- Google recently launched the Android one program in India, partnering with Micromax, Karbonn and Spice mobiles.
- Emerging markets, especially India, are seeing a rapid transition from feature phones to entry level smartphones.
- Android One will offer an improved user experience on lower end smartphones, helping Google capture first time smartphone users and expand the android presence.
Google (NASDAQ:GOOG) recently launched the Android One program in India with new devices from Spice, Karbonn and Micromax. This will be followed up by more launches in Sri Lanka, Nepal, Indonesia, Philippines and Pakistan. The program aims to bring a good android experience to low-end smartphones, which has been a long standing problem.
Low-end smartphone users have often suffered due to bad user experience resulting from poor hardware or use of modified android versions on these devices. The Android One program is an attempt to set this right with Google offering a true android experience to end users by also giving the hardware specifications to the device manufacturers.
Android accounted for 85% of smartphone market share in Q2
According to IDC estimates, Android OS accounted for 85% of smartphone unit shipments in Q2 2014, which was up from 80% in Q2 2013. The incremental gains in smartphone market share will continue to be smaller as Android already accounts for a major share and will, therefore, have to protect its market share apart from grabbing new customers. The launch of larger screen iPhone device will definitely make incremental market share gains tougher.
In view of competition with Apple (NASDAQ:AAPL), Android one is a smart move by Google. While Apple will fight for the premium smartphone customers, Google will continue to expand its presence in the lower-end smartphones, boosting its market share of overall smartphones. Google’s move to launch the Android One program will help it expand the Android presence by offering feature phone users with a cheap and reliable android option at a competitive price. India is one market which is seeing a rapid transition from feature phones to smartphones.
Rapid Transition To Smartphones In India
According to a report from counterpoint research, the Indian smartphone market grew 68% YoY in Q2 2014 while the feature phone market saw a decline of 16% YoY. The report also points out that majority of the smartphone demand was driven by local and Asian smartphone manufacturers. Therefore Google tie-ups with local manufacturers should catalyze this transition due to an improved user experience.
According to a report by Mary Meeker, partner at the venture capital firm Kleiner Perkins Caufield & Byers (KPCB), India is the third largest smartphone market in the world with a user base of 117 million users, apart from being the fastest growing market.
With a smartphone penetration of just 10%, the growth potential for smartphones sales in India is tremendous, considering its population of 1.2 billion people and expected mobile teledensity of 97% at the end of 2014. The smartphone penetration in countries like Indonesia and Philippines is also on the lower side and Google is spot on with following up its India launch of Android One with launches in these countries.
Launch of Android One will help to offer a stable and improved user experience on lower end smartphones which could hasten the transition from feature phones to smartphones in emerging markets. Expanding the overall footprint of smartphones will help Google expand the android presence beyond its current market share as it captures new/first time smartphone users. Strong sales of Android One smartphones would mean more prominence to Google’s suite of mobile apps. The result will be an increased usage of Google's suite of mobile products. And more users lead to more data and more money in the world of online advertising.
We continue to re-iterate our long term positive outlook on Google stock, as reflected in our Google stock analysis.