Google's Android ambition is to reshape the mobile industry, report says

A new study says Google faces big challenges in making its Android handset software stack a success.

But the biggest challenge may simply be the size and sweep of Google's ambition: Android is nothing less than an attempt to reshape the essential relationships, the very character, of the mobile industry, according to the authors of “Google Android and the Wireless Ecosystem: Will the Mobile Future be Google's Future?”

Android, announced in November, is an effort to crystallize a new set of relationships among network operators, content providers, platform vendors and handset makers, replacing the relationships that today define an inherently dysfunctional industry, according to the study's chief author, Philip Sugai.

Google's bet is that as the mobile Internet becomes more attractive, it will reap advertising revenues from mobile search and search-based services.

To achieve this ambitious goal, Sugai says, Google has to enlist the enthusiastic cooperation of these groups, convincing them that the success of the Android ecosystem will directly benefit all of them to the degree that they cooperate in making that ecosystem successful. The creation of the Android-focused Open Handset Alliance, now with over 30 members, is a first step in that process.

One especially intriguing observation is Sugai's speculation on the motive for Google's decision to bid for a spectrum license in the upcoming 700MHz spectrum auction. “We predict that Google will succeed in acquiring a spectrum license, and to use this to ‘convince’ [wireless] operators of the value of mobile innovation, either through partnerships or direct competition.”

Specific challenges facing Google

There are specific challenges Google must overcome to reshape the mobile ecosystem. Some are basic but essential, like enlisting the enthusiasm of, and supporting, Linux mobile developers, winning their support of a common open software stack for a mobile phone operating system and development environment. Others are more systemic: coming up with a viable model to compensate content developers for their work, and convincing wireless network operators to share revenues with these developers.

And Google's time is limited, according to the study. “If Google fails [to win Linux developer backing] by mid-2008, Android will never achieve the critical mass necessary to compete with Windows Mobile and Symbian [platforms],” the report concludes.

The 55-page analysis was released this week, co-published by Mind Commerce, a technology research and consulting firm, and the Mobile Consumer Lab at the International University of Japan (IUJ). A summary of key findings is available, but the report itself has to be purchased via the Mind Commerce site. Sugai is the principal author, with contributions by a handful of his graduate students.

The report describes the “mobile value system” that dominates most markets today, including the United States, as one in which the handset maker plays the central role. With the network operator and content provider, all three see the phone subscriber as “their” customer, and all three focus on extracting the maximum value from that subscriber. For example, “Network operators have become focused on their own revenue gains, significantly limiting the amount of revenues shared back with content providers, which has seriously undermined innovation [in mobile content and services],” according to the report.