CCS Insight: Google's Android One program has had 'limited' impact on the market

Google's (NASDAQ: GOOG) Android One program, which formally kicked off in September 2014, has not had much of an impact on the market, according to a report from research firm CCS Insight. Android One is designed to give consumers in emerging markets, especially those buying their first smartphone, access to cheap, up-to-date Android phones that will receive the latest software updates from Google for up to two years.

CCS Insight wrote that their "checks indicate that Android One has had a limited direct effect on the market, despite initial enthusiasm for the program. Sales of Android One-based smartphones began more than half a year ago in India, but volumes don't stand out."

A Google spokesman did not immediately respond to a request for comment. 

Karbonn, Micromax and Spice released the first Android One phones in India. Acer, Asus, HTC, Lenovo and Panasonic were among the other smartphone makers listed by Google as partners in the Android One project, but CCS wrote that "this interest appears to have stalled."

OEMS and ODMs can use Android One to lower development and maintenance costs and increase their sales, CCS noted, all while pushing device prices down to around $100 on an unsubsidized basis. Importantly, the phones also have access to all of Google's mobile services, which allows the search giant to get a foothold in markets where device makers and consumers sometimes eschew Google's services on Android phones for those from third parties.

"The fading momentum of Android One is an indication of the expanding selection of equally well-specified, low-cost smartphones and tablets in emerging markets," CCS wrote. "Hundreds of models are available at $100 or below--a once impossible price band has become very ordinary."

Since starting in India, Android One has expanded to Bangladesh, Indonesia, Nepal, Pakistan, the Philippines and Sri Lanka. Google has said more countries will join the program in 2015. Thus far, small and local brands have joined the program as device makers, including Cherry Mobile and MyPhone in the Philippines; Evercross, Mito and Nexian in Indonesia; and Symphony in Bangladesh.

CCS added "there's nothing special about the cost of Android One phones to consumers, with other Android-based products and several Windows Phone models competing favorably on specs and price. Some touch-based feature phones are nearly indistinguishable to smartphones, and are likely to be good enough for many first-time users."

Indeed, Microsoft (NASDAQ: MSFT) plans to introduce Windows Phones that cost $75 to $100 in Africa this year. Mozilla's Firefox OS runs on devices that sell for around $35.

The research firm noted Google's key objective with Android One is connectivity, and that it has used the program to "place the spotlight on functional, low-cost smartphones in emerging markets. There's little unique about the products, but Google created a tidal marker with Android One."

Android One is just one part of Google's efforts to expand connectivity around the globe--a strategy that benefits the company's finances as more users access its offerings. For example, Sundar Pichai, Google's senior vice president of products, said at Mobile World Congress in March that Project Loon, Google's project to deliver Internet access via balloons, is making clear progress.

When the project first launched balloons two years ago, the balloons struggled to stay up for five days and delivered only 3G connectivity. Today, he said, the balloons can stay afloat for 200 days, or about six months, and can deliver LTE connectivity. "We think the model is really beginning to work," he said, adding that Google is starting large-scale commercial tests with Vodafone and Telefónica in New Zealand and Telstra in Australia.

For more:
- see this CCS post

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