The young pretenders
The line up of names listed in the handset vendor rankings looks very different now to how it did a few years ago and may yet change more, with Linux-based operating systems lowering the cost of entry to new players. Ruslan Kogan, founder and CEO of Australian electronic manufacturer Kogan Technolgies and Australia’s richest person under 30, gives his thoughts on the market as the company prepares to enter the fray with a £119 Android tablet.
According to Kogan, which specialises in TVs and video cameras, Android is a game changer when it comes to the hardware industry. And it goes beyond the more obvious implications for tablets and mobile devices. Kogan says that for TVs, which form the Australian company’s core manufacturing operation, Kogan spends a lot of time and money on engineers who need to design the software and menus and associated features for the models.
“When it comes to other devices, the beautiful thing about Android is that it says ‘look, you guys just concentrate on the hardware and we’ll make sure that the software does what it needs to do.’ It really opens up the marketplace as the costs of devices are significantly reduced because we don’t have to spend so much time and money on software engineering,” he says. “We just load it and it works with the required features and functions. This lowers the cost of mobile phones and tablets and even cars or other electronic devices. We have already introduced a smart TV set top box based on Android for sub £100, which includes a browser, keyboard, apps, streaming movies and the entire app store ecosystem.”
Kogan claims that the developers behind Android have done a great job of making sure the OS can be ported to different platforms, while “Apple on the other hand restricts what you can do because it’s a very closed system. So we see more innovation in Android with hundreds of new devices coming out every year.”
Kogan admits that his company still needs skills in house and has engineers constantly working on updating certain drivers and getting software working properly on Kogan’s devices, but claims it’s nowhere near the amount of effort required to build an operating system from the ground up. “To do so would double the cost of the devices,” he says. “To be fair, it’s not exactly plug and play but it significantly reduces the resources required to enter a new market. So of course the handset space is attractive to us as well and we’re working on something right now. So you can expect an announcement from us in the coming months,” he says.
Kogan picks his battles. He knows a £100 Android tablet isn’t going to compete against the Apple iPad in the iPad’s own market, but he argues the low cost models are there to fill a specific gap.
“We’re filling the space for people that can’t justify buying an iPad but want the iPad experience. It doesn’t compete, but it’s there at a quarter of the price,” he says. “It’s really a price game for us.”
And Kogan predicts that the industry will see lots of manufacturers bringing out Android-based phones in all shapes and sizes to target specific markets. “Apple has the best product out there and is a market leader in tablet space. But it’s a big market, it’s not just a premium market. There’s a big budget market too.”
Kogan believes that online retail has enabled the manufacturers to talk to the end consumers. Before, companies needed distribution channels with a wide geographic spread, but the Australian firm now believes a company can operate from one hub. Kogan expects that in the not too distant future more manufactures will be going direct with many companies in Asia that recently white labeled products saying, “we don’t need all these other brands we can go direct to the consumer and don’t need to share our brand with anyone else.” Kogan suggests this is to some degree what has happened with HTC, ZTE and Huawei, with the result that the manufacturers can make their products cheaper.
“Hardware manufacturing is our specialty so we monitor what people are searching for, what’s hot in search engines like Google and we use that information to direct our manufacturing lines out in Asia,” Kogan says. “Nokia is going to be struggling because Android has taken away their main competitive advantage. Nokia used to spend heaps on R&D to get the software running as well as it could but they fell behind when iOS and Android came out and all of a sudden all these companies out of China were able to rapidly produce a phone that had the right hardware and the right software, rather than just the hardware. They’ve solved a very difficult part of making a phone for you,” he says.