Web firm's phones risk fragmenting Android
Facebook and Amazon are rumored to be preparing to launch their own smartphones, running their own takes on Android, and placing their HTML5-based services at the heart of the mobile experience.
The question is, why do software houses and retailers suddenly feel the need to turn into device vendors, taking on the very different economics of that business, and making themselves reliant on a mobile manufacturing partner while alienating other platforms for their services?
Google, Facebook and Amazon all have the reach to make their offerings ubiquitous on every mobile device around, without having to own the hardware itself. And they might have learned some lessons from Google's Nexus experience. If they try to be too disruptive, bypassing traditional channels or angering other mobile partners, they can actually reduce the reach of their key services. Yet if they do not do something radically different, there is no point having their own phones at all.
There is an element of Apple envy, but none of these web firms can emulate the integrated hardware/software experience of iOS because they are working with open source platforms and web services, not a closed environment. Their huge reach and influence depends on that, yet they hanker for at least a little of the iPhone maker's control.
So Amazon and, reportedly, Facebook will use their own tweaks of Android, creating their own user interfaces and developer platforms. The plus side is a user experience optimized for their particular offerings; the downside, fragmentation of Android.
We may argue that these companies are excellent at delivering services across multiple platforms, with a strong and consistent user interface – and moving into hardware will only compromise those strengths. The proof seems to lie in Nexus, now largely a showcase developer product rather than a mass consumer device; and even more in the conflicts, internally and within the Android community, which Google will face once it completes the takeover of Motorola Mobility.
And yet, we have to acknowledge that Amazon is already achieving what Google failed to do, launching its own-branded devices (first e-readers, now the Fire tablet) to deliver the best experience for its content and commerce, yet without any apparent dilution of its presence on third party products.
It has done this by creating gadgets which are directly relevant to its services, particularly its digital content stores and cloud offerings, and which had limited existing competition, enabling it to be disruptive in price and to amass large market share quickly. So the Fire, if it lives up to the high expectations for its sales, will do that by being affordable and coming with a different proposition to that of the iPad.
It is doubtful whether Amazon could do the same in the over-crowded handset space. Here, there will be little room to differentiate. The content experience will inevitably be weaker on a small screen and it is questionable how far Amazon could differentiate its own version from its native and HMTL5 apps for other Android or iOS devices.
Being price disruptive would be a marginal tactic – with low cost smartphone vendors and carrier subsidies, most users are accustomed to getting their handsets virtually for free anyway. However, it might be able to shift the price/functionality ratio somewhat - CEO Jeff Bezos has stressed that the firm is “the only hi-tech company that operates on low margins” because of its roots as a retailer, and it may also use those economics to price its handset very cheaply, as it has done with the Fire.
The Facebook phone
Even less proven as a hardware player is Facebook, which is said to be commissioning an own-brand smartphone from HTC.
Since HTC, along with various other vendors such as INQ, already makes “Facebook phones” with their user interfaces centered entirely on the social network, it is questionable how much difference this would make in the consumers' eyes. The power of the Facebook brand, and the promise of a super-efficient social experience, is undoubted – 3 Group and more recently Orange have traded on offering this, with handsets co-branded between their own logo and Facebook itself.
Going one step further and commissioning its own handset, rather than partnering with an existing brand, would only deliver additional value if the resulting phone furthers Facebook's agenda in other ways, otherwise it will just split the existing market and potentially anger key partners, like 3, in the important web phone mid-market – where the social net's much-vaunted mobile usage growth is concentrated, and where operator alliances are most important for effective distribution.
Like Amazon, Facebook is thought to be creating its own twist on Android, encouraging a separate (though not incompatible) apps base to boost its goal of turning its social net into a complete apps platform. This would combine the developer appeal of Android with the ability to incorporate Facebook's APIs in the programs, bringing thousands of new third party capabilities to the overall experience.
Also like Amazon, Facebook would create its own user interface overlay centered on its services, something it may feel is more necessary now that Google will be pushing its rival Google+ to the heart of the standardized Android look and feel.