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Can Android Grow From Micro-Machine to Iron Giant?

By Jack M. Germain
May 13, 2009 4:00 AM PT

Worldwide sales of Android-based smartphones are expected to grow 900 percent by year's end, according to a report from research firm Strategy Analytics.

Can Android Grow From Micro-Machine to Iron Giant?

Meanwhile, the Apple iPhone should continue to see strong sales but remain the second fastest-growing handheld platform. Research In Motion's BlackBerry is not expected to lose its footing, standing firm as the second most-popular smartphone operating system (OS) in the U.S. last year, according to the report.

The Android OS is currently available in just one smartphone in the U.S. (the T-Mobile G1, manufactured by HTC), but many other device makers are rumored to have Android products in the works. The OS may also appear in small netbook computers soon.

Given its relatively limited implementation now, it's a safe bet that Android has room to grow, Jim McGregor, chief technology strategist for In-Stat, told LinuxInsider. "But still, that is a high number," he said.

Clear Signs

Strategy Analytics' prediction for Android's rapid rise in smartphone sales this year is based largely on vendors' actions as they prepare to hit the marketplace. Though the year began with just one Android phone stateside, 2009 will end with Android-powered phones from Samsung, Sony and Motorola, according to Alex Spector, an analyst for Strategy Analytics. Vendors will make announcements about their new phones soon, he said.

"No actual sales this year show a buying trend. Most of the growth is still expected for the second half of the year," Spector told LinuxInsider.

Samsung is expected to announce its new I7500 smartphone for Europe in June. The company could follow up with an announcement for the same phone in the U.S. in the fourth quarter, Spector said.

Strategy Analytics expects the smartphone market to expand by 10 to 20 percent this year from 152 million handsets sold last year. Nearly half of all smartphones use the Symbian operating system, Spector said. Research In Motion sales topped 23.5 million, and about 20 million phones with Microsoft's Windows Mobile OS were sold. Apple moved 13.7 million iPhones.

The Android platform grabbed initial attention in the U.S. market during the second half of last year. Similarly, this year it is gaining a footing in European and Asian markets, according to Strategy Analytics.

Growth Factors

"Part of the potential for Android's expected growth is its appeal as a competitor for Apple's proprietary OS," Spector said. "Vendors are looking for a comparable solution."

Another reason for Android's expected growth is its potential to counter the iPhone's advantage in applications. Apple popularized the idea of selling applications through a central online store about a year ago. The Android platform also includes an application marketplace, and other platforms have begun following suit as well. Google, which developed the Android OS, has the potential to attract application developers for Android-powered devices, Spector said.

Potential Appeal

Even though Android is a relatively new platform that may need to mature further, its open source roots give it the potential to leverage a huge installer base, Spector explained.

Vendors are showing a lot of interest in Android as a Linux solution, agreed McGregor, and Google has the resources for Android to grab a tighter hold in the market.

"This is the year we will see a lot of devices trying out Android," he said.

The Linux Factor

Market research firm Gartner is taking a more cautious view regarding Android.

"Our view is that Android shipments will remain modest in 2009 as new devices based on this platform will only be available at end of the year from some key handset vendors like Samsung," Roberta Cozza, principal analyst for Gartner, told LinuxInsider.

Gartner's forecast currently sees Android devices accounting for 30 percent of the total Linux handset market -- that's less than 5 million Android smartphones sold in 2009.

"This is a 630 percent increase in Android sales in 2008, according to our estimates. I don't think, though, that any year-over-year comparison is that meaningful here, as the base in 2008 is so low with the first Android phone, the G1, which started selling only in [the] fourth quarter of 2008," she said.

Android is developing fast, but it's not mature enough despite each update bringing in key improvements, according to Cozza. Google's resources and the stature of the members of the Open Handset Alliance position Android as a strong candidate to develop more consistent and standardized Linux smartphones that can ultimately gain critical mass.

"We expect Android to have less of an impact in EMEA, where Symbian enjoys a dominant position. In other regions -- like North America, where a lower-cost consumer mobile OS has been missing -- the Android platform could fill the void and be well received by carriers," Cozza concluded.

Vendor Obstacles

It's easy to throw around growth figures like 900 percent when a vendor has little market share to begin with, argued Mark Asnes, COO of The Wireless Zone.

"The fact is that it will be hard for any new OS to break into the marketplace. Apple did it because of the uniqueness of its applications and the phone itself. The equipment was just as important as the OS," Asnes told LinuxInsider.

Running an OS on any phone that a manufacturer wants to run it on can reduce its draw, and if an OS fails to woo wireless carriers, it does not matter what the manufacturers want to do, he said.

Apple's monolithic brand recognition and its large base of loyal customers helped push the iPhone along. In fact, Asnes said, two companies currently dominate the smartphone market in the U.S.: Apple and RIM. The customer bases for those vendors are locked into their respective platforms, he said.

In regard to Android, "It's much too early to tell how the consumer or manufacturers will make the transition when the only phone operating is on the fourth-largest carrier," said Asnes, referring to T-Mobile.

In the past, business users have been the main drivers for smartphones, but today the consumer is in charge, he noted.

"The ability to do email on non-business platforms like Yahoo is attracting the next generation of users," Asnes observed. "Add to it the ability to do social networking, and now youth is the fastest-growing segment."


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