Analysis of Googles Strategy on Android

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Android: The prevailing force in
the smartphone world.










Submitted By:
-Cliffton Kinny (2013015)
-Kanika Shetty (2013029)

Analysis of Googles Strategy on Android

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Google, the search engine herculean, recently turned 15 years old on 27
th
September. In a
span of 15 years, it has turned into one of the largest brands in the world (Currently 3rd). The
rapid growth of this technological giant is attributed to a series of aggressive moves,
including new product developments, acquisitions and partnerships. The company aims
building new tools and applications. It lays great emphasis on innovation, technology and
employee quality, being a highly Tech-based Organization. It positions itself as a top-tier
search company and acts as the gatekeeper of the world information.
Smartphones have been a revolution and Googles Android, which started off in 2008 as a
potentially third competitor to iPhone and Blackberry, now accounts for almost 80 percent of
the global smartphone market and 91% market share in India according to IDC.
Android, a free, open source mobile platform, delivers a complete set of software for mobile
devices: an operating system, a middleware and key mobile applications. The android OS
was built from the ground-up to enable developers to create compelling mobile applications
that take full advantage of all a handset has to offer. Not only does Android benefit
consumers, who have more choice and innovative new mobile experiences, but it opens up
revenue opportunities for carriers, manufacturers and developers. Recently, Android has
passed 1 billion device activations reflecting the work of the entire Android ecosystem.
Googles Android holds a propitious position in the smartphone market based on the VRIN
criteria.
Advertising
Google relies heavily on targeted advertising to earn profits. Google has architected Android
to maximize reach. The OS is free, and any OEM can customize and release Android based
devices. Google can gather more data and sell more ads against searches. It is the search
market leader with more than 65% share globally. This advantage is even more durable if you
not only control the search service, but also the OS in which it lives. eMarketers
report suggests Google took home $4.61 billion in mobile advertising revenues in 2012, or
more than half of all mobile advertising revenues in the world. Google partnering Nestle for
the launch of the latest Android 4.4 version KitKat is giving both brands a prominent,
unavoidable place in the daily vocabulary of countless Android and chocolate fanatics, which
has tremendous advertising potential.

Integration of Killer Apps into the Android Phones and Halo Effect
Google has developed prominent applications such as Gmail, Google Maps, Google
Calendar, Chrome etc. Laptop/Desktop users are accustomed to these applications and would
like to use them on their phones as well. Therefore, Google owns a non-substitutable resource
of integrating these killer applications into the Android phones.
The halo effect describes how one powerful impression can spill over to influence our
judgments of a persons character, or a companys reputation or worth. Google, in the same
way, has an effect based on its popularity. This virtuous circle has enabled the dominance of
Android. Googles popular applications are the start point to create this halo effect which
influences the purchase decisions of consumers.
Analysis of Googles Strategy on Android

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Public Relation:
Acquisitions/Partnerships
Google is excellent at acquiring small promising start-ups and integrating them into its own
system. Successful acquisitions include the purchases of Earth Viewer (Google Earth) from
Keyhole Inc and others such as YouTube, AdMob, Motorola etc. Having an astute instinct to
detect new business opportunities, Google quickly responded to the smartphone market by
acquiring Android, a start-up company for mobile software, when the market presented itself
with huge potential.
Google entered into partnerships with other companies to improve production and services
like Sun Microsystems on technologies, AOL of Time Warner and partnerships with
Samsung, Acer etc. This acquisition/partnership experience is a valuable resource that other
smaller companies could rarely have.
Company Culture
Google ranks #1 on 2013 FORTUNEs Best Companies to Work for. Its really the
people that make Google the kind of company it is. They hire people who are smart and
determined, and favour ability over experience. They believe that great, creative things are
more likely to happen with the right company culture. Positive employee relations have been
important in the high-efficient operations within Google and boost lots of creative ideas
through non-serious working hours as well. Googles atmosphere may be casual, but as new
ideas emerge in a caf line, at a team meeting or at the gym, they are traded, tested and put
into practice and they may be the launch pad for a new project destined for worldwide use.
One good example is Innovation Time Off, which is well-known for Googlers. All Google
engineers are encouraged to spend 20% of their work time (one day per week) on projects
that interest them. This philosophy pays off. Half of the new product launches originated
from the 20% time, among which some are very popular ones, like Gmail, Google News,
Orkut, and AdSense.
Good public relations are valuable and rare resources which put Google into an effectively
offensive position while facing its competitors.






Analysis of Googles Strategy on Android

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Porters Five Forces Google
Threat of Entry: Low

Googles Android has a low risk of new entry threat because of the high level of entry
barriers.
It would take a massive starting capital to build a start-up network infrastructure to
compete with the mobile operating systems requirements of high stability, low power
consumption, high flexibility for customization of different manufacturers and
carriers, and tight integration with hardware, which together make it a complex
process. It would be a considerable feat to maintain and upgrade services at the rate at
which Google has control over the industry.

The cost of building a new OS for the manufacturer is a huge as they have to invest in
developing the drivers for them, ensuring they meet all its software requirements as
well & the same obstacle is faced by carriers as well.
The learning curve for the OS maker to design an OS architecture that is easy to use,
and the learning curve for the partners to use the OS, is still a high barrier for this
market.
A war of patent creates barriers for competitors from copying each other.


Threat of Substitute: Moderate

Tablets and Netbooks equipped with a 3G chip can make phone calls and can be more
powerful than a smartphone in running applications. Their size is considerably larger but it
can be an alternative to people who have to carry a laptop and a cell phone all the time.
Tablets do come with the Android operating system; on the other hand there are iPads from
Apple which are comparatively at a higher price.

Supplier: Not Exist
All the major players develop their products either from other products they already
have (iPhone from OS X), or from free open-sourced product (Android from Linux). They
may license some patent from some other companies, but normally they do not purchase
other products, and do not use out-sourced development. Therefore, there is no clear supplier
in this industry.
Bargaining Power Of Buyers: High

The buyers of Smartphone OS consist of hardware manufacturers, software developers &
Smart Phone users. The inclination of Hardware manufacturers is to choose a platform that
has better applications although there is a switching cost between different OS, as having
Analysis of Googles Strategy on Android

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killer applications is more important than the OS. For software developers, the popularity of
the online application store usually decides their potential profit of creating and selling
software for that OS. The cell phone users have the strongest bargaining power towards the
platform as they have the information about which platform has more interesting
applications.

Rivalry: Intensive

Even though Googles Android owns majority of the market share, there is intense
competition in the market of Smartphone with Apples OS being a major challenger after it
lost its share to Googles Android. Windows on the other hand seems to have been
improvising and subsequently gaining a small slice in the market share. Competitors also
change their strategy quickly to adapt to the trend of the market as they would become
obsolete if they dont change.
To conclude, the Five Forces analysis shows that Google has established itself as a dominant
force in the smartphone market.