Android One smartphones set to become expensive

Indian manufactures are set to price Android One handsets between Rs 7,000 and Rs 10,000, higher than the planned sub-$100 (Rs 6,000) tag.

NEW DELHI: Android One, the Google project that promises rich smartphone experience on low-cost devices, faces its first big test when Micromax, Karbonn and Spice launch products based on it in India early next month.

The three Indian manufactures are set to price the handsets between Rs 7,000 and Rs 10,000, which is higher than the initially expected sub-$100 (Rs 6,000) tag. At this price, these devices — at least one each initially from the vendors — would give the same experience of using mid-to-high price range devices, people familiar with the products told ET.

Google is expected to roll out similar handsets in other emerging markets depending on consumer response in India. The success of Android One is critical for Google as it would help the company bring in new users to its Android platform, especially at a time when the market share of the most popular mobile operating system could hit a plateau globally.

Google didn't respond to emailed questions. Micromax, Karbonn and Spice declined comment as well.

One of the people directly involved in the development of the smartphones said the prices have gone higher than the initially planned sub-$100 because Google intends to offer better features and apps. "Android One is setting minimum hardware and software standards for the three vendors, who are adding or improving upon them in future devices under the Android One umbrella," this person said.

The decision on final pricing of the devices is left to the local handset makers who can choose their addressable market segments while competing in the thriving Indian smartphone market which is set to double to more than 80 million devices this year.

To ensure product quality and final consumer experience, Google is working closely with the companies to develop the handsets and specify compatible components that local handset makers would have to incorporate from original design manufacturers in China, according to people privy to the contours of the talks between the vendors and the US company.

Android One is a reference platform that device makers can follow to develop and produce low-cost smartphones. It ensures that even low-end devices can run Google's latest software and updates to offer uniform user experience.

Google in late June announced that it had tied up with Micromax, Karbonn and Spice to develop sub-$100 smartphones, saying some of the initial devices will hit the markets in September, starting with India. The US internet major had said it was also working with Indian carriers to offer affordable data packs to go with the smartphone, but didn't elaborate, while showcasing a Micromax device that had dual sim slots, a 4.5-inch screen, expandable memory and FM radio.

One of the smartphones that is likely to be launched next week, and that we had an exclusive look at, has a removable back, 1700mAh battery, dual sim slots and SD card slot to expand memory. The devices that the vendors are offers are likely to have 5MP cameras, quad-core processors and 1GB RAM with 4.3-4.5 inch screens. They will run on Android 4.4.4 (Kitkat) operating system.

"The operating system on the Android One devices will be upgraded to Android L in October," one of the people said. This upgrade will allow users to have better browsing and gaming experience at affordable prices, making the smartphones attractive buys for first-time buyers and those wanting to replace their existing phones.

"Advantages of screen size and Google updates could make a difference to these smartphones offering better performance to what Indian buyers are accustomed to," said PwC India's Mohammad Chowdhury.

Sources at the handset vendors said that Google is spending resources on handholding them for creating smartphones of specific quality in the future. ET had earlier reported that Google will spend more than Rs 100 crore with its partners on advertising and marketing for the $100 smartphone.

"The arrangement under Android One is a win-win for all parties," said Vishal Tripathi, principal analyst at Gartner India. "Consumers get better, yet cheaper, phones, Google gets to control hardware and software besides easy management of content on its app store and updates, while handset makers may get more margins."

The internet giant had been planning the Android One initiative since 2013. This tied in well when one of the leading Indian vendors formally approached Google in February 2014 with a proposal for low-cost smartphones for emerging markets like India.

"The fact that Google was already planning a big move on the affordable handset front made it all the more easier for the handset makers," a person aware of talks between the vendors and the US major said.

Google intends to increase presence in emerging markets where smartphone usage is on the rise as opposed to China or Western markets, which face saturation.

And, it chose the Indian home-bred phone makers who have changed the dynamics of the country's handset market, pushing even established players like Nokia to being an also ran in the Indian market in just four years. Analysts said since the local players will grow further and one of them may even topple leader Samsung soon, it's only logical.

"Android One will also help Google to bring in new users to its Android ecosystem, especially at a time when its overall market share could hit a plateau," said CyberMedia Research's lead analyst, Tarun Pathak.

According to IDC, Android had nearly 85% of the global handset market, far ahead of the nearly 12% held by Apple's iOS and 2.5% of Windows.

With Android One, "the proportion of sub-$200 volumes will climb even higher," from the nearly 59% currently, IDC said.

Pathak said that with Android One, Google hopes to counter the threat from growing forked Android devices and against new entrants in the operating system market like Firefox's Mozilla, Samsung's Tizen and Jolla's Sailfish
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