Ovum comments on the first Android-based phone

-mobile and Google have announced the launch of the HTC-made T-Mobile G1, the first device to use Google’s Android software platform. The iPhone-like device will debut in the US on 22 October for $179, followed by launches across Europe.

Here, research firm, Ovum, comments on how it expects the G1 to fare in the marketplace.

Google now needs the other members of the Open Handset Alliance to build critical mass for the platform if it is to fulfill its mobile ambitions. Google needs broad industry support for Android: the G1 is only the start, stated Ovum.

The critical question for the industry is will Android make it easier for Google to roll out its applications and services or will it provide a platform for mobile operators to launch their own services? At its launch, Google said its raison d’etre for Android was to reduce the vast amount of software fragmentation that currently plagues the handset market, in order to encourage the roll out of applications and services. This can only be achieved if the platform is shipped in sufficient volumes and accounts for a significant amount of the market; it cannot be achieved by a single product even if it does live up to the high expectations set by the iPhone.

If we use the G1 as a guide, it unsurprisingly has Google’s services built in, including Google Search (for local and web searches), Maps (including Street View), Gmail, Youtube, Calendar, and Google Talk. T-Mobile and Google have not disclosed any details of their commercial relationship but it would seem that T-Mobile, at least in the US, is content to have a product that competes directly with AT&T’s arrangement with Apple with the iPhone. There is also no information on if or how Google will extend its advertising business model to the G1 or other Android-devices.

If, as Ovum suspects, other Android-based devices are equally as tied to Google’s services as the G1 this will ultimately impact how quickly the Android platform is embraced by other mobile operators. As we have seen with the iPhone, Apple’s stance to restrict involvement from network operators has reduced its appeal for some networks.

Google’s move to provide all of the source code of the Android platform and the G1 after it is publicly available is at least a sign that operators can build their own services if they have the will to do so.

Application compatibility will be the key to Android’s success
Beyond the issue of mobile operators’ own services, the other major challenge that Google faces with Android is building and maintaining momentum for innovative third-party applications within a horizontal ecosystem. As Apple has demonstrated with the App Store, building developer momentum is the key to success, driving device usage and adoption by consumers and operators.

However, the iPhone, unlike Android, is part of a tightly managed environment with device and services vertically integrated. If Android is to become a credible platform in its own right (achieving volumes beyond HTC and the G1) it needs to be used in multiple handsets by a variety of phone manufactures. Android will need to be modified for different hardware platforms but crucially it must maintain compatibility for the third-party applications that run on top.

This is not a trivial exercise, as demonstrated by Sun Microsystems with its mobile Java platform, a technology that is not dissimilar to the application environment used within Android. Failure to maintain compatibility between Android-based devices will severely inhibit demand and innovation for the platform.