Memo to the CEO
Mahipal Raythattha, Joseph Moore, Dingchao Lu, and Samuel Yang March 11, 2009
In this paper, we analyze the future of the smartphone operating system market and consider strategies that Google Android can employ to survive and grow.
INDUSTRY OVE ERVIEW: STATE OF THE MARKET
New Entrant N ts o Smart tphones are e a growing part of the more mature cell‐phon ne market. Mobile ph hone sales d declined ove erall in 2008 8, but smart tphone sales grew. This is a m multi‐billion n dollar mar rket with str rong expect ted growth. 9% of U.S. consumers s brought sm martphones s in 2007, up to 19% in n 1 2009. o PC an nd electronic cs manufact turers have minimal en ntry barrier rs. They are l likely to fav vor Android because of open‐sourc ce licensing, , low cost of development, and low ba arrier to ent try for the O OS market. y of several o open source e contender rs has create ed a o The recent entry comp petitive pres ssure for open standard ds. Lowers en ntry barrier rs and switc ching costs f for handset manufactur rers. Im mminent Sh hakeout o Many y new entran nts create a highly com mpetitive atm mosphere. o Advan nces in hard dware have reduced the barrier to o entry. o Network externa ality effect w with softwar re applicatio ons involvin ng both developers and u users leaves s room for o only a small number of competitor rs. o The tr rend toward ds standard dization will l lead to one e dominant platform.
Source: AdM S Mob, Inc. (Jan n 2009)2
1 PC Magazine: “RIM, Ap pple Top U.S. S Smartphone Sales.”
ww.pcmag.com m/article2/0,2 2817,2329913 3,00.asp http://ww
Market Niches and Differentiation o Consider the US market, with OS shares shown above. Apple iPhone and Google Android are the only ones showing growth. ...