Canadian smartphone enthusiasts received welcome news this week that Google’s Nexus One is coming here. The release of the ‘Google phone’ worldwide is the latest in a series of steps the company has taken to enter the mobile market.

It’s no wonder that Google has ventured into the mobile sector with the burgeoning smartphone market estimated to grow by 38 % in 2010 in North America and with smartphone sales expected to overtake PC sales this year. Google’s approach was to setup the open handset alliance (OHA) in order to create the open source Android OS for use by members. This strategy paid off, in December 2009, Frost and Sullivan projected that Android’s market share would jump from 1% in 2008 to 12% by 2014 in what they claim could be the fastest growth for a mobile product in the history of the mobile industry. Shipments of Android phones exceed 60,000 devices a day and have doubled over the last quarter (at the time of writing of this report).

How does Google make money from Android?

It’s not only consumers who are following Google news closely, but other market players. The latest forecasts by Canalys and Frost and Sullivan related to smartphone shipment forecasts in North America for 2010 have revealed several interesting trends. The following chart shows an average of the expected trends.

Despite phenomenal sales growths of more than 20 % and 27 % respectively, RIM and Apple may still lose market share in 2010. The phenomenal growth of the smartphone market explains how RIM and Apple will increase sales while losing market traction. One of the main trends that materialized and that was echoed in MWC 2010 is that there is increased pressure on handset manufacturers to improve data efficiency which is one of the main advantages of RIM devices which allows them to retain a competitive edge. However, in a recent report by The Globe and Mail titled “Is RIM losing its competitive edge?” one analyst questioned this premise since RIM relies on a centralized approach in order to improve efficiency and there are doubts about the scalability of this approach especially with the expected explosion in mobile data demand.

Overall, there is a general consensus that spectrum efficiency will be key to operators and it was one of the major trends that we reported on at MWC 2010, so based on this, analysts agree that RIM will continue to do very well in the short term especially in the enterprise environment, some concerns related to the long-term viability of the company will always linger since it needs to stay on the cutting edge of innovation, however, time and again it has proven its critics wrong.

On the other hand, Apple will continue to rely on content and applications with its iPhone platform and the recently released iPad platform which will be available on April 13th although this has again raised severe concerns about mobile carriers’ availability of bandwidth to support these applications.

The spectrum crunch is opening the way for new innovations and offloading to unlicensed spectrum, the latest product is LoKast from NEARVERSE, know of any innovations in this space ?  Does this create opportunities for Wi-Fi vendors such as Ruckus Wireless ?

One of the main trends we observe is that while there is contradiction related to the exact market share it will gain; sales of Android-powered phones will double over the next year as a testament to the success of the open-source movement in general.

What do you think about open source and cloud computing?

On the other hand, data from StatCounter (plotted below) tracks website browsing hits by different mobile OS platforms, also shows the growth of the Android OS in North America as a preferred web browsing platform. Although these results should be interpreted with caution due to the fact that not all websites report using this service.

So what is Google’s strategy ? It’s simply to push more traffic to the cloud. With the widespread proliferation of Android (F&S predicting 24% market share by 2014), Google recently announced its “mobile first” strategy at MWC 2010 where it demonstrated synergy between the mobile with its limited form factor and processing power and the cloud with its almost infinite capabilities, thus enabling applications such as voice searching and semantic web applications.

So when Google’s CEO, Eric Schmidt, asks the question “What next?” the answer is likely to be “To revolutionize the industry”, says Dawood Khan, Partner at Redmobile Co, a Management Consulting & Market Research firm specializing in Wireless, Cloud Computing, and Web 2.0 technologies.

These trends reflect Google’s disruptive approach to conquer the wireless sector. For more insights into Google’s strategy for Android and Chrome, please download our latest reports >>

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