Google is going to re-launch its super-cheap Android One phone in India, which was priced at about $US100, and it’s making it even cheaper.
The next round of Android One phones will retail for as low as $US50, according to the Financial Times.
(It may be even cheaper than that. Rajan Anandan, Google’s managing director in India and Southeast Asia, apparently told the FT that he wanted Android One to target Indian “sweet spot” of $US31 – $US47 but the article was later corrected to insist that the phone would not be sold at under 3000 rupees, or $US47).
The news will cause pain to high-price Android phone manufacturers like Samsung, HTC and LG. We told you yesterday that HTC now makes such high losses selling Androids that its stock indicates the company is technically worthless. And LG currently makes only 1.2 cents profit per phone that it sells. Samsung’s revenues have also been in decline, as super-cheap Android phones cream off the low end of its business and Apple’s iPhone 6 decimates the high end.
So it looks as if Google’s super-cheap Android One — which is also supposed to be a high-quality phone — will bring even more discount pricing pain to those companies.
Given that Google needs Android manufacturers to be successful in order to make Android a widespread platform for the apps that Google makes from, why would Google do this? Anandan told the FT:
“Strategically it [India] is very, very important,” he added. “Don’t get me wrong, the revenue is interesting but … we’re here really because 10 years from now a billion Indians will be online and when we have a billion Indians online we think that’s going to make a huge difference to the global internet economy.”
A billion users might buy a lot of apps (from Google Play) or see a lot of Google ads when they use their phones to search for things.
More importantly, 1 billion new phone users will maintain Google’s dominance of smartphone market share. While Apple’s iPhone 6 may become the single biggest-selling phone of all time, the phone market overall appears to be in the process of shrugging it off in favour of Android.
Take, for example, China, where Apple has had a massive success in selling the iPhone in recent years. China is now as big or bigger than the US in terms of iPhone sales. By contrast, Android wobbled for a quarter or two around the iPhone 6 launch but then sailed on regardless, regaining most of its lost share in a matter of months. Here’s a chart of market share in China, using data from KantarWorldwide:
So Google sees this as a battle it can win. The war will have casualties, however, as Samsung and HTC are finding out.
Interestingly, Anandan doesn’t see those victories coming automatically, or purely based on price (Apple’s phones will always be sold at much high prices than Androids):
“There are several battlegrounds where we are not winning [and] local search is clearly the one where it’s most apparent,” Mr Anandan said, noting competition from JustDial, a Mumbai-listed Indian search start-up.