Market Insight

T-Mobile launches G1, not so open after all

October 22, 2008

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Handset manufacturer HTC, mobile operator T-Mobile and Google have unveiled the first phone based on the Google-backed Android operating System. The G1 is a T-Mobile exclusive and will launched in the U.S. on October 22 for $179 with a two-year contract including data. The device will launch in the UK in November (free on a £40 per month contract) and across remaining T-Mobile countries in early 2009. The G1, which features a full touch-screen and a QWERTY keyboard, enables access to Google's mobile application store Android Market and several existing Google products including Gmail, YouTube and Google Maps. According to Google, all applications will be available for free until Q1 2009 when T-Mobile's exclusivity over the Android platform ends. Developers will then get 70 per cent of purchases while the rest will go to mobile operators for billing provision. This is the same revenue sharing agreement developers get on iTunes except that Apple gets the remaining 30 per cent.


Although press coverage tends to pit the first Android-powered handset (the G1) against Apple's iPhone in some sort of ultimate match for smartphone supremacy, limiting oneself to this analysis would be missing a bigger picture where Google and Apple have very different revenue streams and thus objectives. While the former aims to secure an open mobile environment to open the market for advertising revenues, the latter remains a technology company whose revenues are driven by hardware sales.
The G1 is far from being the revolutionary product application developers and content providers were hoping for as it is still under the control of mobile operators.
Mobile operator T-Mobile has the exclusivity of the product over its lifetime and has a veto right over applications available on the G1's version of Android Market. Screen Digest believes that we will have to wait until 2009, when T-Mobile's exclusivity on the Android OS runs out and new Android handsets and paid for applications are available, to see the full capabilities of the platform.
Android is in no way limited to the mobile handset. It could eventually be used to power ultra-portable PCs (as an alternative to Windows or some Linux distributions), in-dash systems (i.e. automobile in-dash entertainment), or set-top boxes able to deliver contextual advertising on top of TV broadcasts. Combining Android-powered set-top boxes with Google's Grand Central services could also position Android as a powerful communications platform for the connected home.

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