Will Android Win?
When I talk to people in mobile in North America, the prevailing wisdom seems to be “Android is going to win”. Even in the sub-$100 phones, even eventually in sub-$50 phones. And so far it has been hard to argue with that trend. For instance Broadcom’s 2157 Android Reference Design has a $45 bill of materials and is enabling sub-$100 Android (maybe even sub $75 depending on duties and shipping costs)!! Well the times are a changing.
HTC settled with Microsoft and now pays a reported $5/device in fees. Microsoft has taken that success and is now working up and down the Android ODM landscape, and apparently looking for $15 from Samsung. In addition to Microsoft, Oracle is hot in pursuit, suing Google directly for the usage of Java and allegedly distributing Oracle’s Java code and using Java’s. On top of going after Google, Oracle is offering manufacturers licenses for $15-$20/device. So manufacturers looking at using Android may be looking at anywhere from $5-$30 of royalty fees/device depending on how the litigation settles out. On a phone with a bill of materials in the sub $65 range, there simply won’t be room to pay for the OS. Manufacturers will turn to alternatives that cost $0 or have more “predictable” business models not mired in litigious, patent hell.
Android App Store Splintering
In a world where companies like Amazon are putting their own flavours of Android with their own app stores, collecting their own revenues, it may make Android’s business model less sustainable. There are now at least 30 app store alternatives to Google on Android .
The Made in China Solution
It also seems that many of the major players in China are looking to provide alternatives. The big internet players have all announced major mobile OS initiatives – Alibaba, Tencent, Baidu, Xiamo Tech have all been rumoured to launch their own OSs, some based on Android, some built up from scratch . On top of these higher end smartphone initiatives, MediaTek themselves are pushing their new major platform, MRE, picking up big wins including a content partnership with Yahoo!. MRE is dubbed the “made for featurephones” OS that will run on platforms with very low platform requirements (think sub 104mhz processors).
A mobile OS with roots in China could be massively successful in China, leading to a further geographical splintering of mobile OSs as well ,,. It’d be very interesting to see how regions like India and South East Asia would be impacted by a new mobile smartphone OS coming out of China, given the current domination of MediaTek, no branded phones in those markets.
Android is clearly going to face stiff competition as it tries to move downstream and into emerging markets, and its ability to win will be largely based on its ability to keep its price at $0.