It Might Not be Lonely at the Top for Android for Long

Harsh is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

Of the various clans fighting the smartphone war, Google’s (NASDAQ: GOOG) Android is the most powerful as it stands with close to 73% of the market in its pocket. But, as we have seen so far, it doesn’t take long for leaders to become laggards in the smartphone arena, and there are some potent threats to the Android supremacy which shouldn’t be ignored.

The story so far

In the third and final part of this future of smartphone operating systems trilogy, I will tell you how Android, which emerged out of nowhere to take pole position in the smartphone race, might see its lead over others diminish comprehensively.

Previously, I told you how Research In Motion (NASDAQ: BBRY), which enjoyed an Android-esque status a few years back, is trying to cut its teeth back into the smartphone game through its BB10 platform, set to be launched later this month. Also, we saw how Nokia is finally seeing some positives in the post-Symbian age by way of its partnership with Microsoft for Windows Phones.

Apart from these stories of struggle, we saw how Apple (NASDAQ: AAPL) needs to raise its game in the global smartphone war and keep the wheels of innovation moving in order to keep its growth rate intact. But all of this might seem nothing compared to what lies in store for Android -- a possible implosion of the most widely used OS on earth.

The android story? More of a Samsung story

Android began with the inception of the Open Handset Alliance back in 2007 with HTC, Sony, LG, Motorola and Samsung as the handset makers. Many more joined the Android bandwagon in the following years but one company stood out and made the most of it -- Samsung.

Initially, it seemed that since these handset makers would use the same OS, there wouldn't be much difference between smartphones and none would have hegemony over the others. But now, Samsung sells around 40% of all Android devices shipped according to IDC, thereby becoming the prime exponent of the OS.

The South Korean giant’s solid marketing machinery and innovation catapulted the platform to new highs while others such as HTC, Sony and LG were left in the lurch. This undoubtedly gave Samsung a huge bargaining power, since high sales volumes of its Android devices would drive ad revenue for Google. The Samsung flagship became the Android flagship, and the company utilized the OS to its maximum benefit to become the leading smartphone maker.

Meanwhile, Google itself was unable to milk the most out of the OS since it offers the software to smartphone makers free of cost in the hopes of earning ad revenue. But, as revealed during a patent and copyright infringement settlement last year, Google had made just $550 million in three years from Android, while Samsung raked in billions.

Moreover, Samsung’s growing influence in the Android ecosystem was indeed a point of concern, since the South Korean behemoth was also dabbling in other territories. It had already skinned the Android interface with TouchWiz, its proprietary user interface which made its Android devices look similar to its homegrown Bada OS. In addition, Samsung also kept its Windows Phone lifeline open and delivered a solid device in the form of the ATIV S last year.

And now, it has emerged that Samsung is keen to push forward the development of its own open source software, Tizen, in an aggressive manner. Reports suggest that Samsung is looking to reduce its reliance on Android by developing Tizen into a competing platform, and might release some “competitive” devices based on the platform this year.

Samsung has been playing its cards smartly. It has its own app store (although it isn't that great), hasn’t restricted itself to one OS, and is now developing its own thing. With the huge marketing machinery and loyal fan following its commands, it shouldn’t prove to be too difficult for it to scale up its own OS and ecosystem.

Google wants more

But why has all of this suddenly come into the spotlight? Well, Google got greedy and envious it seems. As Samsung made money, Google couldn’t make enough of it from the platform whose development it spearheaded. But, it seems that the success of the Nexus 4 has left the search-engine giant craving for more, and it wants to become a smartphone company.

For this purpose, Google is looking to use its Motorola Mobility acquisition to good effect. Initially, it had seemed that the acquisition was done to get hold of Motorola’s patents, but ever since rumors of an ‘X Phone’ emerged, it became clear what Google had actually intended to do. As The Wall Street Journal reported last month, the real intention behind the development of an X Phone was to contest the smartphone war against both Apple and Samsung.

But in reality, it seems the move is aimed more at Samsung rather than Apple, since defection of the South Korean giant to another platform would result in loss of ad revenue. Moreover, with its own device, Google would finally be able to enjoy the fruits of Android the way it has always desired.

If this indeed happens, and the Samsung-Google relationship sours in the future, Android would undoubtedly lose its biggest propagator and this would open up opportunities for other platforms to get in. If this happens, Apple’s iOS would probably gain more ground, while Windows Phones and RIM’s BB10 could expect some more subscribers coming their way.

Open source competitors

But it would be foolhardy to not make a mention of Tizen and Ubuntu, both of which are open source platforms. While Tizen enjoys the backing of Samsung and Intel along with the Linux Foundation, Canonical is looking to take things one step further by introducing Ubuntu on a phone. In the words of gigaom.com’s Kevin Tofel, “Ubuntu on a phone looks as polished as iOS and open as Android, which could make for an attractive combination.” Think of it as a marriage between iOS and Android, or even better, and you would have one of the most potent threats that Android has ever seen.

Final words

The smartphone space is always buzzing with activity and innovation, and it doesn’t take too long for heroes to turn into zeroes and vice-versa. Android has undoubtedly extended its lead in terms of market share over others, but might suffer if the Google-Samsung relationship sours or some other open source OS betters it, or even RIM and Microsoft turn their operating systems into Android beaters.


TechJunk13 has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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