

Strange, my experience of talking to friends/family and noticing what phones other people are using when I'm out and about suggests to me that Android handsets are enjoying a pretty big surge in popularity this year. So I'd find it hard to believe all of these people bought these handsets by mistake or through coercion (unless you consider the rather attractive price plans available with Android handsets to be a form of coercion...) - IMO a steadily growing number of people are actively, willingly, knowingly choosing to go the way of the 'droid rather than take a bite of the apple.

And as the number of Android devices grows and more people get the chance to see their friends/family/colleagues etc. using Android devices, I suspect there'll be even more converts joining the club in the months/years to come. Having now had some hands-on experience with my Desire S, my iPhone-loving wife is starting to consider alternatives to the iPhone 5 come contract renewal time...

[ThomH]

@ChrisC: my experience is the opposite

The number of people "actively, willingly, knowingly choosing to go the way of the 'droid rather than take a bit of the apple" is exactly the same as it always was, and comprised almost entirely of a whole bunch of angry Internet types.

The number of people buying an Android phone has surged because Android phones tend to be the best value proposition by a huge margin for a big majority of the market. You can get a big touch screen, a usable browser and access to apps for free on a cheap contract, often with unlimited data (per the industry's definition of unlimited). Nobody cares that it's an Android.

Sadly I think that's also why this report ends the way it does: the race to the bottom in price terms has squeezed profit, and manufacturers don't seem to have found effective ways to add value. What we've arguably got is a lot of people trying to pretend that phones aren't just commodities.

[ChrisC]

"...has surged because ..."

Well yes, that was part of the point I was trying to get at - people want to buy smartphones, but they don't necessarily want to pay the Apple tax, so they opt for Android (or occasionally WM7, Blackberry etc). Stu suggested that people were only willingly buying iPhones, which in turn suggested Android etc. buyers were doing so unwillingly or by mistake, and that certainly isn't the impression I get.

People might not care/know their shiny new phone is running Android (although again, IME, more and more "ordinary" people do care/know - the brand is starting to make inroads into the general population), but they certainly do know it's not an iPhone - they haven't been tricked into buying it thinking they were getting an iPhone, they haven't been forced to buy it against their will, they've chosen to buy it.

So no, it's not almost entirely the angry net types who choose Android over anything else - whilst most of the early adopters, and a sizeable proportion of recent converts, are still drawn from the more tech-savvy end of the consumer spectrum, there seem to be enough less/not at all tech-savvy types who still want to get a bit of the 'droid action they've heard about or experienced by using someone elses phone. Don't underestimate the marketing power of a few minutes playtime with a new piece of kit - why do you think all the Apple stores have so many real devices (as opposed to the dummy display shells you get in every other phone shop) ready to play with?

[N13L5]

the phones are it

The pipe (telco network) is a commodity.

The OS is a commodity.

The hardware people see in the store is the differentiator.

Companies putting out mediocre hardware will and should fall behind, whatever OS they throw on it.

(Apple is a hype driven anomaly, somewhat deserved, since they were the first to put the pieces together properly, but their hardware isn't exactly at the vanguard like Samsung or HTC)

It won't be long and we'll be able to select the OS independently from the phone, like on PC's.

Companies won't be first to do this, users who cook custom roms will be first, and companies will follow. There's already an application that lets you install a Linux desktop on an Android phone.

[heyrick]

@ Stu Wilson

Oh, look how quickly people resort to FUD.

Let's see...

"Android apps = so does this mean app A that only works on 10 phones, will work on your new phone?"

These are, what, experimental or phone-specific apps? Or just badly written ones? How about you look at the market as an entity and stop picking on highly specific cases. Some of the apps I have may or may not work on certain phones for certain reasons (often noted in the info) but these, and all of the apps I have work on a large number of Android devices... This is, of course, your cue to tell me that there's no such thing as an iPhone 4 specific app that won't work on earlier models... ;-)

"or that the phone you buy actually connects to the store you want since the carrier removed the Google store and put in their own?"

Cite a reference please. Google's Market is fairly well integrated into the system, so replacing it - while not impossible - would be bothersome and liable to cripple the entire point of the Market and Android's use of it. HOWEVER, you can use an alternative - such as Amazon's offering or even (if you allow it) install apps from just about anywhere. Can you do this on a standard (non-hacked) iPhone?

"or that the app will still be free and available when you upgrade?"

And this is a criticism of Android's Market how? Does Apple *guarantee* that an app will be both available and the same 'cost' when it comes time to upgrade your phone?

.

Perhaps something this article fails to address is that - it is right - we don't have a lot of brand loyalty because we know that an Android phone is an Android phone. From a hardware point of view, I am quite impressed with my Motorola DEFY. However I am less impressed with the software side of things - the bloated Motoblur, the tendency for the screen lock thingy to crash, nonsense like "Data saver mode" will block the RSS feed reader, yet trying to download a 10Mb attachment over EDGE is a-okay, not to mention - hello - Android 2.1? Still?... however on the plus side, I wear my phone to listen to music in a wet environment and there's no problem, and it's got a damn fine screen on it.

My next phone purchase will weigh in good points and bad points as I attempt to obtain for myself the best hardware for the money.

Perhaps instead of bitching about the lack of instant profits, manufacturers should see this as a double-edged sword. It is, no doubt, easier to deploy a phone with a plug-in operating system ready to roll and a fairly standard chipset, but it is what the phone can *do* that makes it better or worse than the crowd.

I'll give you a hint - I was rather surprised that there is no "basic" office suite built into the phone - anybody who remembers the Psion 3a will know exactly what I mean. It doesn't need to be compatible with anything much, so long as you can take notes and put together a little database of stuff, such as which <author> books you own, etc. Nothing hardcore, this isn't a micro-netbook, it's a phone. Why does Android not offer this? Why doesn't Android even have a text editor as a standard issue? Hell, the Calendar doesn't even work correctly.

Time for a brand (Samsung, Motorola, what-have-you) to step back and say "we've been making these things for a while now, we know these things. now what can we get them to do?" And I don't mean Twitter apps... At least Motorola offer a built-in post-it note app. That's a start. I can note my shopping list on one of the home screens for easy reference. What else could they offer to make their phones desirable?

[Stu Wilson]

no one saw the troll icon obviously

@heyrick

Analysis done on the Android market showing that the churn on apps and developers there is much higher than at other store, and that applications are up to 20% more likely to no longer exist after 1 year than on on the iOS App store.

[quote]This is, of course, your cue to tell me that there's no such thing as an iPhone 4 specific app that won't work on earlier models[/quote]

not all all, but the inverse is more true, I have apps that have never seen an update since they were first released 3+ years ago, they still run on both my iPhone and iPad.

[quote]"or that the phone you buy actually connects to the store you want since the carrier removed the Google store and put in their own?"

Cite a reference please. [/quote]

it was a hypothetical situation, one that given the carriers penchant for fucking around with stuff is only a matter of time IMHO, especially if Amazon actually build what everyone thinks they are building.

[quote]HOWEVER, you can use an alternative - such as Amazon's offering or even (if you allow it) install apps from just about anywhere. Can you do this on a standard (non-hacked) iPhone?[/quote]

No you are very correct, but then the iOS store has more apps than every other store combined anyway, and oh yes, a lot less Trojan apps also.

[quote]And this is a criticism of Android's Market how? Does Apple *guarantee* that an app will be both available and the same 'cost' when it comes time to upgrade your phone?[/quote]

Showing a small amount of ignorance there, once you purchase an app from Apple you can use it on any of your iOS devices, since it is linked to your account not to your device. Lose or have your device stolen, you sync a new one and everything is back.

And also it gets better, since the latest announcement of iCloud etc, since I have a few banned apps (pulled for licensing restrictions such as Delicious Library, VLC for iPad etc), they are fully available to download under the new version of iTunes, free, since I had already purchased them I will be able to use and run them until such point as iOS evolves whereby they no longer run.

For me, I actually happen to _like_ Android a lot, its so much better than anything else out there, but it suffers massively in UI stakes. It is unintuitive, too techy for the majority, and lets be frank, sometimes the UI is plain ugly.

The first time I used an iPhone, it was intuitive, easy to use and the other half she managed to pick it up, unlock it, and make a phone call without any supervision or help from me. Considering when I first picked up an Android phone, I had to be told what to do. And TBH I don't want to have to learn how to use a phone, it should just do what I want it do.

I've wasted so much time in my life trying to work out how to do stuff with gadgets/phones that someone else thinks is a good way to implement, that the iPhone was an absolutely fresh breath of air and one Ill be sticking with for a long time to come.

yes there are some things I can't do with it, but they are far outweighed by the fact that is does everything else I NEED it for superbly well.

[N13L5]

drawing conclusions from your own incompetence?

If your carrier removed google market, boohoo...

With half a brain, you can take control over whats on your phone and install whatever you like, including a fresh copy of any app market you'd like to use.

And apps you bought are linked to your name, not your phone. Its also easy to back them up to your computer.

If you can't manage, buy Apple.

Apple has successfully shown that pandering to the inept who feel under pressure to avoid looking inept, has unlimited profit potential. It turns toys like the iPad into a compulsory purchase.

[stu 19]

Why Should A Consumer Display Brand Loyalty

WTF, I paid for you fucking product and now I have to stay with you and buy the next 3 slight variations? Fuck off - I'm off to buy an iPhone.

Alright the last bit was a lie, as in never in a million years or not even if you gave me one kind of lie.

But for Vendors to suggest that consumers somehow owe them loyalty is ludicrous.

MAKE BETTER SHIT THAN YOUR COMPETITORS and you will sell more!! or just do what jobs does and make shit, but tell everyone its the mutts nuts and you sell more than anyone else!!

[SteveBalmer]

Unfortunatly

"MAKE BETTER SHIT THAN YOUR COMPETITORS and you will sell more!! "

That would work in an ideal world, but when you have corporations like Microsoft and Apple who have more money than small countries at their disposal, they can churn out crap and simply paper over the cracks with slick everwhere marketing.

No longer does making the best product ensure that you will be number one. You can turn out any old crap. Xbox is a fine example of this...

[Gav]

The only way to keep a customer base; keep the customer happy.

You seem very keen on hardware independence, but happy to accept being "locked in" to an operating system. If I buy an Android phone am I FORCED to buy another Android next year? What if Android's next version is pants? Am I locked in?

Of course I'm not. I can buy any phone I wish. As for my apps, well we all know that Android compatibility is a minefield over different devices, but really why should I have any right to demand that apps I bought for one phone should work on any future phone that may not even be manufactured yet? I might expect an upgrade or conversion path. though. so I don't lose data. Exactly like you can already do between iPhone and Androd. So much for being "locked in..."

No-one is FORCED to keep buying the same brand. They will only do so if they are happy with the product. Yes, there is an element of people avoiding the hassle of changing brand, but that is no different to changing other things like your bank, or electricity supplier . But if customers are unhappy enough they will change.

And I've no idea what you're on about music. iPhone users can buy music anywhere they like.

[Little Poppet]

Brand Loyalty

BRAND loyalty, FORCED or otherwise - call it what you want - the consumer knows what they will get with Apple, and these people want what Apple are offering.

You can call them all manner of names: iSheep, Mactards whatever (i'm not one of them BTW), but making the point about being 'locked-in' to a single device is not a major concern, nor an important factor to the consumer in general.

You make this mistake, by taking the tech-enthusiasts POV - a very small minority indeed.

The fact is, iOS is very good. It works slickly and smoothly, the hardware is very good (in general!) and the apps are plentiful and as good, if not better than Android equivalents. It also helps that iOS and Apple in general is consistent on all levels.

Android, on these terms is an almost complete fail. The thing is, this is what is important to the masses - not some silly fairy tale about 'openess' and the ideas of 'choice' that this suggests...

[Anonymous Coward]

doubt that one

I doubt that there is no brand loyalty.

After all the quality the custom manufacturers differs a lot.

- HTC got the best one

- Samsung is ok

- Motorola and Sony Ericsson are really bad so far

And the main point is... if you find yourself not satisfied with Apple or RIM you are pretty much screwed.

[Wize]

There is a bit brand loyalty

Get a nice phone from one of them and you'll stick with them the next time.

Look what happened when HTC said they wouldn't update the old desire phone. Everyone got upset and they changed their mind. More people likely to stick with them in the future now. If they hadn't, people would have walked.

Glad I got my Desire Z before they dropped their keyboard phones and lost their thumbwheel on the front of the rest of them. Might make me consider someone else next time...

[Anonymous Coward]

References?

Where did the 1% marketshare presumably for Windows Phone 7 come from?

Not questioning it, just wondering what the source was as I haven't seen any worldwide figures myself. Last I was something from Nielsen's for the USA.

[Ralph B]

Canalys via The Inquirer

http://lmgtfy.com/?q=Windows+Phone+7+market+share

[cloudgazer]

from canalys

The last canalys survey gave windows a 1% share in shipmentsI believe.

http://www.canalys.com/newsroom/android-takes-almost-50-share-worldwide-smart-phone-market

[Adam Nealis]

The operators long to "fork" Android

Before Google "forks" them?

The race to the bottom continues ...

The h/w manufacturers who maintain your OS by requiring you buy a new unit shouldn't be too peeved.

[Miek]

Brand Loyalty, what about a bit of customer loyalty?

"Samsung scores highly in user satisfaction surveys, but buyers remain promiscuous – once they have their smartphone, they feel they owe the manufacturer very little gratitude. There's no brand loyalty."

If manufacturers kept up-to-date with the firmwares, I think they would have their brand loyalty.

[Anonymous Coward]

Too right

I won't be going near Motorola any time soon for exactly this reason. Whilst the Milestone is a great piece of hardware, the way they have behaved with the Android 2.3 update (and I hear they are already repeating with the Xoom) is a perfect reason to try another manufacturer.

If a manufacturer actually gets a handle on this and provides updates over the typical life of a 2 year phone contract people will notice and I think you'd start to see some brand awareness and loyalty.

[Sam Liddicott]

yup

Motorola are down in my mind as a bunch of liars for years to come. On their "promise" I got a friend to by a Dext with ancient firmware on the grounds there would be an update.

Motorola have made a liar out of ME. I don't need to give my money to companies like that.

HTC have only just stopped playing locked bootloader games (and only on some phones0 - these games were keeping me disloyal to HTC, despite them being best on the market, despite me knowing personally some of their team from my own work on their phones.

Currently I am loyal to ZTE - because they give good value with no silly games. A little slow with the GPL kernel source - but they, they all are.

[Asgard]

Keeping customers happy is very important.

@Miek, I totally agree about keeping customers happy.

But this bit from the article :"Expensive efforts to differentiate their Android handsets from others are turning out to be a waste of time"

That I totally disagree with, because it completely over looks how customers are reacting to the products. For example the success of the Galaxy S shows this article is wrong. Also as the most popular mobile app category is mobile games, (as mobile is after all flooded with games) its therefore hardly surprising users often compare phones on how well they run games and the Galaxy S was very impressive when it was released for how well it done high end mobile 3d graphics. So even if a user isn't interested in games, they will still get to hear about how good a phone is from other users that are interested. Just look at youtube and see endless reviews of the potential of the Galaxy S. Its very evident a lot of people are impressed by its gaming performance and that has driven it to become the most popular Android mobile phone so far. (Between Galaxy S 1 & 2 its already got over 18 million sales. Also Galaxy S 2 achieved 3 million sales in 55 days, so that shows brand loyalty to the Galaxy S brand).

Brand loyalty takes time to build. Dominate players in the Android market like Samsung and HTC are starting to emerge, but they will only keep customers if they keep them happy, as Miek above said. As soon as the companies do something wrong, their customers will rightly move onto another company.

As for the failure of some companies to earn *as much money as they would like* from Android (which is what they really mean), they only have themselves to blame. But as usual with bosses, its far easier for them to blame others than look to themselves, to see where to make improvements in how they run their companies, to keep their customers happy.

[Anonymous Coward]

Why don't they make money?

The likes of HTC and Samsung make a lot of nice phones. One or two are even more expensive than an iPhone (sim free).

If Apple can make money at this price point, why can't the likes of HTC & Samsung?

If they really can't make money then who is?

Microsoft? Well HTC pays them for every one sold so perhaps they are taking a large percentage of the profit per unit.

Or are they making the cheapo Android phones at a loss? That would be interesting to investigate.

[samster]

Dont' get your facts from this spurios research

Just look at a financial website to look at HTC's revenues over the past 2 years... they ARE making shed-loads of cash through Android. SE are also seeng a turn-around.

[David 164]

They did make money

HTC did make money, they made about 300 hundred million dollars last year. Samsung also made money. I believe Sony Ericson actually made a profit or are least turning it business around using hand sets base on Android. (It loss money for years.) and Motorola have all turn profits and improve the company by switching all of it efforts to Android.

[SteveBalmer]

ssshhhh

don't say that, you totally destroy this articles credibility (not that it had very much)...

[Si 1]

Re: Why don't they make money?

I would guess it's a number of factors.

1) The Android sector is very competitive with lots of handset manufacturers releasing new models all the time, so profit margins are probably being squeezed as they compete with each other on price and the R&D budget is being hit hard as they constantly strive to keep up. Apple have somehow avoided being caught up in all this and seem to be marching to their own beat.

2) While the Android OS market share is at ~50%, that's got to be divided up between HTC, Samsung, Sony Ericsson, Motorola, etc. Collectively Android sales are huge, but no single handset manufacturer is seeing all that cash and so they aren't getting as much out of economies of scale as Apple probably do. Plus there's all those patents to pay for now...

3) Apple make shit loads of cash from the App store and have a monopoly over it. As I understand it, most if not all handset manufacturers have their own app stores, but people aren't required to use them and can use competing ones from Amazon etc. So again, the handset manufacturers are only getting a fraction of the market.

I guess the handset manufacturers are just hoping that as the market gets bigger they'll sell more handsets and that if they're lucky they'll be the last ones left standing and will get a much bigger share of the pie in the future.

[cloudgazer]

a few are more expensive than the 3GS

But none of their handsets are more expensive than the iPhone 4, last I checked. HTC has an ASP around $300 for example, so it's probably not selling many of it's premium $450+ phones. We don't know what Samsung's smartphone ASP is, but most likely it's lower given the large number of low end Bada phones they're shipping.

[dotdavid]

What?

"once they have their smartphone, they feel they owe the manufacturer very little gratitude. "

Mainly because the manufacturers screw up their handsets with buggy bloated operator-and-manufacturer-specific apps, interfaces and ad-ware.

Tip for the manufacturers - you want brand loyalty? Install your interface as a removable component. Make it fast, or buy one of the third parties that already make a fast UI and use theirs. Let people uninstall the stuff they don't need. Keep your phones up-to-date software-wise for the length of an average contract. Then your customers will feel some gratitude towards you.

Oh, I forget - the end-users aren't your customers are they, the Operators are... well there's your problem.

[Arrrggghh-otron]

Interfaces...

I hate the different interfaces that get put onto Android. I've even been put off getting a Samsung or Motorola Android device because of the freaky interfaces.

PC manufacturers don't (generally) install their own UIs with Windows, why should smart phones be any different?

[Anonymous Coward]

It's all about "who owns the customer"

Back in the olden days PC manufacturers used to customise Win3 to some degree (e.g. boot screens), and customisation on Windows (e.g. desktop background) has never gone away, it's done in some vague attempt to try and "own the customer" and not let Microsoft have them. This obviously failed.

OEM Android phones need some kind of differentiation, otherwise their makers think that Google "owns the customer" which is why they do this stuff, they do not want to be generic, they're onto a loser though.

[Anonymous Coward]

Why

Why would they?

"Keep your phones up-to-date software-wise for the length of an average contract"

Because they are running android and not taking a slice of the App pie (other than their own crappy stores), why would they care about you? They need you to buy the latest shiny handset every 6 months to a year or they lose revenue!

In fact the malware//virus thing is great news for them, the average user is not going to put a custom rom on their phone, and the handset manufacturers will say upgrade to get the latest version of android for the latest security, so you need a new handset. Or you could install a virus app, which will eat up your power and memory, requiring you to get a new handset in 12 months.

Hardware manufacturers need to keep you buying hardware, no motivation for them to keep you on your "old" 3 month handset.

[dotdavid]

@Why

Well that's fine, but equally if they don't seem to care about me (by not updating the phone's software) why should I care about them enough to buy another one of their phones again? Especially when (no thanks to them) there is a lot of competition. Brings us right back to why they're at all surprised about the lack of brand loyalty...

[Ralthor]

Brand loyalty?

Where do you get the idea that there should ever be such a thing as brand loyalty? Call it quality loyalty and you will be onto a wiinner. Consistently produce quality and people will give you their hard earned sheckels. Produce crap and people will give you the chance to bitch and moan about brand loyalty.

[lurker]

No brand loyalty = good thing

This is called "competition" in a "free market". Hardly a new concept, not quite sure why the author sees this as an issue. Obsessive brand loyalty such as that engendered by the fruit factory is the exception, and not the norm. I want to buy a product, not a way of life, thanks.

[Anonymous Coward]

No brand loyalty

Means no loyalty to your customers, therefore no updates to latest versions of your OS. Not such a problem for your average el reg reader, who could apply a ROM from the net, a problem however for the average mobile phone user who expects their phone to work, with no AV running, and with updates.

[Microphage]

The operators long to fork Android

"buyers remain promiscuous – once they have their smartphone, they feel they owe the manufacturer very little gratitude"

What are buyers supposed to do in order to demonstrate "brand loyalty" and what difference is it to the hardware manufacturers as to what OS runs on their smartphones. And your article is a little confusing, is it a good idea or a bad idea for the hardware makers to differentiate their handsets from the others eg fork.

"Expensive efforts to differentiate their Android handsets from others are turning out to be a waste of time .. The operators long to fork Android"

--

Four negative Google stories in a row on the front page, come off it elREG editors ..

"Researchers poke gaping holes in Google Chrome OS"

"The curse of Google?: Android licensees fail"

"Google failing to pay Android developers"

"Mobile app malware menace grows: Android users at front line of attack"

[Chad H.]

Meh

If you don't wan't negative Press - don't do anything worthy of Negative Press.

Google deserves scorn for this. If the Patents are phony maybe they should have spent their time and money challenging them, noy trying to buy them.

Given that El Reg isn't on Apples' invite to press confrence list, much less Steve's Christmas card list, I think you're overreacting.

[Rob Daglish]

@Samster

Yes, android market is simple to use. But if you put an app in Apple's AppStore, it appears on all devices - iPod/iPhone/iPad. Not all applications appear on all devices in the android market as not all devices are capable of running all apps. As a techie, I get that, but I would hazard a guess that most of my users won't grasp that, because it hasn't been explained to them - and if your phone doesn't display "AngryBirds", but your mate's does, it's gonna look like your phone is cr@p, regardless of how good, bad or indifferent it is.

And that's before you start not being allowed to use the market on devices because they don't fit into one of google's pre-defined boxes...

[Anonymous Coward]

phones

Smartphones - the new home for the fags that argue about browsers.

[Bassey]

Re: No Brand Loyalty

"Not such a problem for your average el reg reader, who could apply a ROM from the net, a problem however for the average mobile phone user who expects their phone to work, with no AV running, and with updates"

I'm not sure I agree with this. I know half a dozen people who have bought Android phones in the last couple of weeks and none of them would "expect" updates. They wouldn't even know what an update is. Consider how many Windows users get pissed off when they turn their PC on and it takes five minutes to boot up because windows is installing "yet more updates". Yeah, I know, those are "patches" but users don't understand the difference. They buy the phone that is in front of them in the shop. They don't give a damn if it contains v2.3.3 or v2.3.4.

Only we care about shit like that and we're freaks.

[filholder]

No brand loyalty???? To samsung ?Of course not

I think you will find most people who use a HTC say 1 of two things excellent device, good support, well built or I am bored of android I am getting an iphone next time. I think HTC has developed intself into a premium smart phone manufacturer because they give people things they care about build quality and updates.

Samsung on the other hand has had a different tactic, lets release a new phone every week, sod the build let's just go with features. I know big screen, dual core, more ram, very slim. They seemed to have released so many fing devices they cantrember them all let alone possibly keep them all updated and build is, except for the high end stuff, quite poor.

My experiences are of work mates here in Spain, all teachers, in the last year almost everyone has moved over to smart phones. About 80% android, 10% iphones (way to expensive on contract here) and 10% Samsung Waves on the Bada platform.

HTC are really cleaning up here and cos their build is good people are going back for more second time. They are the old Nokia of the smart phone age.

Samsungs support and build are crap. Try my 16 month old Galaxy Spica, it seems cos me and my Mrs missed an updated which was issued on New PC Studio (1.6 to 2.0) we now cannot updated to 2.1 on Kies. Tried in 3 times on 2machines never picks up the bloody update and Kies doesn recognise the phone. If your going to change your F'ing software support a currently sold phone you arses. Woeful, and Bada is a terrible platform in terms of apps. What were they thinking

[Rob Dobs]

Article makes vauge claims not backed up by facts

OK, so some some of the Me-to Android vendors apparently are yet to make an Apple sized killing on Android.... However,

A very quick glance at the graphs linked to in the article appear to show that both HTC and Samsung made roughly 1/2 $Billion in profit EACH form their smartphones. How in the world does the author draw conclusions that Android is not profitable from his own linked data?

Even if I am looking at the size of their profit bar wrong, surely they each made in the HUNDREDS OF MILLIONS of dollars.

Let print that out: $200,000,000 to $400,000,000

That a lot of damn zeros and a profit that many companies would literally kill for (really some business are shady).

The writer had a good idea in discussing the risks of other vendors ability to hop on and make a profit, but then widely swings into his own speculation drawing conclusions that don't appear to be supported by the evidence. The article should have focused more on how it appears only the top two vendors appear to be making a lot, and ironically (sarcasm - it actually appears obvious) HTC and Samsung have a reputation for making quality hardware in other markets as well.

Will users switch between Samsung, HTC and even some other brands depending on features they want? - sure but as long each company makes good products they should (pick up and loose) keep a still very profitable amount of customers.

How about some journalistic integrity - come on... admit it ...you own and I-phone don't you?

And I bet it just steams your clams that Apple is no long the hot #1 cult group that you are a part of. Its OK, its an easy fix... just go buy an Android phone, I'm sure they will make one in a nice white case soon enough. And then you can be "cool" again.

For my full disclosure: I will stick with my (old) Palm Pre

Does videos, web, encryption, MS docs, excel etc, has cut and paste, and I can even play angry birds on it (if I wanted to.) Oh yeah it only cost me $50 for two of them, though you could probably get a new one for free. And it fits in a small shirt pocket. (WebOS is really easy to use

BTW, never had to look up how to do something I wanted to do "it just works".

[Brewster's Angle Grinder]

quod eos nutrit eos destruit

I expect to get handed my arse on a plate here, but why isn't "quod eos nutrit eos destruit" translated as "what nourished them, destroyed them"? Aren't those verbs in the perfect tense?

(I did Google the phrase, but all roads lead back to Rome^H^H^H this article.)

[stim]

WP7

Doesn't matter about Android - Nokia will return to rule the roost with WP7 at the helm ;)

Roll on Mango!

[SplitBrain]

One Windoze comment..says it all really

What you been smoking mate?

Ah...just looked at your post history, Mickeyshaft troll...

My own 2 cents, I am a very happy Iphone 4 user, I waited until the 4 as I didn't think the 3G/3GS were quite there yet. Android was a serious consideration but when I spent time (too much of it...) looking up the platform, the fragmentation in OS versions, the need to install custom ROMS to keep up to date, the poor catalogue of apps, no equivalent to podcasts (I use this extensively now, for BBC4, comedy, Music set's, Sport...and its all FREE), no app2sd at the time, the fragmentation in hardware specs causing some apps to not work on some phones.....

The list went on and on, and that was a year ago, I look at it now, and it's still the same shit! None of it (apart from app2sd) has progressed, same old problems. This leads me to believe these problems are inherent with the platform, if it aint fixed now it never will be.

Thats why I won't ever buy android. Not while Apple are making a product that I am completely happy with in every way.

[stim]

thanks!

thanks for spending the time to read my post history! i'm sure you can conclude from all of it that i am definite windows fan!

...crack, by the way.

[Martin Lyne]

Brand Loyalty

Providing value and function gets you (a measure of) brand loyalty.

Peer pressure and social "status" items gets you socailly enforced loyalty.

Restrictive systems and lock-in gets you enforced loyalty.

Spot which one could be actually considered "loyalty".

It sounds like people are complaining that Android encourages competition between manufacturers. People move to the best deals.

Welcome to Economics 101.

[Dave Murray]

Brand Loyalty?

Why should mobile phone manufacturers expect brand loyalty from me? I don't have brand loyalty for any other product or service. Make the best combination of the features I want at a price I like and I'll buy your product. If you still do so when I require a replacement then I'll buy from you again.

Buying something just because of the manufacturer's name is stupidity in my opinion.

[Anonymous Coward]

The Power of Brands

So you research every single thing you buy meticulously, never using brands as shortcuts? When you buy bread, do you look at the nutritional information on the back and compare them, weighing up the various health benefits of white vs brown bread, the price per gram of bread, etc.? Or do you just buy the same bread every time because it's what you always get and it's always worked for you?

As hard as it may be to believe, not everyone spends hours reading tech blogs and manufacturer's spreadsheets. A phone is just like any other consumer purchase. You buy Hovis because Hovis has always been fine for you in the past. You buy Nokia because Nokias have always been reliable for you in the past. You buy Ariel Non Bio because you know exactly how much to put in, how long to leave it for, to get the results you expect. It's not feasible to research everything in depth on a case-by-case basis, and for most people it just doesn't matter. Tell the average Joe who has just bought an HTC Sensation that the Galaxy S2 has a better screen, thinner, higher capacity battery, etc. and they won't really care, so long as their phone is 'good enough.'

The fact of the matter is that most Android phones, to most people, look the same. Hell, most smartphones look the same - touchscreen 3.5-4.5" slabs. Sure, some have physical keyboards, some have capacitive buttons as opposed to physical buttons, but try and get a normob to tell the difference between an HTC Desire S, HTC Incredible S and an HTC Sensation and they'd be hard pressed to do so other than 'this one looks a bit bigger than that one.'

[Glenn Amspaugh]

Simple fix

Just sell at a loss and make it up on volume. Just like those new CD thingies, that are full of loud. I think I need a beer.

[Charlie Clark]

Too simplistic

Yes, the manufacturers have to work harder to be distinctive. This is the flipside of not having to build their own OS. HTC, Samsung and Sony Ericsson seem to be doing a reasonable job so far of providing distinctive offerings with sales to match. Of course, they are threatened at the lower end by stuff from ZTE, and others but let's not kid ourselves - over time every manufacturer is who doesn't continually innovate and provide value. This is why Apple is getting all tetchy and launching patent claims, especially in the eco-system that it really wants which is tablet and post-tablet, which I'm just making up to suggest keyboard devices running on beefed-up tablet chassis. Android may well go two-tier with the three I mentioned above and Motorola continuing to pay for preferential treatment from Google with last season's version of the OS being open sourced as a way of speeding up the version cycle. Not sure if Google really wants all the service business built on top - that really would be asking for anti-trust action.

Android phones are good enough. Actually they're much better than that. People have them in their hands and to all intent and purpose the high-end ones can't be told apart from the fruit-flavoured ones.

For Android the brand loyalty will be built first of all around the OS - "hey, I can my stuff with me" but customer service and build quality will also be considered, just as they are with cars. HTC has become very good with aluminium and Samsung and Sony Ericsson have some excellent display technologies. In a sense, Android is a dream come true to integrated consumer electronics companies as, if they get it right, they get to maximise the value out of their own commodity business.

[PaulR79]

Brand loyalty is ajoke

Why should anyone have loyalty to a brand when almost all have shown that as soon as they have your money they only care about shoving their next product out and selling it to you? Having brand loyalty is as stupid for consumers as it is for businesses. They're out to make money, we're out to get what we want.

[scarshapedstar]

Stick a fork in it

Customers are just begging for more vendor-specific crapware and crippleware!

Anyway, seems like HTC is winning, probably because their handsets are so nice. The only drawback is that a lot of people, myself included, think they all look the same. I'm pretty sure I will stick with them because I like the feel of the capacitive buttons and love the official stance on unlocked bootloaders. In general they seem to have built up a nice brand identity. Motorola is dead to me (basically everything I like about HTC, Moto does the opposite), which is a shame, because every phone I used from age 15-25 was a Motorola. Samsung I almost like, but every one of their phones seems to have some baffling design flaw (only two buttons? NO SD CARD?!) that turns me off. LG... I just think of LG as cheap crap and I don't know why. I might be wildly off-base here.

tl;dr Consistency breeds loyalty. Which probably drives the marketing/targeting people crazy, but too bad - seems to work for Apple and HTC.

[Irony Deficient]

Romanes eunt domus!

Brewster’s Angle Grinder, “quod eos nutrit eos destruit” is in the present and is correctly translated in the article. To put it into the perfect (well, nutrio in the pluperfect and destruo in the perfect, presuming that the nourishing was completed before the destruction was), it would become “quod eos nutriverat eos destruxit” — “what had nourished them has destroyed them”.

[Anonymous Coward]

MMMMmmmmmm........

Smartphones.....a bit like arseholes....everybody will have one!

Anonymous because I use a HTC with WM6.5 (and, I find, it works just fine)

[kmitchell3]

Sales not what it seems

I'm a taxi driver in Australia. and I decided to do my own survey of customers with smart phones that were responsive to having a chat. All had iPhones except 4.

Of the 3 customers with Samsung iPhone lookalikes, 2 wanted to buy an iPhone but were unable due to lack of availability (1 needed a phone immediately and regretted buying it because the UI was not as easy as an iPhone, the other was told by the salesman that he would have to wait at least 6 more weeks). The third said it was not really responsive but was looking to upgrade to the next Samsung, however she would never buy an iPhone because she heard that they froze up all the time.

The fourth with a Sony hated it and wished he had bought an iPhone.

All the other customers had iPhones (numerous customers), and without exception, loved them. One said she hated phones until she bought an iPhone, and now she loves it. Another had upgraded to a 4 from a 3GS and when the contract expired would upgrade to the newest version.

In summary, all with iPhones loved them. 3 out of 4 with other smartphones would rather have an iPhone. 1 would never buy an iPhone.

That is the extent of my survey, but I think even with the small sample size, it says a lot.