Android – Mixed message

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Lollipop’s growth is not good news.

• After 18 months of being available, Lollipop has finally become the largest version of Android with 36.1% of Google Android devices now using this version.
• KitKat is at 34.3% while Jelly Bean is at 22.3% while the latest version Marshmallow is struggling for relevance with just 2.3% of all Google Android devices in the hands of users.
• The general view of commentators is that this is good news for Android, but this is something with which I cannot agree.
• The latest version of Marshmallow has been available for 6 months but still only 2.3% of Google’s own devices are using it.
• This is bad news because all of the improvements and innovations that Google announced nearly a year ago are benefitting only a fraction of its user base.
• This leaves the vast majority with an inferior user experience which results in less traffic and lower revenues to Google.
• Furthermore the fact that almost all Android handsets are not upgradeable to later versions (see here) makes the outlook for rapid Marshmallow penetration very poor.
• As a result of most devices not being upgradeable, I can only conclude that Lollipop is growing because handset makers are still shipping new devices with the older code.
• With most devices are being upgraded, the only way to get a new software into the hands of the user is to sell him a new device.
• Hence, as handset makers are selling new devices with an older version of Android, it will take even longer for Google to get its innovations into the hands of users.
• I think that good news would have been large increase in Marshmallow with a corresponding decline in Lollipop representing a rapid switch from shipping with Lollipop to Marshmallow.
• As it stands today, the outlook is that the fragmentation problem in Android is not getting better meaning that the Google ecosystem on Android remains vulnerable to both market share loss from competing ecosystems as well as persistent malware (see here).
• This is why I continue to believe that Google will end up taking complete control of Android as it is the only way in which it can get a grip on fragmentation and also distribute its new versions in a timely manner.
• I am currently expecting that this may happen with Android 8.0 which I expect to be announced in May 2017.
• Despite these problems, iOS continues to drive Google’s short term revenues, which tempers my concerns with regards to share price weakness over the next few quarters.