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Is Google's Android One a game changer or a gamble?

16-September-2014
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Is Google's Android One a game changer or a gamble?

In an increasingly device-driven demographic, mid-segment mobile phones are ruling the roost. With indigenous brands Micromax, Lava and Karbonn locking horns with global brands in a battle for marketshare, Google has decided to take the fight a notch higher.

In an initiative aimed at boosting sales in key emerging markets through cheaper prices and better quality software, Google, on Monday, unveiled its first set of Android One low-cost smartphones, partnering with Indian hardware vendors Spice, Micromax and Karbonn. The three phones will be available online on Flipkart, Amazon and Snapdeal and via Reliance Digital, Croma and The Mobile Store, offline.

Samsung’s woes

Google's partnership with the three low-cost smartphone makers, is a clear threat to the likes of Samsung.

According to global mobile operators’ industry body, GSMA, smartphones will account for two out of every three mobile connections globally by 2020. The study predicts that the number of smartphone connections will grow three-fold over the next six years. With such numbers at hand, the so-called crowded market still has enough space for the smartphone battle.

Samsung still is one of the front-runners in the country’s smartphone market, but it is losing ground. Its second-quarter market share tumbled to 25.3 per cent from 33.3 per cent in the first quarter, while Micromax jumped to 19.1 per cent from 16.7 per cent. Karbonn has 5.9 per cent.

The impact of Google’s latest move is yet to be seen. But with devices priced between Rs 7,000 and Rs 10,000, it is likely to put Samsung under tremendous pressure. 

While Samsung sells quite a few low-cost smartphones in India, most of its recent marketing initiatives are focused on high-end products. This too might be contributing to its shrinking market share. Motorola, Xiaomi and Asus have already grabbed a considerable chunk of the mid-range smartphone segment.

The brand is facing a challenge on the global front too. In China, Samsung’s biggest market, it has increasingly been losing share to Xiaomi.

Samsung was unavailable for comments for this report.

Level-playing field

Consumers were caught by surprise when foreign brands Motorola and Xiaomi invaded the budget smartphone early this year. The Android One project is expected to pitch local and global players on a level-playing field.

According to Google, the reason why it chose India as its centre to unfurl its plans globally is that in the world’s third-biggest and fastest growing smartphone market its initiative is expected to carve up a robust share of the smartphone market.

Under the Android One programme, Google partners with local phone makers to create and sell affordable yet feature-packed Android phones, providing hardware reference boards and software support to partner vendors under the programme.

Google will also have Wi-Fi-equipped mobile demo trucks called 'Showroom on Wheels' in 600 locations across 20 cities to allow potential consumers to experience the Android One phones. Thirty thousand Android One ambassadors will spread the word about the phones.

Airtel will offer 200MB of free data per month for app downloads and updates via Play Store. However, Google clarified that it is not paying Airtel for the subsidy and other telecom operators will also join the programme in the near future.

Google’s ‘play’

Google is also launching support for Google Play News Stand in India with 30 Indian publications on board.

Sundar Pichai, Google SVP (Android, Chrome and Apps), said, “India is one of the fastest growing Android markets globally. In 2013-14, it saw more than three-times growth. Internet can have a transforming effect. The intent is to take Internet to the next billion people.”

He pointed out that the Android devices will get direct software updates from Google and will get early access to Android updates just like Nexus devices. However, Google “will not pump in any marketing money and will not support OEMs to market the phone,”he added.

Acer, Intex, Lava, Panasonic, Alcatel, Xolo, Qualcomm, Asus, HTC and Lenovo will also join the Android One programme, said Pichai.

With Google betting big in terms of both money and expertise to provide more Indian users with Android smartphones at low costs, the untapped section of the mid- and entry-level markets will witness some of the fiercest price wars. This could also edge out smaller players.
 

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