Android – 1984.

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An Orwellian future beckons for Android.

• The news that Samsung is finally upgrading the Galaxy s6 and s6 EDGE to Marshmallow (Android 6.0) will come as little comfort to Google which continues to unable to distribute its innovations.
• Marshmallow and iOS9 became available at roughly the same time but Marshmallow is present on just 1.2% of Google’s devices while iOS9 is on 87% of Apple devices.
• To make matters worse the previous version of Android (Lollipop 5.0) is present on just 34% of Google’s devices despite having been available for nearly 18 months.
• 60% of Google’s devices currently run Android 4.x meaning that most of Google’s users do not have access to any of the innovations that Google has made in Android for the last 3 years.
• To date this has not been a real issue, as Google has still been able to update and distribute its services through Google Play, but as services need to become more sophisticated problems begin to arise.
• Now on Tap is a great example of this.
• Now on Tap is context based search from anywhere on the device.
• This can be quite useful for users but also has upside for Google as it will understand what users are doing regardless of whether or not it owns the service.
• I have long believed that this will enable Google to monetise data collected from services is does not own for the first time.
• Consequently, this represents meaningful upside in revenues.
• Unfortunately this requires Marshmallow to work which renders this innovation effectively useless for several years to come.
• This is why I think Google will end up taking complete control of Android by moving the entire OS into its services layer known as Google Mobile Services (GMS).
• This is the only way that Google can end the endemic fragmentation that continues to plague its devices as well as take back control of software distribution.
• The net result is that a Google device will become much like an iOS or a Windows 10 device with absolutely no options for handset makers to make any changes.
• I suspect that this could also go hand in hand with Google becoming far more prescriptive in terms of hardware to ensure that its software runs properly.
• While this would be good for Google in terms of improving its user experience and its ability to monetise, it will be yet another nail in the coffin of the long suffering handset makers.
• Android handset makers have already been reduced to virtual commodities with only Samsung being able to earn more than 2-4% margins on a sustainable basis.
• I suspect that a number of the Android ecosystems like Xiaomi, Baidu, Tencent, Alibaba, Cyanogen and so on will react to this by creating their own version of Android following in Amazon’s footsteps.
• The result will be rising costs as the alternatives to Google will end-up having to write more and more of the code themselves.
• The result will be a series of ecosystems based on a proprietary version of Android making the attainment of scale more important than ever.
• With life getting harder for those involved in hardware, I would still consider only being involved with either an ecosystem or a value added technology supplier.