Alphabet’s Google to Try Again With Low-Cost Smartphone for India
Indian phone makers said Android One hardware requirements made it tough to differentiate devices
Alphabet Inc.’s Google helped launch a line of low-cost smartphones in India more than a year ago, part of a strategy to win more customers in fast-growing emerging markets. It was a flop.
Now, the tech giant is trying again by relaxing its rules, giving phone makers more latitude when it comes to features and price.
Google and India’s Lava International Ltd. plan to release a new low-cost smartphone in the coming months as part of the Android One program, people familiar with the matter say. The initiative aims to give users in developing economies an inexpensive way to get online through its Android mobile operating system.
The
new device is the product of a revamped initiative that gives device makers more freedom to choose the components and features that go into the phones and how much they cost, the people said.
Google launched Android One in India in September 2014. Analysts say the company wants to deliver more users to its apps and services, such as search, Gmail and YouTube, in order to generate more advertising revenue. But the first Android One smartphones, which cost roughly $100 and were made through partnerships with Micromax Informatics Ltd., P.S. Associates Private Ltd.’s Karbonn and Spice Retail Ltd., weren’t big hits with consumers.
Shipments of these first three versions totaled just 1.2 million units in India in the first year, according to research firm Counterpoint, representing 3.5% of the market for devices that cost $50 to $100. By comparison, similarly priced Redmi smartphones from China’s Xiaomi Corp. secured 7.5% of the market. Google’s devices also faced stiff competition from its partners’ own products. Handset maker Micromax says it sells about three million handsets a month, many of them for less than $150. Its phones run on Android, but they aren’t Android One devices.
Since the release in India, the Android One has launched in 19 additional countries, including Indonesia, the Philippines, Turkey, Egypt and Morocco. But shipments have totaled just three million globally, Counterpoint says. Google doesn’t release sales figures for Android One devices.
“There’s a long way to go before an effective reboot of Android One,” said Kirt McMaster, chief executive of Cyanogen, a startup that runs an alternative Android operating system and has worked with Micromax in India.
One major complaint among Indian phone makers was that strict Android One hardware requirements made it difficult for them to differentiate their devices from those of rivals on both price and features. For example, Indian phone makers had one or two choices for most components, and Google required them to buy from specific suppliers.
For Google, this ensured the phones were capable enough to run the latest versions of Android. However, for the phone makers, this meant less flexibility on price, and it slowed down product launches, according to people familiar with the program.
“Google tried to define too many parameters in regard to device components that were required for Android One, when Indian manufacturers really value supply chain flexibility,” Mr. McMaster said.
If smartphone makers can save $1 by using a different supplier, that’s important when a device costs $100 or less. Google limited that flexibility. That is why few phone makers in India committed to Android One, and those that did made only one or two devices, he explained.
In Google’s new approach, it lets Android One partners choose from a greater variety of each component, and phone makers can buy the parts from their own approved vendors, according to people familiar with the situation. For instance, there are at least five cameras to choose from now, one of the people said. Phone makers also can use other suppliers for the main processor, such as Qualcomm Inc., the person said.
A Google spokeswoman declined to comment. Representatives for Lava, Micromax and Karbonn declined to comment. A Spice spokeswoman said there are no plans for a second Android One device currently.
For Google, success in India is critical as it aims to tap more users in fast-growing emerging markets. Google Chief Executive Sundar Pichai recently said the company had attracted some 400 million users to the Android platform since May 2014, with much of the growth coming from developing countries. Only about 10% of India’s more than 900 million cellphone users have smartphones.
“Google wants traction in the India market for the digital advertising opportunity it has built in other world markets,” said Jeff Orr, an analyst at ABI Research. “Putting Android One phones in the hands of India’s citizens enables that platform for the company.”
However, many manufacturers in emerging countries such as India lure users by customizing the platform, offering their own apps and app stores. Even with a revamped phone, some executives are skeptical whether there will be demand for the new version of the phone.
An executive at one phone maker in India who declined to be named said Google’s new flexibility on Android One hardware requirements leaves little difference between the program and just producing regular Android phones.
Alphabet’s Google to Try Again With Low-Cost Smartphone for India - WSJ
