Prospects for the GPhone

The Gphone just came out, and despite the fact that I’m busy beyond belief, I thought I’d take a moment to pen some initial thoughts on the market positioning for the Gphone. Quite simply, The Gphone is stuck between RIM’s Blackberry and Apple’s iPhone – what someone might call a sweet spot, can also be an abyss where feature-rich phones without a clear brand go to die.

At first glance, I have to say I like the concept. First the hardware: It’s got the touch, and it’s sleek, but it sacrifices some sleekness to add-in a qwerty keyboard. This means that while it may not be quite as great in your hands as an iPhone, it appeals to all those grown-ups for whom the iPhone’s on-screen keyboard was a non-starter. Sounds good so far. Now the software: It doesn’t offer Exchange support, it’s heavily tied-into Google’s own services. This doesn’t sound quite so good – I’m crackberried out, and I want something new, but not if it can’t do email well. 

It also has the same package of goodies as the iPhone – the built-in bluetooth, wifi, accelerometers, microphone, etc. But here is the first wrinke I see – there are two variables at work in making the iPhone – or any smarphone from here on -successful – one is the power of the stand-alone product – is the product powerful enough on it’s own that it will attract a robust chunk of the market? The second variable is if the product is powerful enough to attract a meaningful chunk of market share, and the platform is robust enough to want to keep developers on it, then the power of the platform and the 3rd party apps written for that platform suddenly become a tremendous value-add, and also help to create stickiness so that there’s a big switching cost to chosing a different platform. With the PC market this was Windows – it was, stand alone – a strong product, and so it had huge market share, it became the platform of choice, and you wouldn’t switch away becuase none of your apps were built to work on any other platform. My conclulsion is that the platform is important in getting stickiness, and in creating that ongoing ad revenue Google is hoping for, but not in initially selling the device. So how is the Android platform doing? Last I heard, the platform had some fantastic apps being built, but simultaneously Google was alienating the rest of the developer community for giving special treatment to a few teams in it’s competition.

The iPhone v1 – at launch – did not have an AppStore – it sold remarkably well despite the fact that at the time it was a closed platform, and most phones today, whether they sell well or not, don’t have a 3rd party ecosystem. They sell because of the device hardware, and perhaps because of some gimmicky music service or tv service added on top – if at all. Net result, unless the Gphone is – without any 3rd party apps – a strong device + experience – it won’t get the uptake needed. The platform will not sell the device. The device must sell to create a reason to use the platform. And as this ex-Googler points out on TechCrunch, the G1 hardware leaves a lot to be desired.

Supposedly there’s a heavy marketing blitz planned, funded by Google, focusing on the Android story, in time for holiday. However without the strong handset experience, and with the iPhone hitting it’s stride, it is likely that Google’s positioning in the market will be stuck somewhere between iPhone and Blackberry – even as Blackberry launches sleeker & sleeker devices. Furthermore, if this 1st phone isn’t considered a break-out success, it will hurt the Google branding – which is front-and-center, so that when a new better handset emerges in the Spring, it’s uptake won’t be as strong.

Bottom-line, I think the phone will sell, it will sell well if the Marketing volume is high enough, but it will still sell like any other Blackberry, and it will sell less than iPhone. Furthermore, the AppStore will be filled with Apps, but the choice of apps, and level of innovation, will be much higher on the iPhone. Finally, when Google does get around to launching a G2 with a sexier handset in the spring, the brand will have sufferred from G1 bad press, and it will be an uphill battle.


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