Google's Android: Will It Shake up the Wireless Industry in 2009 and Beyond?

Describe the general characteristics in the wireless industry

Threat of new entrants:

There are only few to none new entrants, as the technology is very complex.

Bargaining power of suppliers:

The handsets makers can choose between 8 operating systems ⇒ High

Bargaining power of the costumers:

Due to the high switch costs, it is low.

Rivalry within the industry:

High, because there are already companies which have sold a lot of phones including operating systems. (IPhone, Blackberry, Symbian (63% market share)...) And all companies have the same strategy to create a store with many apps for the better user experience.

Threat of Substitutes:

There are eight, common known operating systems.

The demand for mobile phones has an above average growth of 13,5%, the demand for smartphones growth as well.

The carriers have to make hefty investments into the infrastructure. That's way there are less carriers year by year.

What is Android and how does it differ to other OS?

Android is an operation system for mobile devices. However in contrast to other operating systems, like Blackberry and iPhone, Android is an open source Linux-based system. That means it is not only linked to phone models of one company, but every company can use Android. Moreover there are free development tools for everyone who wants to create applications for an "Android-Phone" and no access fees for the SDK. In contrast to Symbian the development environment of Android is easy to understand.

Consequently carriers are not limited to certain application as they are when using for example "Windows Mobile".

From the costumer perspective there should not be a huge difference between IPhone and Android but from the perspective of developers and carriers it should be a completely new environment.

Why is Google investing in Android and when will it be successful?

Google's main goal is to make money out of advertisement. As the mobile phone has much more insights oft the owner's life and his whereabouts, the ads on a mobile can be more targeted than on a desktop. More targeted ads generate more clicks and consequently more profit. Moreover the growth of mobile subscribers is above average. It was predicted that there will be 5.4 billion mobile subscribers in 2009, that is a growth of 60% compared to 2007.

To realize this goal Google needed a change in the computing environment, so that people could change the way they access and share information. With Android Google invested into an operating system, which not only enabled every developer to create an application free of charge, but also improved the user experience with those applications. With Google adsense every developer can make profit out of the ad placed in his app and Google takes his share.

There is no concrete point in time, with which the success of Android can be measured, but there are aspects which can lead to a success: number of users, number of handsets makers, which use Android, the number of apps for Android, further development of Android by developers.

For Google Android will be a success as soon as apps of all operating systems show ads.

To what extent are stakeholders in the wireless industry aligned with Google? What impact would their alignment or misalignment have on the viability of the OHA?

Mobile operators align with Google in terms of the best phone for costumers. As Android is open to all application the costumer has a lot of advantages compared to other operating systems.

One advantages for example is that he can use Skype and Face time, which reduces his costs. However the mobile operator loses revenue, if costumers take advantage of Skype and Face time. If the 7 members of the OHA, which are mobile operators do not find a solution for this problem I see the cooperation breaking apart.

Software Companies need people to use their software, in this case, apps. However if they create their apps for free they must earn their money with advertisement. Since Ad words is strongly used for advertisement on computers I do not think that is a problem. However if Google's strategy is not working out the alliance will break apart, as there are 10 Software Companies in it.

How likely will Google be a Cross Boundary Disruptor for the wireless industry?

A cross boundary disruptor is a firm, who enters a new, stagnant and populated industry with an innovative product and makes high profits. The question is if Google, who enters a new market with an innovation, can make high profits in the wireless industry.

External perspective

On the one hand there are only few to none new entrants. Although the power of the handset makers (suppliers) is relatively high they are no threat for Google as the company cooperates with four handset makers. The bargaining power of the costumers, due to the high switching costs, is low. This is an opportunity and a threat. If all 4 handset makers of the OHA switch to Android, it is not likely that they go for another operating system in the future, as developing costs for drivers are high. However other handset makers, who already developed drivers for their operating systems are not likely to switch to Android except if they want to save money.

On the other hand the rivalry within the industry is high, because there are already companies which have sold a lot of phones. (Apple, Blackberry,...) Furthermore substitutes like IPhone have to be considered.

Internal perspective

Google's strengths are the alliances with big handset makers, software companies and carriers. The already established brand name, because of the search engine, Gmail and Youtube is a strength as well. Google will be a cost owner with Android as there is no other well-known operating system, which does not cost. Moreover small and new developers will chose Android over other operating systems.

A weakness could be that carriers reject Android as some