Distilling market noise into market sense
The VisionMobile blog is a space where VisionMobile analysts and industry insiders exchange views on the fast-changing mobile market and the trends that define the future direction of telecoms.
Low cost Android: crossing the $100 barrier
[Where's Google's Android going? Guest blogger Ben Hookway uncovers the race for low cost Android taking place behind the scenes of the mobile industry, and how this may change the face of Android as we know it]
Low cost Android devices have been forming a large part of R&D activity for some time now. Behind the scenes of the mobile industry all major players – including semiconductor vendors, software vendors, software services companies, ODMs, OEMs, and network operators – are putting considerable resources into rolling out low cost Android phones. It’s a silent revolution in the making that, once set in motion, should see Android shipments lift off from the single-digit millions.
So how low is â€˜low cost’? Reports of $75-$110 reference designs are emerging from Asia; these are fully featured touchscreen devices, albeit with an EDGE (2.75G), rather than a 3G baseband chipset.
Why the interest in low cost Android? Low cost means volume which in turn means market share, and a consistent platform for the provision of services. There are multiple parties with a compelling interest in having a low cost Android device.
Semiconductor companies are under pressure to better address the market for Android platforms. Qualcomm is the overwhelming leader in 3G chipsets for Android phones in Western markets. Their competition such as ST Ericsson, Broadcom and Infineon are responding and a low cost Android niche may be a way for them to break into the current Qualcomm dominance.
The majority of handset manufacturers are investing heavily in Android. With so much effort going into a single platform, there is an inevitable pressure to be able to scale that platform on as wide a range of phones as possible. While the lion’s share of press coverage is on â€˜smartphones’, the mass volume still is in lower end devices.
Network operators are already developing and deploying â€˜operator packs’ comprising of specific operator applications and service enablers, designed to run on Android devices. Longer term, Android may end up affording operators the standardised platform for devices they have been craving for years; a standard platform they can consistently deploy their own â€˜pack’ on. That’s assuming operators can gain access to low cost, mid-range Android devices on which they can deploy standard operator packs on and therefore extend the operator experience to the mainstream consumers. Moreover, with subsidies widely practiced in the mobile industry, it is in the best interest of the operators to reduce the cost of Android phones.
Google’s brand power hurts Android differentiation
There has been much mainstream publicity on the launch of the Nexus – yet another Android smartphone – which does not seem to be materially different from – say – the Motorola Droid. The reason for the mainstream press is simple. Nexus is a phone sold by Google, not by a phone manufacturer. The brand is king here. As an experiment, I did a straw poll on my Facebook network of (mainly) non-industry friends. Out of 100, only 2 people knew what Android was in the context of mobile phones. They all knew who Google was though. Google is a brand people will buy, Android is not.
This powerful brand recognition enjoyed by Google forces Android-based manufacturers to further differentiate their devices. After all the general public will buy a Google phone over an Android phone so you had better come up with something different. This may force manufacturers to â€˜hack’ Android more and more in order to differentiate, and low cost could be a means to the same end.
So if low cost Android is going to emerge as a category how are we going to get there and what are devices going to look like? Perhaps more importantly, would you buy one? If the user experience is radically different to Android smartphones, is there still a place for a low cost Android device? For example, if you didn’t have fancy graphics, smooth transitions, or if the touchscreen was a bit harder to use, or even if there was no touchscreen at all?
Low cost means design sacrifices
Well, the cost of phone components is going to have a big influence on what low cost Android devices look like and what are they capable of. They may even be unrecognisable as Android phones by current standards.
As an example, iSuppli’s teardown of a G1 estimated the cost of components as $143.89. Of this cost;
- Baseband (ARM11 for multimedia, ARM7 for modem): $28.49 (20% of BOM)
- Touchscreen: $19.67 (14% of BOM)
Baseband and touchscreen are the two biggest cost factors. Reduce the requirement for expensive processors and touchscreens and you go a long way to lowering costs.
Therefore, running an Android device on a single core chip would reduce costs significantly. A single core EDGE chip sales for well under $10 – but the question is how to run Android on it. A quick tech lesson in basebands is in order here.
Baseband chips are needed to run the modem (software) stack in a phone. To run a modem you need a real time operating system such as Mentor Graphics’ Nucleus or ENEA’s OSE. However, each chip core (CPU) can only run a single OS, and the modem needs an RTOS to power it, so how do you run Android?
Virtualisation to the rescue
The answer may lie in virtualisation of the modem chip. Using hypervisor technology from Open Kernel Labs or Virtual Logix, it is possible to run two operating systems on the same CPU. This would enable the RTOS and Android to co-exist on the same core, and open up single core EDGE chips to Android. Such an approach requires close cooperation from the RTOS, semiconductor and virtualisation companies, but could lead to a significant cost reduction for markets that do not need 3G capability.
To touchscreen or not to?
One of the largest cost factors in building an Android device is the touchscreen. An Android device could be built that eliminates the need for a touchscreen – but would it be a hit with consumers?
If an attractive feature phone can be produced with Android at the right price point, then does the consumer care what OS is under the hood? I would argue the vast majority of consumers don’t care. Such a device may even run a restricted number of applications with no access to an app store.
Would you use an Android phone with no touch screen and no QWERTY keyboard? Probably not, but then if you are reading the VisionMobile blog, I’m guessing you are not your average consumer?
The operator would appreciate having the same “standard” platform to deploy their operator packs on; the OEM would appreciate having the same platform to develop their â€˜signature’ apps on, even if it this platform have fewer features. With a smaller, non touch screen devices, graphic processing requirements are reduced, and therefore processor requirement and cost is reduced.
However, there is an obvious side-effect here; will the applications developed for Android touchscreen devices also work on low-cost Android phones?. Would the buyers of the non-touch devices care or even know?
I would contend that the consumers that buy low-cost devices over the next 2-3 years won’t care about the apps. If the consumer wants a mid-low price touchscreen phone then there are a wide number of feature phones available (see Guy Agin’s excellent article on dispelling the smartphone craze).
The inevitability of low-cost Android
All in all, the push towards low cost Android is inevitable. There are simply too many companies in the value chain who are racing to differentiate with low-cost Android. But due to cost reasons, the form factor, functions, target segment, and use of the resulting devices is going to be significantly different from what we understand as an Android phone today.
Comments welcome as always,
[Ben Hookway works for Mentor Graphics in Business Development. He has founded, financed and sold companies in the mobile software sector over a 15 year career]