Google will reportedly subsidize Android One handsets in India

Google(s goog) announced Android One at its I/O conference in June, and at the time it was introduced as a program to seed Android reference designs to low-cost manufacturers in emerging markets. But the program appears to involve more than low-cost handsets running stock Android: according to a new paywalled report in The Information, the program will focus on India to begin, it will include a $1 billion advertising component, and Google is even willing to subsidize handsets to get them under $100.
At I/O, Google revealed a Micromax handset and mentioned that it had a partnership with Karbonn, two device makers largely unknown in the United States but more prominent in India. The report adds Spice and Celkon Mobiles to the Android One roster as well. Those device makers will be the beneficiaries of a huge “Apple-like” advertising campaign, as Google plans to spend hundreds of millions of dollars to promote Android One devices starting this fall.
There are still some hurdles to getting smartphones in the hands of Indians who currently use feature phones. For instance, 3G and 4G coverage is spotty outside of the major metro areas. Considering that the Android One program includes a requirement that its devices come with “reasonable data plans,” it appears as if Google is going to need to cut deals with Indian wireless carriers, who are themselves hamstrung by inconsistent regulation and spectrum allocation.
India is also near and dear to Android head Sundar Pichai’s heart, beyond the huge market opportunity it represents. He was born in Chennai, and Google reportedly describes the program internally as a way to “bridge the rich-poor digital divide.” Hundreds of millions of people in India are expected to get their first smartphone — and therefore their first computer — in the decades to come.
Samsung is already a big force in the Indian market, selling 38% of smartphones in India in 2013, and Motorola announced last week it sold 1 million Moto devices in five months. Chinese handset makers are launching phones on the subcontinent as well. Google’s long-run strategy doesn’t involve revenues from device sales; it wants Indians to use its services, whether they happen to be using an affordably-priced Android One device or not.