Phone Wars II: Attack of the Droids – The Motley Fool


What an iPhone Really is

Have you seen an iPhone commercial lately? They’re remarkable, because they aren’t iPhone commercials anymore–they’re App Store commercials. They’re fetching, arresting, compelling because suddenly the Star Trek future (“…Need to know the closest place to buy fresh garlic? There’s an app for that…”) seems real. Like all those flying cars we were promised 40 years ago, this is one promise of the future made good.

This is a longer way of saying that the iPhone is really just a bully handheld computer. And this is a good thing, because as you probably know, no one’s particularly happy with the device qua phone.  (Apple tifosi will debate this, but that’s an argument for another time.) At last count, Apple claims that there are something over 80,000 applications for it.

Right now the iPhone runs what’s been programmed specifically for it.  Apple wins because you have to buy iPhone apps through their online store. Developers win because they get a first-rate storefront to hawk their wares and a rock-solid OS to build on. Consumers win because they get what they want easily—and in many cases, quite inexpensively. Investors win because it’s a sticky product that attracts and retains users better than the back of my couch attracts dust bunnies.

If it ain’t broke…

But what if you could come up with an OS that anyone could write for, tinker with, re-assemble, re-package, and re-shell? What if you made it free? What would that market it created look like?

We’re about to see. Enter the Droid. Specifically, Android, an ‘open source’ operating system shepherded, but not controlled by, Google. It is powerful, fast, and free to handset makers.   That’s right—they don’t pay licensing fees to install it on their phones. And its open source nature means that adopters, should they decide, can customize it. This can range from simple re-skinning (making the user interface, or UI, look different) to really getting into its guts and playing around.

As I write, SamsungMotorolaHTC and Acer are all Android handset makers. You can buy a first-generation North American market Android device through T-Mobile now (the MyTouch 3G or the G1), or wait a little bit and pick up at least two through Verizon, and at least one through Sprint.

Everybody Wins…

The value proposition to the consumer is unreal. This is nothing less than a nascent Windows-of-the-smartphone world.    As a software developer, presently you have the choice of developing code for Blackberrys, iPhones, as well as Windows Mobile devices. This is not to forget any code that you might want to develop for Nokia smart handsets. Or, you could write one basic set of code for Android—an OS that almost every major smartphone maker is beginning to load on its phones. Where’s the bigger, easier market? There are only so many hours in the day, what are you going to code for? As a user, you will have access to a tidal wave of available apps. Android is the rising tide; everybody wins.

…Except for Apple

I’m a shareholder and pleased as punch with AAPL stock, but the iPhone’s undisputed reign is questionable in the near-term and severely undermined in the mid-term. See here to see how the bell tolls for thee, iPhone.

Android isn’t Google, but who cares?

Android isn’t owned or operated by Google, but the consumer perception will be that it is, in the same way that users once upon a time conflated “the internet” with “AOL”. That perception is going to sell handsets, and, more important, hook users into Android applications. Once they’re hooked, switching costs are high. (Ask anyone who owns an app-laden iPhone user if she’ll ever go back. I challenge you to find a significant number.)

A Growing Ecosystem versus a Walled Garden

An open-source OS represents an ecosystem; closed OSes represent a pale facsimile of same.  Not every ecosystem is successful. But the interlocking and self-interested software developers, wireless providers, handset makers, and consumer parties who will profit from it being so, are all there.

And you know that cool new Kindle competitor from Barnes and Noble?  It runs Android, too.

[via The Motley Fool]


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