The more I study the mobile landscape the more it becomes clear that many companies are competing for what is arguable the most important device for global consumer–the mobile device. Winning mobile, and by that I mean being sustainably relevant, is the battle that is happening as we speak. Those who entrench themselves as leaders in mobile will reap rewards. However, this will be the most cutthroat and competitive sector for the foreseeable future. Who wins these battles today will likely have huge advantages tomorrow. Battles will take place on three vectors — hardware, software, and services — and they are more related than many realize. In this article, I’ll focus on the hardware, and more specifically, the Android side of the hardware landscape/ecosystem.
All vectors will be extremely competitive, but from a hardware standpoint what area has more churn than mobile? Consumers will change devices on a yearly or bi-yearly basis. Meaning every two years, new potential customers emerge. In no segment of mobile is this more of an opportunity, and challenge, than for Android hardware OEMs. I’ve stated time and time again that, in Google’s ecosystem, Android customers are loyal to Google — not the brand on their smartphone. I can just as easily go from Samsung, to HTC, to LG, to Huawei or ZTE, or any hardware OEM who has the best device to meet my needs whatever they may be at the time. As long as the OEM ships Android they will be competing for new and existing customers every year. This is actually a good thing. For a brief period of time, the PC industry saw an average 2-3 year replacement cycle of PCs. During this time, it was enterprises, not consumers, engaging in this churn. During this time, we saw rapid advancement of hardware. Once the lifecycle extended, then we saw less innovation happen in PCs. Smartphones will remain in the 1-2 year replacement cycle for most people, which means in the Android ecosystem hardware innovation will be key to keeping and winning customers.
This is where Google must step in. Google must advance their OS in a way that allows hardware OEMs to push the bar and innovate. Whether that be around 64-bit support, new display technology, optics, and more. All things I am anxious to see how Google addresses at their developer conference this week.
No single Android OEM is safe. None can rest on their laurels. Today’s underdog could be tomorrow’s leader. Just like in the chart above, Samsung could be the new Nokia and see their share go from majority to minority. That is what makes it exciting.
The key for hardware OEMs who wish to win mobile is to come to grips with the reality that, at least for now, Google is their partner not their enemy. This will be a very hard pill for many to swallow. Until the role of the OS changes, this will be the reality. I suspect for some OEMs, Android is used but the relationship with Google is kept at arm’s length. For others however, Android could be their rise to power and global relevance.
Of course, this is where we are today. This is a battle still very much in the early stages. When it comes to the now over one billion Android users, it is still very much anyone’s game.
The Mobile Gateway
I say “winning in mobile” because I have a sense it is the gateway to other consumer electronics. From a hardware standpoint an OEM must be concerned with this reality if it becomes true. Winning the mobile experience could be the thing that leads other hardware vendors’ ecosystems. Take Xiaomi for example. A company I love to study and talk about but one that could easily be gone in five years or dominate the landscape. They sell TVs (and TV set top boxes) running Android. They sell routers and they sell tablets now. All this is possible because of their relevance in mobile. Now let’s look at Sony. A company whose best business as of late is their optics business. The TV business is suffering, they shed their PC business, and PS4 is a bright spot but still has a long road ahead. Here is a company struggling in mobile. Yet one which still has an opportunity in mobile. Could it be that for Sony to save their TV business they need to win in mobile? I think an argument can be made for this angle.
There is a centrality of mobile and owning some share of the mobile engagement, either at a hardware, software, or services layer, is intertwined with consumer electronics going forward. Some of these companies may own more of the hardware, software, and services endpoints than others but it is still related. Right now the battle is for mobile. For most of the consumer tech companies we like to talk about this is the central battle ground. The foreseeable future represents monumental challenges and monumental opportunities within the Android ecosystem.