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Android Is No Enterprise Mobile Threat

Android

While the Google/T-Mobile handset will make a splash in the consumer mobile device pool Tuesday, with one research firm predicting the open platform phone will grab 4 percent market share by year's end, there's little reason for big enterprise players to sweat, though struggling handset makers should be concerned.

A report today from Strategy Analytics predicts the Google (NASDAQ: GOOG) Android-based platform device will grab 4 percent of all U.S. smartphones' share in the fourth quarter of 2008, accounting for 250,000 units of the estimated 10.5 million expected to be sold. The firm said Google's brand power will be the reason for a "big impact," but that the price point will have to stay under $200 to be competitive.

"The biggest challenges will be style and pricing. Google is under pressure to create an immediate iPhone-like wow factor with the design, while making sure that the retail price and data plans are not overpriced," Neil Mawston, an analyst at Strategy Analytics, told InternetNews.com.

While competitors such as Apple (NASDAQ: AAPL) and Nokia (NYSE: NOK) should be a bit worried, as the handset is viewed as a pure consumer play, smartphone leader Research In Motion (NASDAQ: RIMM) doesn't have reason to worry, pundits said. That's a good thing as the future impact of shaky economics is enough of a headache for smartphone makers and wireless carriers.

"Android is another rival, and serious, new competition will always make life tougher for the existing players," said Mawston, adding that the list of players most vulnerable to Android also includes Palm (NASDAQ: PALM).

Given Palm's mixed revenue report yesterday, that can't be good news for CEO Ed Cooligan, who was optimistic about Palm's new mobile OS scheduled to arrive by year's end.

The only company likely happy to see Android and the G1/HTC Dream handset is RIM, analysts said.

"Android's arrival won't spark a mass defection from BlackBerry. The playground is more than large enough, and Google won't be stealing market share from RIM anytime soon," Carmi Levy, an analyst at AR Communications, told InternetNews.com. "Apple, on the other hand, may want to take a closer look at its new competitor," Levy added.

A pure consumer play

As analysts all noted, the Google handset is a pure consumer play, yet not on the level on which Apple's iPhone hit the market over a year ago.

"I think the kind of consumer reaction to the device is not going be the same as what we saw for the iPhone," Carolina Milanesi, an analyst at Gartner covering mobile devices, told InternetNews.com. The first Android system is arriving on a HTC device, but future Android phones are expected to arrive next year from Motorola (NYSE: MOT), Samsung and LG.

According to pundits, the new handset won't rock the enterprise side given the security, stability and reliability levels that companies want in mobile communications.

Strategy Analytics' 4 percent market share prediction appears aggressive to Maribel Lopez, founder of Lopez Research. The analyst noted how Apple's iPhone came after years of development time, and she doesn't expect Android to have the same "wow" impact even with savvy consumers.

"They will get market share, but it will be with the Google fans and techies," Lopez said. "Android is in the unique position of starting at the base of nothing but being compared to everything out in the market. The iPhone was also compared against everything, but it also changed many things," Lopez said.

The one aspect that could be the future market game changer is Android's openness, pundits said.

"Android's beauty lies in its openness, as it lowers the barriers for everyone from developers, carriers to third-party providers, who are all interested in getting into the market," said Levy, noting the approach holds potential for consumers as it can bring lower prices and a wider range of offerings.

"A more open playing field encourages and rewards innovation and competition," Levy said. "Google has followed this mantra in the Web services space, and it's about to bring that kind of thinking to a market that's traditionally been more insular than other areas of tech."

Levy considers the iPhone the most vulnerable device at this point.

"The playground is more than large enough to account for Google's arrival, and Google won't be stealing market share from RIM anytime soon. Apple, on the other hand, may want to take a closer look at its new competitor," Levy said.

Going forward, handset vendors will be pressed, at least in the consumer space, to design and develop devices featuring exceptional user experiences and special mobile services, Gartner's Milanesi said.

The big winner from all the mobile handset activity will be users. After Android arrives at least two dozen more devices will come from Motorola and several more from Nokia, according to announcements earlier this year.

"I think the fourth quarter is going to be very competitive, though the market conditions are not optimal, as users are being careful how they spend their money," Milanesi said. "We also have many new phones coming to market during the quarter, which is going to make it even more difficult, as it means consumers will have choice."

Levy echoed Milanesi's viewpoint and asserted that all handset makers should be worried to a certain extent.

"Motorola still hasn't recovered from the near-total collapse of its handset business and is in no position to challenge anyone independently," Levy said. While Motorola is a member of Google's Open Handset Alliance, which directed the Android build, how Motorola leverages that relationship into its recovery roadmap is still unclear, he explained.

For Nokia the competitive scenario is a bit more complicated given its recent move to buy up the open source Symbian platform, and its current U.S. strategy that has included music services and an unlocked open device.

"It shows that Nokia takes Google's initiative incredibly seriously, but its existing business model simply won't fly in tomorrow's much more competitive wireless market," said Levy, pointing to the vendor's slipping market share and "stale" designs.

"The stage is set for a major battle for open standards dominance of the converged device space," Levy said.