Next year will be a pivotal year for the Android platform. Between 50 and 75 new Android phones are expected to be announced at the Mobile World Congress in February and version 2.0 also has some exciting new features. While the platform is gaining traction, some troubling developments are posing real risks to the long term success of Google Android. These risks are exemplified in the aggressively promoted Motorola Droid phone. The Droid OS is an enhanced version of Android, which leads the platform down the fragmentation path. Also, the device launched on the Verizon network includes a Google navigation application that puts Google in direct competition with developers…..developers they are trying to attract to their platform.
Fragmentation is not new to the mobile software industry and has kept many a mobile executive up at night. Google has taken steps to manage fragmentation but market forces are driving vendors like Motorola to enhance the platform to differentiate their products. Motorola has wrapped their entire strategy around their Android handsets and will make sure these products are well differentiated from other Android based phones. Further more, the OHA licensing terms do not require Motorola to contribute their IP back to the association, opening the door for multiple distinct Android operating systems battling for market share.
Along with the Droid launch, Google announced "Google Maps Navigation," a turn by turn navigation application which the company is offering free of charge. Turn by turn navigation applications have been some of the most successful in the mobile application market. TeleNav's announced IPO filing on Monday just shows how successful these 3rd party developers have been. Google seems to want in and has launched a free application that is a direct competitor to existing navigation developers. The folks at Networks in Motion are particularly upset by the Google Maps Navigation launch on the Verizon network. NIM is the software developer behind Verizon's successful VZ Navigator application which it gets $9.99 a month for; of course Verizon gets its share. In an interview last week, Steve Andler of NIM points out the difficult position the new Google app puts developers in and how they are jeopardizing the growth of the Android ecosystem. Steve correctly points out that if developers create a very successful application on the Android platform, Google is in the position to build competitive functionality into the core of the Android platform and give it away for free. This makes it very risky for developers to create innovative applications on a platform whose core code is controlled by a company that can and will destroy partners' business models. And, more importantly, VC looking for the 10X return will not invest in applications built on Android.
Over the years, Research in Motion has been very deliberate not to compete with developers within their ecosystem. By only incorporating commoditized functionality into its platform, RIM is not providing cutting edge applications that compete with their partners. This strategy reduces the risk to developers and provides economic incentive for them to create robust and advanced applications that help sell BlackBerry devices. Google is not in the device business but the advertising business and has not pursued the same strategy. Google Maps Navigation seems to be a very innovative application that will present stiff competition to mobile navigation developers.
It is quite interesting that TeleNav has announced an IPO filling as its market is threatened by such disruptive forces. The company does have an Android version of its application, putting them in direct competition with one of their platform providers. I am not sure I would want to be the investment banker selling that story.
