Google Breathes Life into Android
with 34 Partners and a Press Release

| November 9, 2007 | Wireless | Competitive Intelligence Special Report

| Analysts: Avi Greengart, Bill Ho, Emma Mohr-McClune

Event Summary

On November 5th a broad alliance of leading technology and wireless companies joined forces to announce the development of Android, an open and comprehensive platform for mobile devices. Google Inc., T-Mobile, HTC, Qualcomm, Motorola, and others have collaborated on the development of Android through the Open Handset Alliance, a multinational alliance of technology and mobile industry leaders. An SDK preview will be available November 12, and Android-powered phones are expected in H2 2008.

Analytical Summary

Current Perspective

Wireless Services - U.S.
Slightly positive on Google’s Android/Open Handset Alliance (OHA) announcement, because Google’s involvement gives a kick in the pants to the global wireless status quo. Still, this event presents a quandary for carriers to consider. While they want to appear open and pro-user, they still need to protect (in the near term) the revenues associated with voice and walled gardens that keeps the business going. T-Mobile and Sprint are onboard, which stands to reason, as they have the most to gain given their underdog status.

Mobile Devices
Slightly positive on Google’s Android/Open Handset Alliance (OHA) announcement, because Google’s involvement gives the OS a resource-rich and relatively neutral parent. At the very least, Android should wreak major havoc with other mobile Linux coalitions, such as LiMo, and handset vendors seeking to build developer communities around their own mobile Linux variants, such as Palm. There is no question that an open source mobile OS with no application development restrictions and a significant installed base would be the holy grail for application developers. However, that last part -- the significant installed base -- is questionable for now.

Wireless Services - Europe
Neutral on Google’s open-source Android operating system (OS) and its early advocates in the form of the Open Handset Alliance (OHA). This event should calm operator’s near-term fears of a GPhone challenge in Europe, with arguably more immediate significance to the handset manufacturer, OS and app developer communities.

Market Impact

Wireless Services - U.S.
Moderate on the wireless services segment, because the entire U.S. carrier community is not onboard yet, as questions remain concerning the potential impact to the carriers’ walled gardens. Walled gardens represent a nice revenue stream in the form of applications and downloadable content (e.g., ringtones, wallpapers, music/video tracks, etc.), and the potential relegation to being insignificant “bit pipes” (similar to their wireline equivalents) does not settle well with carriers. Ad-based revenue sharing may offset this fear, but it is currently still in the discussion phase.

Mobile Devices
High on the smartphone market over time, because if OHA members live up to their pledges and ship actual products based on Android, it would provide a significant alternate platform to today’s mobile OS choices and other mobile Linux coalitions that have never gotten off the ground. It is less clear that the industry needs Android to spur the creation of killer applications; Windows Mobile and Symbian already provide the ability to write applications leveraging VoIP, social networking, or anything else that developers can dream up. Google will need to use the Android ecosystem, or, more likely, shared advertising revenue, to remove the real bottleneck in the chain: carriers.

Wireless Services - Europe
High on the European mobile services market over time, as Android could provide a significant alternative OS platform in the mid-term. On face value, Android appears to hold good news for mobile operators – its open source nature will allow carriers to pick and choose applications to fit their own strategic prerogatives, as against the closed, highly proprietary aspect of the iPhone. What’s more, this initiative could provide a shot in the arm for new killer application innovation and lead to cheaper, more sophisticated smartphones. However, nobody suspects for a moment that Google is serving anyone but itself.

Perspective

Competitive Positives and Concerns

Recommended Vendor, Competitor and End-User Actions

| Client access - Wireless Services - U.S. | More information
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