Microsoft’s decision last year to focus its Lumia device lineup on low-cost phones for emerging markets sounded smart, but as we now know it was a resounding failure. But it turns out that Google’s like-minded Android One initiative was also a disaster. So now Google is jumpstarting Android One to address the issues. Among them: the sub-$100 price point was too high.
I followed Google’s entry into this market last year with some interest, mostly because of the Lumia angle. Like many of you, I was no fan of Microsoft’s strategy to spam the market with low-cost phones, but I did see the logic to it. Of course, with the benefit of hindsight we can now see that logic doesn’t always equate to success. Microsoft sold far fewer phones over the past year than it had projected internally, and the average selling price was lower than ever before for the Lumia lineup (which shouldn’t have surprised them, but whatever).
Microsoft’s failure was so vast that it has completely altered it smart phone strategy and will emerge as a smaller player with more a streamlined portfolio of devices (including, of course, low-end phones for emerging markets, just fewer of them). For Google, the stakes are quite different. The firm’s Android platform already dominates the market, with almost 80 percent market share. But it had started Android One to go after the next billion users: those in emerging markets who could not afford traditional smart phones. Like Microsoft, Google has failed to reach this market. So like Microsoft, it is shifting its strategy.
In a recent interview with The Financial Times, a Google executive used terms like “not delivered to expectations” and “a few hiccups” to describe the initial rollout of Android One devices in countries like India and in southeast Asia. The firm remains “very committed” to Android one—no doubt because of the very real opportunities—and will make a “massive” new investment in succeeding.
We know that Microsoft’s plan amounts to fewer but better phones. So what is Google changing?
First, it is lowering prices dramatically. When Android One launched last year, the price point was under $100. But with generation 2, Google and its partners will sell phones that cost just $30 to $50, less than half the price of last year’s devices. That’s a pricing “sweet spot” in places like India, the Google executive said.
Google is also investing in developing local content that is suitable for India in particular, which is a gigantic market, but also one plagued by Internet access problems, rendering services like YouTube near-unusable. So it providing offline capabilities to YouTube, and to Maps, and a stripped-down version of its search engine.
Finally, Google is fixing supply chain issues with its phones, which are made in China.
This seems a lot more cohesive that anything we’ve heard from Microsoft, though to be fair I do expect more details on Microsoft’s plans—which involves not just emerging markets but also business users and flagship devices for fans and enthusiasts—in the next 30 days or so.
Tagged with Lumia