Paranoid Android

BACK IN FEBRUARY 2009 news broke that Google would launch China's first smartphone based on its open source mobile OS - courtesy of its Android acquisition a few years earlier. At the same time analysts were speculating that there will be at least 18 Android phones available worldwide, Android would enjoy exponential growth rate and the world would be a better place.

Unicom and China Mobile, China's biggest mobile operators were lining up like prom queens to launch an array of Android enabled smartphones. Google would prevail where Apple had stalled and Microsoft was absent mindedly wallowing in a Jurassic fug.

Then all hell broke loose. Chinese hackers targeted Google accounts of human rights activists and Google responded with an opening salvo on its official Blogspot entitled ‘A new approach to China'. Google announced it would be reviewing its business operations in China because it was no longer willing to censor results on Google.cn. A huge story in and of itself but then Google went full metal jacket by declaring that the situation goes to the very heart of freedom of speech, an issue enshrined in the First Amendment to the US Constitution no less. Enter bandwagon.

US Secretary of State Hillary Clinton gave a speech about Internet freedom last Thursday and said, "Countries or individuals that engage in cyber attacks should face consequences and international condemnation." Inflaming US-Sino antagonism further, some US parties went one further, suggesting that the great firewall of China should be brought to book before the Word Trade Organisation, of which China was only made a fully paid member nine years ago.

China responded with a spokesman for China's Ministry of Industry claiming that the Chinese government had nothing to do with the cyber attacks. While Google didn't officially claim the Chinese government was culpable, the insinuation is clear. China's rebuttal was an attempt to answer what the Chinese state newspaper called "information imperialism" from what it regards as an ever more interventionist US government.

Round three. Google's decision not to play the censorship game produced potential repercussions not just for Google but for hardware manufacturers deploying Android on their mobile platforms. Last week, China Unicom announced that Android phones would be delayed indefinitely because of debugging problems. Nice one. Casualties of war include Samsung's GT-i6500U and Motorola's XT701, thereby denying Google full entry in to a market with more than 700 million accounts. The Samsung GT-i6500U was to include a visible Google logo and branding with both phones running Google applications. As of today the only Android phone slated for release through Unicom, is Lenovo's Lephone, which just so happens to be - would you Adam and Eve it- a Chinese company.

Google doesn't want to acquiesce to Chinese demands but it does need to extricate itself from a diplomatic nightmare and protect its nascent mobile communications business where it has a serious slab of stake, not just through leasing Android to hardware partners, but for its own Nexus One smartphone.

Google needs to sign up to an exit strategy faster than you can say cash in those long odds on an atrophied nag called Microsoft. The Vole is planning to launch Windows Mobile 7.0 at the World Mobile Congress in February and netbuzz is surprisingly positive after the 6.5 wash out just a few months ago. Rumours suggest that Windows Mobile 7.0 will be a complete system overhaul and due for rollout near the end of 2010 or start of 2011. In other leaked news, a research note by Jeffries' analyst Katherine Egbert hints that Microsoft will be launching a "Zune-like phone" running Windows Mobile 7.0. If Microsoft does release its own mobile phone on its own mobile platform it will be able to complete with Google and Apple on a level playing field.

Only, maybe, not quite level. Whatever happens at the Mobile World Congress, Microsoft has already buttered up China with an act of diplomacy by none other than the traditionally foot-mouthed Steve Ballmer. Strange things happen at sea. Ballmer commented last week that he was confused over Google's reaction to China and that companies must comply with the laws and customs of any country where it does business. His comments were tacitly approved by China's official news agency, Xinhua, in an article on US double standards. Now factor in Apple's decampment to Bing as the default search engine on its Iphone and Microsoft may have it by a nose.

However, the signs for Android so far are very good. Research analysts at Trefis estimated just two weeks ago that Nexus One could add £20 billion to Google's market value while mobile ad network AdMob said it has tracked over 1 billion ad requests in two months. If Google can finalise face saving negotiations with the Chinese government, maintain its existing infrastructure in China and offer Chinese punters the best Android has to offer, the world will be a better place. Okay, not. But Google would at least sell an absolute shedload of phones. µ