Motorola’s Big Bet on Droid
It’s not an exaggeration to say that the DROID is probably the most anticipated Android phone of the year. The Motorola phone lands tomorrow at Verizon, and it is the first smartphone to don the spanking new Android OS 2.0.
Motorola dumped Windows Mobile earlier in the year and decided to focus all their energies on Android. Given the state of the world, we have to say that it was a smart move for them. Make no mistake, Motorola is betting the farm on Droid and other Android devices for a come back. And to their credit, Droid looks absolutely promising and is definitely one of the best devices on the market in terms of hardware, software, and features. Among our favorites are its beautiful 3.7” high-res display (480×854), Google’s new internet-connect turn-by-turn navigation, car dock and multimedia dock modes, Dual LED Flash, 5 MP camera and Exchange support. Motorola has put together a fine piece, and it offers a great alternative for Verizon customers. You can read all about its features and specs on Motorola’s Droid site. Here is also a good summary of the early reviews for major enthusiast sites.
But is Droid an iPhone Killer?
Early reviews of the device are extremely positive, reminiscent of how ]early enthusiasts were calling the Palm Pre, the “iPhone Killer” at CES earlier this year. But so many iPhone Killers have come and gone – why is it different for Droid this time?
We think that the Droid is not an iPhone Killer, but it is a Windows Mobile and Symbian killer. For many customers who want to have an iPhone caliber phone but want to stick with Verizon, the Droid is the only alternative. The new internet-connected turn-by-turn navigation experience is a killer feature that will entice many customers in North America. At $199 with 2 year contract, the Droid is competitively priced. Simply put, Droid is the best non-iPhone smartphone in the market today.
But the trouble with the Droid is that it follows the pagan model. Much of Droid’s value is derived from Google’s Android OS, which is available to any OEM who wants it. The flood gate has already opened, and there will be many many Android phones on the market that kind of look the same, but aren’t exactly the same. Consumers will be massively confused with all these Android phones. Which is better? What are the differences? Am I getting the best phone? These OEMs will be forever caught in a cat and mouse game, each one upping the other in hardware every couple of months or even weeks. Any “exclusive” features can only last a very short period of time before someone else comes up with a bigger camera, a larger screen or a better spec.
Contrast this with the “Jesus” model of the iPhone: 1 manufacturer with 1 model (3G and 3GS are close enough), backed by genius marketing to produce a simple and easy-to-understand set of value propositions and messages. Having an iPhone also makes you feel like you are in an exclusive club, like owning a Porsche. Having a Droid (or an Android phone) makes you feel more like you are driving a Camry – great car, great deal, but it just doesn’t reach you the same way emotionally.
We are not implying Android will never get significant share in the market; we are just saying that it is difficult for any single OEM who ships Android to have significant mindshare, and build an ecosystem only around its devices. Any significant mindshare and ecosystem surrounding Android phones will be built around Android itself, not around a specific OEM. Android’s smartphone share is currently less than 2%, but we expect it to grow significantly to the teens and even twenties in 3 years time. But again, no single OEM will dominate this portion of the pie, including dear Moto.
So it’s quite a risky bet for Motorola to bet the farm on Droid. While we think it will be reasonably successful in the short term, it will be difficult for them to maintain any sort of meaningful and significant long term differentiation, just like in the PC world. Google is the real winner. No matter who has the next blockbuster Android phone, it wins. Google gives Android out for free, but they view each Android device as an advertising socket, and it positions them well in the upcoming battle in the mobile location/context aware ads market.
We expect Motorola to have some short term upside, but you better keep your eye on their stock if you want to be in for the long run.
