Android Rising

The top 7 things to know right now about the hot mobile product

When Google founders Larry Page and Sergey Brin roller bladed onto a New York stage in September 2008 to launch the first Android phone—the HTC-manufactured G1— some believed Google’s long-awaited “iPhone killer” had finally arrived. It hadn’t—yet. While Apple’s iPhone and its iOS ecosystem is still a hit among consumers, developers, and advertisers, Android’s fortune is slowly changing. The operating system now spans more than 400 devices on 231 mobile carriers in 123 countries, Google says, and the sheer number of eyeballs landing on Android screens is making the platform more appealing than ever. And despite being perceived as a “poor man’s iPhone” by some consumers, many others are beginning to look beyond Apple’s white glow to the underlying positives of its less flashy competitor. Adweek surveyed analysts, industry insiders, and developers to get the latest lowdown on the platform that could still give Apple a run for its money.

Apple may win on user experience, but Android wins on numbers.

“Over the past 18 months, Android has experienced a meteoric rise from a market leadership perspective,” says Linda Barrabee, an NPD Group analyst.

In the last three quarters, according to NPD, the phones accounted for at least half of all smartphone sales in the U.S. And a recent Nielsen study found that 43 percent of all U.S. smartphone owners have an Android device, and that 56 percent of those who bought a smartphone in the last three months went with an Android.

The platform’s open nature means manufacturers such as Samsung, HTC, and Motorola can—and do—offer Android phones. And they’re offering increasingly sophisticated products at lower prices and with flexible payment plans.

Apple now offers the iPhone 3GS for free with a two-year contract, but Android customers can choose from a variety of phones and service plans, including free phones with cheaper contracts or low-cost phones with prepaid or pay-as-you go plans.

“Android, if it remains unchanged on its path,” says Marcus Startzel, senior vice president of sales for Millennial Media, “is becoming the new default operating system for handsets.”

With an Android phone at nearly every price point, the platform is attracting a broader mix than Apple.

A recent Nielsen study reported that 66 percent of users had annual incomes under $100,000 vs. 52 percent of Apple owners. Also, Android leads its competitors in penetration among African Americans, grabbing 37 percent of the market. RIM’s BlackBerry follows with 30 percent and the iPhone just 16 percent.

Android appeals to the 18-34 demo, according to a July smartphone study from the Pew Internet & American Life Project, so it’s a promising platform for advertisers.

Android’s influence extends beyond national borders too, pushing through to some developing markets around the world, particularly in Asia, at a faster pace than Apple.

“There’s a huge market of cheap Android devices, which allows you to broadcast rich media to those devices in [parts of the] market that Apple does not exist at all,” says Tomer Weiss, program manager for MediaMind.

One criticism has dogged Android from the start: fragmentation. Its open nature means dozens of manufacturers and more than 200 carriers globally can distribute Android phones. So different versions of the software on phones with different screen sizes, user interfaces, and capabilities all operate in the wild at once.

Mobile ad developers say an Android ad can take from 25 percent to double the amount of time it takes to develop an ad for Apple. NPD’s Barrabee says a developer told her, “I write it once for Apple [and] three times for Android.”

But some in the ad industry feel fragmentation issues are not as pronounced as they once were and  expect the next version of the operating system, Ice Cream Sandwich—due out by year’s end—to unify the Android platform even further.

Michael Nicholas, chief strategy officer for digital agency Isobar, while emphasizing the platform has to continue to address the fragmentation issue, says by the time brands want to reach huge swaths of the mobile public with the most robust apps, the issue will likely be solved.

“Is it really keeping us up at night? No,” says Nicholas. “But does it have the potential to? For sure.”

Several virtual shops peddle Android apps—but not all of them can guarantee a positive user experience.

Android users can choose from Google’s official Android Marketplace, carrier app stores, and other independent venues—each with potentially different rankings, reviews, and standards.

Yes, the issue, again, is fragmentation. While consumers get more choice and developers more opportunities to share their apps, the overall experience is inconsistent and potentially complicated.

This summer, for instance, indie game developer Bithack pulled an app from the Amazon Appstore after people complained they were able to purchase it even though it wouldn’t work on their phones. The Amazon store also didn’t include a mechanism for Bithack to respond to the negative feedback.

NPD’s Barrabee agrees that problems in the greater app store landscape are real, but says it’s still early days for the micro-industry. Plus, she notes, the number of purchases outside Google’s Android Marketplace is relatively small. “Android market,” she says, “is still young and teething.”

For advertisers willing to do a little extra homework, there are opportunities for creative executions that leverage the capabilities of the different phones—from front-facing cameras to 3-D hardware to Near Field Communications (NFC) technology.

“You can use specific manufacturer advantages to create very addictive ads,” says MediaMind’s Weiss.

Google’s planned acquisition of Motorola Mobility could also boost innovation opportunities for advertisers. Paul Gelb, head of mobile for Razorfish, says having a manufacturer of its own could make it even easier for Google to leverage its newest and coolest products (like the augmented reality app Google Goggles).

“[For] a lot of marketers looking to do stuff that’s innovative and new on mobile, and as part of packages or relationships with Google,” says Gelb, “I think there’s going to be a lot of Android opportunity.”

Google could finally make gains in the tablet department in no small part to the recent launch of Amazon’s Kindle Fire, which uses the Android platform. The tablet’s user-friendly interface and hyper-attractive $199 price tag, say industry watchers, could give Android a needed boost. 

It is true that Amazon barely acknowledges the Kindle Fire’s underlying operating system (the word “Android” is mentioned just once on the product’s consumer-facing website). But while it might not look like an Android tablet on its surface, the Kindle Fire could still give app development a kick in the pants and show consumers the platform’s potential.

The Kindle Fire “motivates app developers [and] advertisers to rethink their Android tablet strategy,” says Paran Johar, CMO of Jumptap.

NPD’s Barrabee says a recent study found 59 percent of Android smartphone owners were interested in owning an Android tablet. “What this tells advertisers right now and for the foreseeable future,” she says, “is Apple has a leg up on Android, but into next year, consumer preferences could change.”

Tablets and smartphones aren’t the only places you’ll likely find Android in the future. Google has long eyed the living room as a hub for user interaction, and with its (planned) acquisition of Motorola Mobility—which has a highly hyped patent portfolio and the needed hardware—it’s better equipped to land there.

By making Android the underlying operating system for a Motorola-manufactured set top box, Google could offer connected TVs that include a suite of Android apps and connect with Android mobile devices.

“There’s renewed momentum toward getting it in the living room,” says Noah Elkin, mobile analyst with eMarketer. “Your mobile device, whether it’s a smartphone or tablet, is increasingly the bridge between online and offline. I think, in some ways, Google sees that 360 approach to advertising in those terms.”

But are consumers ready to marry their TVs and mobile devices? Even Apple, with its highly integrated system, has had little success gaining traction for Apple TV. For now, both companies will have to wait and see.