Beset With Failures, Google Tries to Breathe New Life Into Android One

Last September, Google inaugurated Android One, a cheap smartphone line for emerging markets, with typical Google audacity: It was billed as the fix “for the next five billion” soon to come online.

The initiative, which promised low-cost devices with the latest version of the Android operating system and Google’s full software imprint, was a point of pride within Google. Started in India, one of Google’s biggest markets and the birthplace of Android chief Sundar Pichai, it was counted among the many bids to spread Internet access globally.

But internally, Android One was seen as an attempt to avoid another China, where Android is popular but comes without Google’s services. It was also a hedge against the rising power of Facebook, which is becoming, in many parts of the developing world, the gateway to the Web.

So far, it has done neither. And the audacious hardware program has been anything but.

Android One began with a bang, thanks to the tremendous marketing dollars Google put behind it. But despite its scale, it has been a disappointment, beset by reluctant consumers and manufacturing partners, as well as misfires from the search company that has never quite cracked hardware, according to multiple people familiar with the project.

Android One spread with relative speed, reaching its seventh country, Turkey, in May. Google also is expected to announce in India an additional OEM partner, which will make the eleventh Android One device, according to sources close to the company. Each phone runs on Android Lollipop 5.1 and Google is moving toward updating to the next version, a rarity across emerging markets.

Yet Google has failed to get the phones into consumer hands. In the program’s first 100 days, around 700,000 Android One phones were shipped, primarily in India, according to estimates from Counterpoint Research. The same number of devices were shipped in the subsequent five months. (Google does not share sales figures, as with its Nexus hardware line.)

As it has done in India, Google recruited national manufacturers in the next countries, Indonesia and Bangladesh. While growing, those hardware partners lack the muscle of larger phone manufacturers that run Android, such as Samsung. “Google has been able to rope in ‘local kings,’” Neil Shah, a director at Counterpoint, wrote in an email. “But the competition has been even more aggressive than the Android One phones. The sub-$100 retail dream and the corresponding execution didn’t go exactly as it was planned.”

Google declined to comment.

Cutthroat market

Part of the problem with Google’s strategy began when it reached out to country-specific hardware makers rather than the global giants.

Local manufacturers were a logical target for Google: They are rising fast across Asia and they’re more willing to bend to Google’s stringent restrictions on Android One. But the market they’re in, hawking super cheap phones, is cutthroat, with low profit margins. They must contend with new devices from global players, like Samsung and Motorola, as well as flashy newcomers like Xiaomi.

Take Micromax, the largest of the three initial hardware partners. The company has risen swiftly, toppling Samsung in the country in overall sales. Micromax told the Wall Street Journal it now ships a million smartphones a month.

But few of those are the Android One device. One source who has worked with Micromax said the company has put little emphasis on the phone and is very unlikely to release another. Google’s ample marketing lift helped trumpet the devices with the Android brand at its center.

Yet, in the mobile industry, where margins are razor thin, manufacturers need profit or volume. Google delivered neither, all while locking its Android One partners out of software customizations. “The OEMs (original equipment manufacturer) would have to be brain dead to fully embrace it,” the source said.

With little room for innovation, Android One offered at best an opportunity for volume, with narrow profit margins and little way for each company to stand out from one another.

Two months after the Android One launch, Micromax announced a deal with Cyanogen, the startup building a non-Google version of Android that offers far more flexible terms for the manufacturers, such as Sony and Smartfren, a telecom and device-maker in Indonesia.

Micromax did not return requests for comment.

A source close to another manufacturer said the handset maker considered Android One, but passed on the offer because the initiative had failed to show “market traction.”

“Thankless” task for engineers

Part of that failure comes from Google’s short-sightedness. For one, it may not have anticipated the dearth of help from its hardware partners, which have largely bailed on marketing the devices, sources said.

And Google failed to foresee the internal stress of the feat. Central to the company’s mission with Android One is getting more devices on the latest version of its software. But the hardware manufacturers have little incentive to help this — they sell the phone and move on. For engineers working on Android, coordinating the updates across all the handsets, in seven very different markets, is taxing and undesirable. One person familiar with the matter described it as a “thankless job.”

Plus, most of the engineers responsible for Android One sit in Mountain View, removed from the thorny world of developing market consumer electronics.

Google spent big to market Android One devices, but failed to assemble a viable strategy to sell them, people familiar with the company’s launch in India said. Most phones there and in similar markets are still sold in small, rural retail outlets. Google’s decision to delay offline sales for three months upset retailers, sources there said.

Peeyush Ranjan, Google’s head of engineering in India, who managed Android One and other campaigns, decamped for e-commerce firm Flipkart in April.

Then there’s revenue, or the lack thereof, a nagging issue for all of Android. Google wants the next five billion online to be on Android and on the latest version with Google services. Getting there is not easy. Many Indian Android users, for instance, shut off Google Now, the mobile personal assistant and the latest star product inside Google — it drains too much data. Google attempted to bake data subsidies, like free Play Store downloads, into Android One but did not ultimately, for many of the same reasons Facebook has had difficulty.

A nudge, not a market grab

The saving grace on Android One could be the long game.

As with its Nexus line, Google is likely not using device sales as its metric of success. Instead, it’s trying to nudge the mobile industry to run current (and more uniform) software. That could take time. Google has imposed similar restrictions on cars running Android Auto as well as Android Gear watches.

Another corollary is Chromebooks, Google’s cheap PCs, which launched in 2011 but are only now claiming noteworthy market share.

In fact, the Googler who once managed Chromebook globally, Caesar Sengupta, a VP based in Singapore, now oversees Android One. He is close to Pichai and is admired within the company, largely for his work on Chromebooks.

“If there’s anyone at Google who understands the hardware partner ecosystem, it’s Caesar,” said Shailesh Nalawadi, who left Google two years ago to co-found Mavin, a mobile startup focused on reducing Internet access costs in markets like India. “He’s probably the best person to be working on this.”

Of course, the other precedent for Android One is Nexus. Launched in 2010 as the pure Google “superphone,” Nexus One arrived with the wrappings of an ambitious device to seize the market. Google aimed to change not just how phones were made, but also how they were sold, seeking to largely bypass the wireless carriers.

That effort flopped, but Google has kept the Nexus program around with a more basic purpose — trying to set the bar for hardware makers and allowing Google a chance to influence the market and see what Android looks like from the phone maker’s vantage point.

During the keynote at Google’s recent developer conference, Android One received a passing mention. Nexus went unnamed.