The Difficult Challenge of Android Manufacturers

When Google unveiled Android seven years ago as an open operating system with few associated costs I think a great opportunity to manufacturers: they could devote resources to the hardware and get almost free software features, without having to dedicate resources to create an ecosystem around it. The experience was very good, and some manufacturers, such as Samsung, have flourished leaving behind Nokia, for example.

However also created them a problem: If the software was the same in any manufacturer, What would you distinguish terminals? Some, like Nokia, were able to see this problem and did not want to go through the hoop. However, anyone who has not joined Android truck is out of the market (with the exception of Apple that was already creating their own closed ecosystem). And we are now seeing as vaticinados in his day by Nokia problems are flourishing.

What is the difference between two terminals?

The main problem that makers of Android have is to differentiate their terminals. Why almost everyone trying to put their customization layers, many hate because they slow down and make complicated what was already simple, although the issue has improved since the early days of Android.

The second way distinguish themselves is with technical specifications. Seven years ago, you could see the production capacity of each manufacturer and only a few were able to pull pointers or terminals in different ranges, hence that Samsung could do with a good pinch of market. However this has changed a lot.

The first affected by this “democratization” of technology were the middle and lower ranges. On the one hand was the pressure of Chinese terminals, which appeared like mushrooms and Motorola launch economic terminals but solvent performance strategy as the G bike and bike E. Then came Oneplus revolutionize the middle range, offering a terminal with SoC of high-end price range medium. And now we are in a moment in which the best SoC of the moment, the Qualcomm Snapdragon 820, is going to be in more than 100 different terminals.

Differentiation has finished, with some exception. Any manufacturer can offer any range, and this has an impact on the price. The mobile becomes a commodity, gives equal the mark. And that is why manufacturers have only an argument to compete: the price. And the price war low margins and causes suffering to the sector.

This has already happened

What we are seeing with the terminals Android already live it in the years 80 and 90 with cloned PCs. Independent hardware (PC) of the software (Windows) PC makers were immense in a war that ended up sinking the manufacturer reference of the moment, IBM. The only ones that could survive at the end were children, riding clones, or manufacturers of niche (companies focused on enterprise customers, for example).

Android we are experiencing the same thing. Some manufacturers are trying to survive still with differentiation in hardware, software and distribution. In the higher range, they still hold some, like Samsung, but others not so much, as HTC or Sony. The lower range is almost lost, those who look for price always will find a cheaper terminal with better specifications.

HTC and Sony are still unique. They try to hold in the high-end launching leading terminals, with some features that not everyone can offer (e.g. photographic experience, finishes) and at high prices. But even there Samsung exceeds them and he steals them virtually the entire market. He is willing to value these things is going to Samsung, which won’t be cheaper manufacturers.

What happen will in a few years?

Honestly it is difficult to know what will happen in the future. But all indications are that there are too many manufacturers who want to keep playing to differentiation: Samsung, LG, HTC, Sony… and then there is pressure from Huawei, who wants to gain a foothold there. Don’t think I can endure this situation long, with Sony losing 544 million dollars a quarter, HTC on the same path, LG which has not successful this year (and it hurts, but I already envisioned it)… the only ones that endure are Samsung and Huawei.

The situation of Sony and HTC is unsustainable, Of course. They are trying to live off past glories and the brand is not enough to sustain the investments that have to be done to show something different. They have two options: or spend to compete in price or sell the brand and close business. And this, I fear, we will see it soon.

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