It currently seems en vogue to hype Android in the blogosphere. It is without doubt the fastest growing platform at the moment. The somewhat polemic title of this post suggests that next to abundant opportunity, there’s certainly a fair share of palpable risk for Google’s Android platform.
Anybody remotely interested in Mobile and with a reasonable mid-term memory does remember the days, when Symbian was dominating the smartphone market until 2008. As current Nokia CEO Stephen Elop’s recent memo clearly illustrates, the days of glory for his company’s platform are long gone.
With such a prominent predecessor, one question begs to be asked: Could Android face the same destiny as Symbian in the short term or will it become the ubiquitous OS of the future?
A. Android faces three major self-made problems from a developer’s perspective:
a. Platform fragmentation
b. Lack of monetization opportunities for developers
c. Lack of qualitative (3D) developer tools
A more detailed look at these three issues reveals, why each could potentially sack the currently skyrocketing OS.
a. Platform Fragmentation
Approximately 2 months after Android 2.3 (Gingerbread) was released, it has made its way onto only 0.8% of the devices in use. Even the uptake of Android 2.2 (Froyo) at 57.6% is alarmingly low, considering that it was released ~8 months ago. The comparison with iOS reveals, why these figures have to be perceived as startlingly low: 90%+ run on iOS 4.0+, which came about a month later than Android 2.2. And to be clear: It’s not only a problem of the Android handset manufacturers. Google itself did not manage to update its own Google Nexus One to Android 2.3 yet (after two months).


Source: http://developer.android.com/resources/dashboard/platform-versions.html
However, the biggest problem for Android is still to come: The current statistics are still relatively good because Android has sold at least 10 times more devices in 2010 than it did in 2009. Therefore, the relatively up-to-date version status is to a large extent due to the fact that many people recently bought devices which already had Android 2.1 or 2.2 installed. For 2011, this huge installed base needs to be addressed. It’s pretty clear that many devices won’t get further updates beyond 2.2.
I’d estimate that by the end of 2011, at least 25% of Android devices will run on an 18-month-old OS (2.2 or below) and probably 50% will be on a 12-month-old 2.3 Gingerbread or below. On the other side of the fence, again 90% of iOS users will run iOS 5.0, which will probably have been in the market for 6 months at this time.
In conclusion, Android users will need to buy new devices every 6-12 months, if they want to benefit from the latest OS level innovations: that’s clearly not a sustainable model.
b. Lack of monetization opportunities for developers
This is currently still a profound weakness for Android, as Androidthe Mmarket has some very weird quirks:
1. Developer taxation
As Google does not sell the apps, but just acts as a merchant for the developer, this leads to quite complicated VAT taxation issues for the developers of paid apps (see e.g. this thread on the Android dev forums). Besides, as Apple sells through Luxembourg, their VAT rate in Europe is much more favorable (15%) than Android’s (between 15-25%, depending on country).
2. Still no in-app purchases
However, Google finally confirmed that this will be available just after the Web Store.
3. Editorial process
Google’s editorial process is not as elaborate as the one of the App Store, which features a bunch of different apps every week to provide them with exposure in the very competitive and confusing market.
However, there are also some (rare) success stories on Android: Angry Birds raked in more than 1 Mio. $ per month from advertisement (which should have surpassed their iOS revenues).
Google is clearly aware of the monetization issue and seems to be hard at work to fix it. The web-based-market is a first step in the right direction.
c. Lack of qualitative (3D) developer tools
I’m aware that I’m bound to draw a lot of criticism from die-hard Android fans on this, but what we do discover at skobbler every day (and we have both iOS and Android teams), is the development on Android being a lot more cumbersome than on iOS. That’s especially true when working close to the metal (e.g. using OpenGL graphics). This goes so far that some of our Android developers take our core library and debug it on iOS, to see if they can catch the bug there, before porting the code back to Android.
Let me be clear: This is only a problem for developers of 3D graphics apps (such as vector based navigation or 3D games). Yet after I spoke with many people from game companies, this positively is a big problem for them and significantly reduces Android’s viability for them. In the end, it’s just a huge cost driver.
Google seems to be well aware of this issue as well. It has partially been addressed in 2.3 Gingerbread (see Gingerbread gaming fixes) and will be pushed further in 3.0 Honeycomb with the introduction of RenderScript.
B. External risks
Apart from these internal risks, I see two major external risks for Android world domination.
a. Apple gets the low-end market (200$ non-contract iPhone)
Although I highly doubt that Apple will introduce the iPhone nano (1/3rd smaller as rumored recently), I do believe they will introduce an affordable mass market iPhone (200-300$ off-contract) in 2011. They should clearly be able to do this from a cost perspective: additional manufacturing costs to add a UMTS module to an iPod Touch will be less than 30$ and the iPod Touch sells for 229$. Therefore, 299$ could already be a viable price point. If Apple based the new phone on the iPhone 3GS, they should be able to price it even lower.
My personal impression is that outside the tech hemisphere, where many regard an Android device as more avant-garde than an iPhone, the average users mostly don’t buy iPhones for three reasons:
- It’s too expensive (should be solved by the low-end phone).
- It’s not available where they want to buy it (with Verizon and other carrier deals, Apple certainly is going to fix this).
- They need some differentiated features (e.g. a keyboard, different form factor, etc.).
I believe the third reason to be both the smallest and possibly the only long-term sustainable advantage for Android with its many vendors and different devices.
b. Facebook pushes HTML5 for apps and Facebook not Android will be the relevant mobile platform
With more and more platforms appearing on the scene (WebOS, Windows Phone 7, Bada, iOS, Android, Linux based phones in Asia, etc.), many developers will have to migrate to HTML5 app development to sustain reasonable development costs. At the same time, the HTML5 support on all major platforms gets better and better (with the notable exception of Windows Phone 7 until end of 2011). Even iOS is pushing hard for HTML5 progress. We experience that iOS is currently more advanced in HTML5 support than Android.
A true game-changer would be Facebook announcing their mobile HTML5 app-store on top of the Facebook platform. This would lead to a major decrease of any phone platform’s significance. If this happened, many developers would flock to the Facebook platform. This would be a true cross-platform approach.
C. Summary
If Android fixed the inherent platform problems (fragmentation, monetization and development tools), it could really become the Mobile equivalent of Windows on the desktop. If this didn’t happen or if Facebook or Apple completely changed the market (again), Android could well become the next Symbian and fade into irrelevance in the mid-term.
For 2011, I am nonetheless pretty bullish on the Android platform. Clearly Google has both the ambition and the development muscle to make Android successful, but that’s what a lot of people thought about Nokia back in 2006. Only one thing seems certain: interesting times are ahead for the mobile industry, as the smartphone OS wars are just about to begin.