Bloomberg News

Google Ice Cream Sandwich Debuts as IPhone Sets Record: Tech

October 19, 2011

Oct. 19 (Bloomberg) -- Google Inc. unveiled the first device running the new version of its Android software, stepping up competition with Apple Inc. and seeking to win over developers by making it easier to write programs that run on both phones and tablets.

The new Android, dubbed Ice Cream Sandwich, was unveiled at a joint event with Samsung Electronics Co. in Hong Kong today, less than a week after Apple started selling the iPhone 4S, the smartphone that set a sales record of more than 4 million units in three days.

The latest Android incarnation pitches facial recognition programs that enhance security and photo sorting. With the update, Google Chief Executive Officer Larry Page aims to boost mobile-advertising sales and give customers an alternative to Apple’s iOS software, which runs iPhones and iPads. At stake is dominance in the $207 billion mobile-phone market, where iPhone is the top-selling device and Android is the most-used software.

“Ice Cream Sandwich could provide the critical push in the race to catch Apple,” said Mark Newman, an analyst at Sanford C. Bernstein & Co. in Hong Kong. “Apple’s software is still on the cutting edge.”

The Samsung Galaxy Nexus runs Ice Cream Sandwich, Matias Duarte, Google’s senior director, told reporters in Hong Kong. Samsung will start sales next month. No price was disclosed.

Other features of Ice Cream Sandwich include Android Beam, which lets users quickly share web pages, apps and YouTube videos, improved multi-tasking, and an upgraded voice technology that converts dictation into text.

Honeycomb Software

Putting the same operating system in phones and tablets, a break from the past where different devices ran separate software, may spawn more applications on the Android platform.

“Users of Android tablets have had fewer applications to choose from, compared with Apple,” said Lu Chia-lin, an analyst at Samsung Securities Asia in Hong Kong. “Making an operating system for both smartphones and tablets will help Google close the gap.”

Earlier this month, Apple said there are more than 500,000 applications in the company’s App Store. Firestone said the Android Market had more than 200,000 apps as of May 10.

The most recent iteration of Apple’s mobile software drew positive reviews for its new voice-recognition software, faster processing speed and improved picture-taking ability. The availability of new features helped Apple’s sales of iPhone 4S reach a record in its first days on the market.

Defending Against Apple

Carolyn Wu, a spokeswoman at Apple in Beijing, declined to comment on the Android upgrade. She cited statistics showing the iPhone is the best-selling smartphone.

Still, Google is able to defend against Apple’s inroads in part because it’s available on so many devices from multiple carriers, said Charles Golvin, an analyst at Forrester Research Inc.

“Android doesn’t need any help demonstrating its effect on the iPhone’s market share,” Golvin said. “It’s been doing extremely well.”

Ice Cream Sandwich is the first major rollout for Android since Google announced in August a $12.5 billion acquisition of Motorola Mobility Holdings Inc. That led to speculation that Google might become a competitor to its own handset partners.

Motorola Deal

Google Chairman Eric Schmidt said earlier this month that the company “won’t do anything with Motorola, or anybody else by the way, that would screw up the dynamics of that industry.”

Unveiling the software with Samsung, the biggest seller of Android phones, should reassure partners that Google won’t favor Motorola Mobility over other handset makers, said Song Myung Sup, a Seoul-based analyst at HI Investment & Securities.

“At the end of the day, you have to give good treatment to those who sell well,” Song said. “It wouldn’t make much sense for Google to discriminate against Samsung.”

The software debut comes as Suwon, South Korea-based Samsung faces legal battles with Apple over patents in the U.S. and Europe. Google will enter the hardware business and gain a trove of wireless patents with the Motorola Mobility acquisition.

Android controlled 43.4 percent of the global smartphone market in the second quarter, while Apple’s iOS had an 18.2 percent share, according to researcher Gartner Inc.

For tablets, Apple’s iOS dominated with 61.3 percent market share in the second quarter, according to research company Strategy Analytics. Android accounted for 30.1 percent of the tablet market.

Google offers Android for free and then makes money on mobile advertising, which is on course to reach $2.5 billion on an annual basis, Google said earlier this month.

“This is an important announcement for Android,” said Nomura Holdings Inc. analyst Aaron Jeng, based in Taipei. “Apple’s software supports both phones and tablets, and it’s important for Android to have a common platform for both product categories.”

--With assistance from Brian Womack in San Francisco and Jun Yang in Seoul. Editors: Anand Krishnamoorthy, Kenneth Wong

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net


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