Never has a tweet been more true, or potentially more disastrous for a vendor. Years ago Google’s Andy Rubin, stung by Steve Jobs’ criticism that Android wasn’t truly open, tweeted that anyone could fork – i.e., modify – Android, making it “open” in the truest sense of the word.
Unfortunately for Google, many OEMs took Rubin at his word.
Today, Google’s Android business is booming, but it’s clear that Android fragmentation minimizes just how much Google—or its ecosystem of app developers—can make from the open-source mobile OS. Unfortunately, according to new ABI Research data, it’s only going to get worse.
Unleashing The Freedom Genie
Despite concerns over the years as to just how open Android truly is, Andy Rubin’s tweet set the concerns to rest:
the definition of open: "mkdir android ; cd android ; repo init -u git://android.git.kernel.org/platform/manifest.git ; repo sync ; make"
— Andy Rubin (@Arubin) October 19, 2010
Google open source chief confirmed Rubin’s point, telling me that more than 10 million lines of Android code are free to anyone to use under an open-source license.
Yes, Google controls the development process for Android. And, yes, it may release code selectively to favored third parties. But on balance, Google has been an exceptional steward for Android (not to mention many other open-source projects).
Perhaps too good a steward, it would seem.
Making Android Dominance Pay…For App Developers
Open source has been very good to Google’s Android operating system. Unlike previous mobile operating systems like iOS (available only to Apple) or Windows (available for a fee and on Microsoft’s terms), Android was free to use (or, as venture capitalist Bill Gurley pointed out in 2011, sometimes under generous subsidies).
How good? Well, once a non-entity in mobile, Android now has a clear lead in terms of devices sold and shipped:
Oddly, this hasn’t turned into a financial bonanza for Android app developers.
It’s long been the case that iOS developers make more money than Android developers. While Android’s superior volume has been serving to cut this lead, it remains true that Android fragmentation makes it hard for app developers to monetize Android efficiently.
How hard? So hard that 64% of Android developers live below the “app poverty line” of $500 per app per month, according to VisionMobile.
It may not be much better for Google.
Making Android Dominance Pay … For Google
Fragmentation, it turns out, hurts Google, too. No, not in the same way that third-party developers feel it, but it hurts all the same.
Google has responded to Android fragmentation by forcing Android OEMs to certify against newer versions of Android in order to get the right to distribute Google Mobile Services (GMS) or Google Apps. Google has also introduced new developer APIs that tie directly into Google Play, sidestepping OEMs to ensure end-users can get the latest Android experience.
That is, provided end-users are running official Android builds. But many OEMs have a stock response for Google and its attempts to own the Android experience:
As ABI Research uncovers, forked Android (“AOSP smartphones”) grew 20% sequentially from Q1 2014 to Q2 2014, compared to total market growth of 3% sequentially. Forked Android, in other words, is now 20% of the global smartphone market, and growing much faster than the overall market.
It’s also growing faster than the certified (Open Handset Alliance, or OHA) Android market. While this official Android market tops 65% of all smartphones shipped today, it’s growing at a 13% sequential rate.
This wouldn’t matter if these were mom-and-pop OEMs with little reach. But as VisionMobile data highlights, Android’s biggest growth comes from a geography that is happy to go it alone on software: Asia.
ABI Research analyst Nick Spencer unpacks what this means:
AOSP’s growth is driven by the development of Chinese and Indian handset manufacturers, not only in their domestic markets, but increasingly throughout Asia and beyond. Chinese and Indian vendors accounted for the majority of smartphone shipments for the first time with 51% share. While many of these manufacturers are low cost, some are making inroads in the mid-tier, including Xiaomi and Gionee, hence the growing challenge to Samsung in particular.
In other words, two of the world’s biggest markets are filled with AOSP/forked Android vendors that are starting to sell far beyond their home markets, challenging Google’s ability to monetize Android globally.
Charging For The Internet
Could Google still make money from all this forked Android adoption? Possibly. As Asymco explains, excluding China, Google earns roughly $6.30 per Internet user per year. So in theory a significant percentage of these Android (or iOS or Windows or…you name it) devices should turn into money for Google, because each comes with a gateway to the Google Internet.
In practice, however, this isn’t the case.
Asymco further explains that while there are plenty of reasons OEMs fork Android (e.g., a reluctance to deal with Google’s obligations, Microsoft’s IP licensing costs, etc.), “the most likely reason is flexibility.”
Vendors competing on price and localization are looking to move quickly against each other and can’t wait for blessings from above. Belonging to some “Alliance” and all that it entails is just too much to ask for companies that are, so to say, delicate. The result is that the “more open” version of Android is beginning to threaten the “less open” version of Android
This “more open” Android will often include “a unique UI and set of services,” including search and other non-Google apps made in China. In other words, forked Android may mean no $6.30 per user for Google.
All that said, while I imagine Google would like to exert more control over Android in order to minimize fragmentation for users and maximize revenue for itself, it’s also the case that Android’s open source nature has seriously diminished Apple’s once impregnable lock on mobile. In an Apple world, Google’s ability to make money is precarious at best.
In other words, “too open Android” is far better for Google than “too closed iOS.”