Google: We're Fresh Out of Androids

Editor’s note: A previous version of this article was published with a figure of pre-ordered handsets that was incorrectly calculated. The author of this article intended for that number to be a figurative representation rather than an official pre-order figure. The article has been corrected, and The Motley Fool regrets the error.

Prepare for an epic showdown between two gnarly gunslingers when the first Google  (Nasdaq:  GOOG  )  Android phone hits the streets in a couple of weeks. T-Mobile  (NYSE:  DT  ) , which nearly tripled its order of G1 Android phones from Taiwanese handset maker HTC because of “great anticipation and the heavy pre-sale demand,” has actually sold through all of its preorder units.

Although pre-orders for the G1 Android phone are only available to current T-Mobile subscribers, the stage has been set for a dazzling entry for this phone, which is clearly in high demand. No official word from Google or T-Mobile as to how this compares to the 10 million second-generation iPhones Apple  (Nasdaq:  AAPL  ) originally hoped to sell this year -- Apple may already have reached that goal, according to the Silicon Valley rumor mill -- but it's a heck of a rush for an unproven software concept on never-before-seen hardware. 

Google needs the G1 to be a hit. Given all the hype around the Android platform, a weak or disappointing first example could turn a lot of prospective buyers off entirely: "Oh, that's all? Gimme an iPhone!" That could be the end of the entire Android platform.

That's why Google has worked closely with the service and hardware suppliers here, to make sure that the first shot in this battle is a killer. The Android is armed to the teeth with touchscreen and sliding keyboard, Wi-Fi,  Bluetooth, and 3G networking, but the real difference-maker is an application marketplace that could open up the Pandora's box we call a smartphone. These gadgets are technically capable of much more than the few morsels that service providers like AT&T (NYSE: T  ) and Verizon (NYSE: VZ  ) Wireless allow us to taste, and Google's open attitude to its developer community finally unleashes the full power of smartphones' potential.

I don't see Google going for Apple's throat here, but the search giant's commitment to this vision is real. The company paid out $10 million to the winners of an Android application development contest -- but won't take a dime out of the applications' sales. Instead, Google wins when more people use the Web.

If the Android platform kills the iPhone, that's great. Google wins. If Apple ends up killing the Android, it'll have to be with better software that takes full advantage of connectivity everywhere. Again, Google wins. The only way to lose is to release a total dud, so failure this month is not an option.

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Fool contributor Anders Bylund owns shares in Google, but he holds no other position in any of the companies discussed here. He is a current T-Mobile subscriber, but hasn't ordered a G1 -- yet. You can check out Anders' holdings or a concise bio if you like, and The Motley Fool is investors writing for investors.


Read/Post Comments (11) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 11, 2008, at 10:13 PM, RipRagged wrote:

    Open source will destroy Android. Unlike a computer it MUST devote resources to the telecommunication function all the time. Programmers, especially of games, like to tie up as much of the processor and RAM as possible.

    Open source applications will render far too many of the devices useless for all but the most geeky propellerheads.

    Android fails. In one year you'll forget it ever existed.

  • Report this Comment On October 12, 2008, at 6:00 AM, g1phone wrote:

    I wrote about this article via Pulse2 a couple of days ago on my blog.

    http://www.g1phone.blogspot.com

    Do check it out for all the latest news on the G1

  • Report this Comment On October 12, 2008, at 3:49 PM, eagle7186 wrote:

    The comparison you have in the second paragraph (1.5 million versus 10 million) is a silly comparison to make. You are comparing the iPhone, which has been on the market for 1.3 years, to Android, which has been on the market for negative 2 weeks as of when you wrote this.

    A better comparison to make is that it took 74 days for the iPhone to sell 1 million handsets. It has taken Android approximately 18 days to reach 1.5 million pre-orders.

  • Report this Comment On October 12, 2008, at 6:58 PM, chuffpdx wrote:

    RipRagged, you have obviously never heard of a process scheduler. You can assign priority to certain processes, like the phone process, to always get CPU time if needed.

    Small semantics lesson:

    Android = OS

    G1 = Phone/Computer

    How is the G1 unlike a computer?

    And yes, the title of the authors article is incorrect. You can't "run-out" of the Android OS. The author obviously meant the "G1".

  • Report this Comment On October 13, 2008, at 2:58 PM, henrystamp wrote:

    RipRagged --- even assuming the OS is no good at doing process control to keep greedy processes from overloading a processor... the fact is, the g1 has a multicore processor with one processor totally dedicated to core phone functionality.

  • Report this Comment On October 13, 2008, at 5:35 PM, beetlebug62 wrote:

    Where are you people getting 1.5M G1s pre-ordered? Engadget reports that the initial T-Mo order was 60k. Now, the rumor is that the initial order has been tripled. That comes out to 180k, nothing like 1.5M. HTC itself said that it was expecting to produce only 500k of these phones this year. So, where is this 1.5M coming from?

    Oh, MotleyFool. Where's the source? Isn't it possible that poor Anders Bylund, took two reports and made a mistake. He heard that HTC was planning on building 500k G1s in the 4thQ, and took that to mean that was T-Mo's pre-order?

    Just run the freakin numbers. T-Mo has how many subscribers? 10% of those are smartphone users, so what is their potential market, if all of those existing users are upgrading to a G1? Exactly. There's no way in the world that T-Mo could have pre-sold 1.5M G1s, especially given that they have a 3G network in only 15 markets. Look at all the complaints the iPhone had, and it launched its 3G network with over 100 markets. There's no way that the G1 could possibly sell in the same order of magnitude as the iPhone given those two factors, one, the existing number of T-Mo smartphone subscribers does not support the math that half of them are upgrading. And two, the number of actually viable T-Mo 3G markets is pitiful.

    Someone is reporting nonsense without thinking about whether it could even be possible. This is like Scott Moritz pretending that Apple was trying to sell 1M iPhones on the first weekend, back in 2007. We later learned his supposed fact was just imaginary.

  • Report this Comment On October 13, 2008, at 5:47 PM, beetlebug62 wrote:

    Anders wrote, "That's why Google has worked closely with the service and hardware suppliers here, to make sure that the first shot in this battle is a killer. The Android is armed to the teeth with touchscreen and sliding keyboard, Wi-Fi, Bluetooth, and 3G networking, but the real difference-maker is an application marketplace that could open up the Pandora's box we call a smartphone. These gadgets are technically capable of much more than the few morsels that service providers like AT&T (NYSE: T) and Verizon (NYSE: VZ) Wireless allow us to taste, and Google's open attitude to its developer community finally unleashes the full power of smartphones' potential."

    The G1 is a "killer"?!? Are you serious? Touchscreens are NOT new. Multitouch screens are. Your supposed "difference-maker" is an app marketplace? How many apps are in the G1 marketplace? AT&T is already allowing Apple's AppStore to offer more than 4000 applications. Do you really think there are going to be more in the G1's "difference-maker"? It's already playing catchup, so how's that a "difference-maker", unless you mean it in the opposite sense.

    As for Google's "open attitude", is that why Google had a secret preferred developer program that got betas, while the vast majority were locked out, and only found out due to a misplaced email distribution?

    Do you realize that no matter how open Google or its handset offerings may be, that it always comes down to the wireless carrier? It's quite remarkable that Apple was able to negotiate such a good deal for consumers with an all-you-can eat data plan, when prior to their entry all the carriers were trying to monetize every little bit of data. Particularly onerous was music and ringtones. With the iPhone, Apple has cut out AT&T from music and ringtones, and AT&T allowed it.

    Did you even stop to think why Verizon, rejected the iPhone, when Apple approached them first? They didn't want to give up all their little revenue streams.

    Look at T-Mo, they're 4th in what is essentially a 2-horse race among wireless carriers. Of course, they're going to be first to offer an Android phone. What do they have to lose? Their 4th place status? Android won't be a success, until it is offered on Verizon or AT&T, or both, and unfettered with restrictions. Until then, the jury is out on Android.

  • Report this Comment On October 13, 2008, at 6:52 PM, boswellaz wrote:

    beetlebug62 wrote; Just run the freakin numbers. T-Mo has how many subscribers? 10% of those are smartphone users, so what is their potential market, if all of those existing users are upgrading to a G1?

    I too would like to know the source of the 1.5 million pre-order number, but it doesn't seem entirely out of the range of possibilities. According to Wikipedia, T-Mobile has just shy of 31 million subscribers in the United States. If, as you claim, 10% are smart-phone users that is 3.1 million smartphone users. Is that the entire potential market? You don't think anyone that doesn't already have a smartphone would want a smartphone? You don't think that customers from other networks would switch to tmo for the android?

    Anders, can you please reply with the source for your data? I am very intersted in knowing that as well.

  • Report this Comment On October 13, 2008, at 9:05 PM, beetlebug62 wrote:

    Yes, there will be upgraders from feature phones and switchers, but those numbers are small, tiny. There's no way that 50% of a carrier's existing base, upgrade. It NEVER happens. The 1.5M number is clearly wrong. It's an order of magnitude wrong. The more likely number is as Engadget proposed that 60k pre-orders were tripled to 180k. This makes sense given T-Mo's size and user base. 1.5M just doesn't pass the sniff test.

  • Report this Comment On October 13, 2008, at 9:11 PM, beetlebug62 wrote:

    Just to add to my answer, switchers are likely to switch for better coverage. T-Mo has 3G in just 15 cities. How is that going to attract switchers? You can use EDGE, but the point is to use 3G for the speed. I mean, look how iPhone users complained and AT&T had 3G launched in over 100 cities. I think they're in 200 cities now. Do you really think people will switch to T-Mo for their network?

    As I mentioned the most likely people to pre-order a G1 are upgraders who already use a smartphone from T-Mo. As you note, that's about 3M users. Do you think 50% of those are upgrading?

  • Report this Comment On October 14, 2008, at 8:28 PM, beetlebug62 wrote:

    Wow, the silence from Anders is deafening. Jacqueline Emigh of Betanews has now picked up the scent, and T-Mo has only responded in generalities, without confirming Anders' contention that T-Mo has 1.5M pre-orders. Here's the link to Jacqueline's article:

    http://www.betanews.com/article/TMobile_cannot_confirm_15M_p...

    Some choice quotes:

    " T-Mobile spokesperson said that the industry's first Android device is "one of the most highly anticipated phones of the year," that demand "continues to be robust," and that the phone will be available on Oct. 22 for customers "to be able to experience.""

    Ah, lovely, PR-speak. Do you think they'd keep quiet if they'd pre-sold 1.5M units?

    And more PR-puffery:

    " T-Mobile has told BetaNews, "While we have not released specific pre-sales numbers, nor do we comment on rumor or speculation, we look forward to Oct. 22, when our customers will be able to experience this unique phone first-hand.""

    Yep, that pretty much confirms it. It's like the Kindle. If you don't tout your sales, could they really be that good?

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