Lowenstein's View: Putting an operator stamp on Android

Mark LowensteinThe rise of Android, in terms of market share, operator commitments, and device OEM relationships has been remarkable. The pace of product development, in terms of new features, capabilities and integration with the Google ecosystem is similarly intense, with new, and better products coming out nearly every month.

But something is missing, in my view. Having used several Android devices over the past several months, across several device manufacturers and operators, I'm still looking for that certain something that builds the sort of loyalty one sees among iPhone and BlackBerry users. Android has caught up, and surpassed in some respects, other operating systems in terms of core capabilities. But because Android is spread across so many operators and OEMs, the experience is not as tight, or as familiar, as with other operating systems. Placement of important keys, elements of navigation, and how one performs common tasks, such as dialing a number, viewing e-mail or contacts, or getting to certain applications, can vary quite significantly from one device to the next. In part, this is because many of the phone manufacturers have placed their own user interface overlay on top of Android, such as HTC has done with Sense.

An additional observation is that the Android experience varies more by device than by operator. Outside of differences in network capabilities, pricing strategy, a small number of pre-loads, and the ability to have an operator "store" within Android market, there isn't all that much that distinguishes, say, an Android device from Sprint than one from Verizon.

Twin this with the common concern, especially with the market tilting so heavily toward smartphones, that the operators will end up being merely a "dumb pipe." With respect to the iPhone, the train has already left the station: Apple is essentially an MVNO, its disdain for the operators is quite apparent. But the dynamics of the operator-Google relationship could be quite different.

Two broad themes here: first, Google needs the operators, more than it thinks, as part of its broader strategy in mobile; and second, if Android is going to be an important part of an operator's portfolio, consumers must be given a better reason to choose a particular operator's Android device--otherwise this will become an OEM bake-off a la PC-Windows market.

So, here are six broad ways in which operators could create a more differentiated Android experience.

1. User Experience. Unlike Apple or RIM, Android is not vertically integrated, which is why the OEMs are attempting to exert greater influence over the UI. But I think there is a potential role for operators here, especially those that will have a broad portfolio of Android devices. At the very least, operators can ensure there is more of a common and consistent feel across their particular Android portfolio. This is especially important because of the pace of new Android devices coming to market.

2. Customer service. Apple has taken on much of the customer support for the iPhone, and even makes money from AppleCare. In the case of Blackberry, enterprise IT departments have a significant service and support role.

With Android, the wireless operator is the default point for customer service. It is not possible to call Google or the phone manufacturer for help. This is ironic, because Android devices are geekier and more complex to use. The customer has to be their own CTO in many respects. I have found operator support capabilities for Android devices to be uneven and unpredictable in quality. I believe operators have an opportunity to differentiate on customer support for Android. And by the way, there is no reason why Google or the OEMs can't help pay for or staff support centers.

3. Analytics. Clearly, data and analytics is a core of Google's historic success and is integral to the company's strategy across device and application families. Wireless operators have customer data that is quite complementary to what is collected by Google. Operators have historically under-leveraged this asset, in part, due to caution, as they fear a mis-step would result in both customer and regulatory backlash. I would also argue that most operators do not have the internal resources and capabilities to fully leverage the data that they have. Google and the operators could work together to use their respective customer data to provide a more contextual customer experience, and to deliver relevant advertising. They can also jointly work to develop the proper security and privacy safeguards.

4. Advertising. It is amazing to me how the mobile operators are largely sitting on the sidelines with respect to mobile advertising, having allowed Google and Apple to define the agenda. If the operators want to play a role in an area of promising revenue opportunity, they will either have to buy an ad network (such as a Millennial Media or Jumptap), develop their own, or partner. Google has been more willing than Apple to engage with operators to develop the nascent mobile advertising market. And operators have a lot to contribute: customer and location data, billing information, store and purchase behaviors, plus their own relationships with major advertisers, brands, and content providers. I believe there is an opportunity for a small number of "special" relationships between Google and certain operators. Verizon is probably the leading candidate in the U.S.  Key questions are how to effectively define the rules of engagement, and whether the business model allows another major entity to share in the revenue distribution.

5.  Billing. iTunes, the billing relationship, and synch with the PC world is a major Apple advantage. Google has Checkout and is working on the PC angle, but operator billing relationships provide a capability Google should covet.

6.  Unique content. With their "store" inside Android market, operators have an opportunity to play a role in content and applications for Android. Examples include opening up certain network APIs to Android developers, or allowing them to use some data, thus enabling a richer experience in certain applications. Operator relationships with marquee content partners, such as with the NFL, can also be better leveraged on smartphones than they historically have been.

Unlike Apple and RIM, Google does not make any money on the sale of devices. Unlike Apple, it does not make any money on the sale of applications. And unlike RIM, it does not take a percentage of operator service plans. Not meaning to sound trite, but Android devices are merely additional screens over which to deliver ads--hopefully more targeted and contextual in mobile, hence commanding higher CPMs and click-through rates. Google and the operators bring different assets to the party, creating the opportunity for some unique, and differentiated, operator experiences on Android.

Mark Lowenstein, a leading industry analyst, consultant, and commentator, is Managing Director of Mobile Ecosystem. Click here to subscribe to his free Lens on Wireless monthly newsletter, or follow him on Twitter. Join Lowenstein and other idustry experts Sept. 1 for a Webinar discussing what's ahead for wireless in 2011. Register here.

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